Harping on Chinese FDIs in Malaysia


January 16, 2017

Harping on Chinese FDIs in Malaysia

by Josh Hong @www.malaysiakini.com

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A leopard never changes its spots, does it? Having failed to offer a set of alternative policies and convince the general public of their ‘reformist’ credentials, Dr. Mahathir Mohamad, Zainuddin Maidin and Muhyiddin Yassin are now all back to bashing Najib Abdul Razak along the not-so-subtle racial lines.

Yes, China has been investing aggressively in Malaysia, but the Chinese are not the first ones who came, saw and conquered our market in recent years.

Before that, the Americans, Japanese and Arabs, too, had pursued very proactive business strategies in South-East Asia. With its relatively well-developed infrastructure and affordable land, Malaysia stood to benefit tremendously from their investments for more than three decades.

Since the 2000s, the Arabs, too, have been investing heavily in strategic industries in Malaysia, especially the petrochemical sector and real estate development, with the United Arab Emirates emerging as one of Malaysia’s largest trading partners and among the most vigorous investors in Malaysia’s oil and gas industries.

Mubadala Petroleum is currently setting its sights on Sarawak, while the International Petroleum Investment Company remains a key investor in Malaysia despite the 1MDB debacle. Both Putrajaya and Abu Dhabi maintain bilateral and trade relations are rock solid.

Meanwhile, the Qatar Investment Authority is a big player in Malaysia’s strategic real estate, commodities and energy sector. In 2013, it had plans to develop the Pengerang Integrated Petroleum Complex in southern Johor that was worth US$5 billion, aimed at making the country a petrochemical regional hub, not too dissimilar from China seeking to help turn Malaysia into a ‘transportation hub’ via Bandar Malaysia and the proposed high-speed rail terminal.

Even less well-known was that an agreement was signed in 2012 to make Qatar Holding a cornerstone investor in Felda Global Ventures Holdings Berhad, no doubt a highly important and vitally strategic global agricultural and agri-commodities company, while the Kuwait Investment Authority invested US$150 million in Malaysia’s IHH Healthcare.

At one time, the Qataris and the Najib government even agreed to build a ‘seven-star’ Harrods Hotel in the Bukit Bintang area in Kuala Lumpur, right next to the upmarket Pavilion shopping mall. The business venture somehow went awry and subsequently called off.

This aside, Saudi Arabia several years ago ranked fifth among Malaysia’s leading sources of investment, just behind Japan, South Korea, the US and Singapore. China was nowhere to be seen then.

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Mind you, PetroSaudi International was deeply involved in the scandal-ridden 1MDB and the Saudi Foreign Minister Adel al-Jubei even confirmed in April last year that money was wired into Najib’s personal account and it was a “genuine donation with nothing expected in return”.

Now, one may derive from the s statement that the Kingdom of Saudi Arabia was complicit in corruption on a global scale but did any Malay or Muslim leader in UMNO or outside of it accuse the Saudi government of seeking to undermine Malaysia’s sovereignty or taking over the country? Is Saudi Arabia beyond reproach simply because it is where Mecca, Islam’s holy city is located?

The Arabs have been coming but no-one, certainly not UMNO, Mahathir or his minions in Bersatu, has said a word against investors from the Gulf region.

Nobody is talking about Najib turning the country into an Arab colony except for Marina Mahathir who lashed out at ‘Arab colonialism’ because traditional baju Melayu for women are now more difficult to find than in the old days as compared to the increasingly popular Arab attire. But her father has yet to cast aspersions on Najib selling Malaysia out to the Arabs through all the strategic investments.

Instead, Mahathir has been harping on Chinese nationals buying up lands and properties and blaming it on Najib, hoping that this would heighten the siege mentality of the Malays which would in turn alienate them further from UMNO.

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But Mahathir’s subterfuge can escape anyone but me. After all, it was his alleged racist rhetoric that kept him in power for over two decades, and Malaysia’s complex racial dynamics have created a fertile ground for a cunning strategist like him.

Crafted with the Malay constituency in mind

The messages by Mahathir, Zainuddin and Muhyiddin are not a coincidence, for they are all carefully crafted with the Malay constituency in mind.

They cannot openly demonise the Chinese Malaysian community because they need to ensure the opposition parties including DAP win enough Chinese votes, but at the same time, they are in dire need of denying Najib critical Malay support. So the best way to achieve this is to play up China as a bogeyman.

