BEIJING: While China is repeatedly trumpeted as a lucrative and vast market, Malaysia is fully aware that enhancing trade and investment linkages with Beijing will not happen automatically.
Like other countries keen on taking bilateral trade to a higher level with the Asian economic superpower, Malaysia knows it has to cultivate ties in diverse areas, while overcoming obstacles.
China has many suitors and that is why Kuala Lumpur has not lost sight of that critical need to work hard at nurturing economic ties with China, since establishing diplomatic relations with that country 40 years ago, following a visit by the then Prime Minister Tun Abdul Razak Hussein.
Now, his son and current Prime Minister Datuk Seri Najib Tun Razak is continuing that legacy to ensure Malaysia stands to gain much from the bilateral relationship.
Malaysia, the first country in Asean to establish diplomatic relations with China, has not only seen trade ties grow, but the advent of strong people to people relations. Malaysia’s bilateral trade with China last year recorded US$106 billion.
This made China, Malaysia’s single largest trading nation, for the past five consecutive years. Bilateral trade between both countries has expanded at an average of 18.2 per cent since 2000 with the trade profile witnessing a major shift over the last decade. Commodities are no longer the major source of goods traded.
As much as 50 per cent of trade now comprises manufactured products, and other higher value-added goods. Malaysian businesses also made over US$6 billion in investments in China last year.
About US$1 billion in investment was posted by Chinese businesses in Malaysia during the same period.
Najib and China’s President Xi Jinping have agreed to upgrade bilateral ties to a comprehensive strategic partnership, when the latter visited Kuala Lumpur last October.
Among the objectives set between both leaders is to increase Malaysia-China bilateral trade to US$160 billion by 2017.
To add to the mutual agreement, Najib on his return visit to China last week signed a joint communique with Chinese Premier Li Keqiang which, among others, touched on increasing cooperation in trade and the people to people relationship.
The communique was signed during the grand celebration of Malaysia-China bilateral relation’s 40th anniversary. Another key point in the communique is cooperation between the central banks of both countries to further accelerate the use of local currencies as settlement for trade and investment as well as promoting the development of the necessary supporting infrastructure.
Najib said to realise all the resolutions and understanding agreed upon, a special committee would be set up to monitor and take the necessary follow-up action. “It’s a committee within the government and we will invite the relevant ministries.
“It is important for us to know what the other is doing and coordinate all the action necessary in a timely manner,” he told a media conference here.
He said the committee would be meeting from time to time and as when necessary but at least twice a year.
The prime minister will also chair a joint committee for the development of the Malaysia-China Kuantan Industrial Park (MCKIP).Both the Federal and Pahang state governments have allocated RM700 million for the development of the park. The park, part of the ‘Two Country Twin Park’ project, is aimed at wooing more Chinese investments into Malaysia and address the imbalance in the investment gap between Malaysian and China.
The trade gap now stands at a 6 to 1 ratio, favouring the Chinese.
The MCKIP offers special incentives tailored to Chinese investors keen to invest in Malaysia.
Malaysia efforts to attract more Chinese investments also received positive response from the Chinese leaders.
Both President Xi and Prime Minister Li gave a commitment to encourage investments by Chinese companies in Malaysia. The Chinese government is also giving priority to the twin Park project, whereby, it has approved a 2.4 billion renminbi development fund for the Qinzhou (Chingchou) Industrial Park on top of the one billion renminbi already pledged by the government of Guangxi province. Apart from bilateral relations, Najib said Malaysia and China are also working together to take the Asean-China free trade agreement to the next level.
At the opening ceremony of the China-Malaysia High Level Economic Forum, he said both countries are striving to deliver the Regional Comprehensive Economic Partnership, an FTA between Asean countries and its existing partners, in 2015.
During his visit to China, Najib also witnessed the signing of six government to government (G2G) and 11 business to business (B2B) agreements. Among the G2G agreements is an agreed minute between the Ministry of International Trade and Industry (Miti) and the Chinese Ministry of Commerce on exploring initiatives in bilateral trade and economic cooperation. It also includes the agreement to enhance connectivity in areas such as maritime transportation, ICT, tourism, energy, investment and technical cooperation.
Another milestone achieved by Miti was the agreement with the Guangdong government, during its trade and investment mission to the province – prior to the bilateral anniversary celebration – to increase bilateral trade with the province to US$40 billion by 2017. The agreement is deemed important considering Guangdong accounted for a quarter or US$28 billion of Malaysia’s trade with China last year.
Miti Minister Datuk Seri Mustapa Mohamed said there was a lot of potential to explore between Malaysia and Guangdong, including possible sectors where collaboration can be further enhanced. He said among the areas to consider by Guangdong companies includes, integrated logistics, halal products and tourism, while Malaysian entities are keen to tap Guangdong’s green, traditional medicine and healthcare sectors.
“These are some possible areas of increased collaboration as we want to develop special economic and commercial ties with Guangdong,” he said during a courtesy call on Guangdong Vice Governor Xu Shaohua. Mustapa said he would also head a joint trade and investment committee with a view to increasing economic activities between Malaysia and Guangdong. Before the end of his visit, Najib expressed confidence that as both countries celebrated 40 years of diplomatic relations, they would build on the strong economic connections and usher in a new era of shared prosperity.
“Our economic relationship is going from strength to strength, but we can do more,” he said.
Miti, under the stewardship of Mustapa and via its agencies such as the Malaysia External Trade Development Corporation (Matrade) and the Malaysian Investment Development Authority (MIDA), has done a tremendous job towards deepening Malaysia-China economic ties but all concerned must continue to persevere.
Malaysia must not rest on its laurels, for complacency only gives away opportunities to other competitors, also vying for a chunk of the Chinese market. — Bernama