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Encouraging Najib initiative in China

By Wednesday June 10th, 2009 No Comments

THIRTY-FIVE years after former Chinese premier Zhou Enlai and Malaysia’s second prime minister Abdul Razak Hussein established diplomatic relations, the latter’s son, Najib, took bilateral relations a step further in his first official visit to Beijing last week as Malaysia’s fifth premier.

To be sure, much has changed in both countries. Communism is no longer a threat in Malaysia after the Malayan Communist Party signed a peace agreement with the government 20 years ago. And Malaysia itself has become a middle-income developing country. For its part, China has morphed into the world’s third largest economy. The enormous strides made by both countries is epitomised by their bilateral trade. Two-way trade reached US$39.06 billion in 2008, courtesy of double-digit growth every year for well-nigh three decades. By contrast, it was less than US$100 million in 1974, when Mr Razak visited Beijing.

China is now Malaysia’s fourth largest trading partner and its fourth largest export market. Close to a million Chinese visited Malaysia last year, the largest number from any country outside South-east Asia. Meanwhile, Malaysians were the 19th largest investors in China last year.

Mr Najib’s visit has been viewed as particularly meaningful because it involved, perhaps for the first time, deals between mainland Chinese companies and Malaysian companies controlled by the government.

In the past, Malaysian investments in China have been dominated by companies controlled by Chinese-Malaysians. The same old names kept cropping up in the context of investments in the People’s Republic: Robert Kuok, William Cheng of the Lion Group, Robert Tan’s property investments, and Tiong Hiew Kiing’s media investments.

During Mr Najib’s four-day visit, at least two more Malaysian companies announced significant investments in China in joint ventures with Chinese firms.

By itself, that was unremarkable – but it was the identity of the firms that piqued media interest. The two are the multinational Sime Darby (in an enormous property venture) and the United Motor Works conglomerate (in a huge steel mill). Both companies are majority-owned by Permodalan Nasional Berhad, a state-owned agency that seeks to economically empower ethnic Malays.

In a country as defined by race as Malaysia has been, this is an encouraging development; it suggests that Malaysia wants an engagement with China based on commercial merit rather than ethnicity. If the trend continues, it would also be good for Malaysia’s corporate culture in that it would expose more Malaysian companies to commercial discipline and make them more internationalist and cosmopolitan in their outlook.

It would also contribute to deepening China’s economic engagement with Malaysia and South-east Asia.

Source : Business Times Singapore

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