Will ‘Malay first’ policy affect China investments?

(FMT) – As Umno, fearing Dr Mahathir’s party, tries to convince Malays that its affirmative action policies are bearing fruit, investors from China may not be as keen to play ball, says report.

Government leaders have been touting the RM21 billion MRT project as a success for the “Malay first” policy because they fear Dr Mahathir Mohamad’s new party will eat into Malay support.

A report in the South China Morning Post (SCMP) added that Umno’s efforts to assuage the Malays that their interests would be taken care of came “amid rising signs” that PPBM was “fast gaining ground” ahead of an election that must be called by August 2018.

The report said that Prime Minister Najib Razak – by painting the completion of the Sungai Buloh-Kajang Mass Rapid Transit under budget and on time as evidence that the decades-old bumiputera policy was paying off – was trying to extract political mileage.

It quoted Rashaad Ali, a research analyst at Singapore’s S Rajaratnam School of International Studies, as saying: “Najib’s statements are to be expected as he shores up support for his Malay core voter base.

“He is essentially trying to indicate that he takes care of and prioritises Malay interests, using the megaproject of the MRT as an example. Rhetoric from other ministers also indicates the same line of thinking, whereby the people, especially Malays, should be grateful to their government.”

However, the SCMP said championing the “Malay first” policy could prove disquieting for investors from China and firms whose infrastructure projects were crucial to Malaysia’s “fragile economy”.

It noted that Malaysia’s planned railway and port projects would receive up to RM400 billion in Chinese investments over the next two decades.

It said observers were split on whether bumiputera companies would be substantially involved in the China-backed projects, such as the US$7.2 billion Melaka Gateway port project on Malaysia’s west coast and a US$13 billion high-speed railway on the east coast.

Rashaad was quoted as saying: “I do not expect them [the Malaysian government] to go out of their way to implement a pro-bumiputera policy, and if they do, bumiputera participation would take the form of companies that were expected to be part of the projects anyway.”

Major projects, such as the Melaka Gateway, have local partners that are made to adhere to bumiputera quotas; firms from China don’t have to do that.

“It’s hard to shake off the impression that the Chinese do not fully appreciate the delicate balance Malaysia needs to strike on economic opportunities for the various communities, especially the bumiputera,” Shahriman Lockman, a researcher at Malaysia’s Institute of Strategic and International Studies, was quoted as saying by SCMP.

“It remains a steep learning curve, but one hopes that the Chinese will gradually have a more sophisticated understanding of the local context, both in Malaysia and elsewhere in Southeast Asia.”