Mahathir and Bersatu may appear to be concerned over the influx of mainland Chinese capital and money, but their articulation is nothing but a veiled warning to the Malays that continued support for Najib would mean a greater Chinese presence in Malaysia, to the detriment of the ‘indigenous population’, of course.

Why pick on the Chinese when your Muslim brethren from the Middle East are no less commercially greedy and strategically ambitious?

It is not very different from the days when Mahathir ‘cari pasal’ (find fault) with Singapore in order to consolidate the Malay base. Stigmatising Chinese Malaysians comes at too huge a political cost, hence the sudden ‘realisation’ of mainland Chinese investments being a threat.

It is nothing more than a repackaged argument that, in favouring the (mainland) Chinese, Najib would only end up marginalising the Malays, just like the British.

If Mahathir and his cohorts have an issue with excessive foreign investments, they must not just single out China but the Gulf countries also. Mahathir may even question his own national car policy which only resulted in Malaysia becoming almost totally dependent on Japan for spare parts and technology, while failing to make Proton a car giant as he would have dreamed!

I have a problem with Islamic conservatism, but I have no problems with the Muslims; I am sceptical about American expansionism but I am fine with the American people; I am opposed to Israeli policies on Palestine but I don’t hate the Jews; I disagree with Shinzo Abe’s historical revisionism but I appreciate Japan as a wonderful country, and I look askance at communist ideology yet I enjoy the friendship of my mainland Chinese friends.

And I remain very much a leftist and a liberal who considers neo-liberalism a major source of the global chaos today. But unlike Mahathir, I vow not to use race or religion as my weapon even if I am wary of the destructive power of capitalism, because I have always been acutely aware of the hard fact that capital and money have no motherland.

Go on supporting Mahathir and Bersatu if you want, and I won’t shed a tear for you even if one day you find yourself trapped in the quicksand of racial politics and unable to be free.


JOSH HONG studied politics at London Metropolitan University and the School of Oriental and African Studies, University of London. A keen watcher of domestic and international politics, he longs for a day when Malaysians will learn and master the art of self-mockery, and enjoy life to the full in spite of politicians.

The views expressed here are those of the author/contributor and do not necessarily represent the views of Malaysiakini.

World Bank Doing Business Report Continues to Mislead


December 16, 2016

More of the Same: World Bank Doing Business Report Continues to Mislead

Anis Chowdhury, a former professor of economics at the University of Western Sydney, held senior United Nations positions during 2008–2015 in New York and Bangkok. Jomo Kwame Sundaram, a former economics professor, was United Nations Assistant Secretary-General for Economic Development, and received the Wassily Leontief Prize for Advancing the Frontiers of Economic Thought in 2007.

Eight of The World Bank's "Doing Business" report 2017’s ‘top 10 improvers’ including  Kenya, Pakistan, the United Arab Emirates and Bahrain have, in fact, worsened workers’ rights, according to the International Trade Union Confederation. Credit: IPS

Eight of The World Bank’s “Doing Business” report 2017’s ‘top 10 improvers’ including Kenya, Pakistan, the United Arab Emirates and Bahrain have, in fact, worsened workers’ rights, according to the International Trade Union Confederation. Credit: IPS

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Malaysia’s Professor Jomo Kwame Sundaram

SYDNEY and KUALA LUMPUR, December 15, 2016 (IPS) – The World Bank’s Doing Business Report 2017, subtitled ‘Equal Opportunity for All’, continues to mislead despite the many criticisms, including from within, levelled against the Bank’s most widely read publication, and Bank management promises of reform for many years.

Its Foreword claims, “Evidence from 175 economies reveals that economies with more stringent entry regulations often experience higher levels of income inequality as measured by the Gini index.” But what is the evidence base for its strong claims, e.g., that “economies with more business-friendly regulations tend to have lower levels of income inequality”?

Closer examination suggests that the “evidence” is actually quite weak, and heavily influenced by countries closer to the ‘frontier’, mainly developed countries, most of which have long introduced egalitarian redistributive reforms reflected in taxation, employment and social welfare measures, and where inequality remains lower than in many developing countries.

The report notes that relations between DB scores and inequality ‘differ by regulatory area’. But it only mentions two, for ‘starting a business’ and for ‘resolving insolvency’. For both, higher DB scores are associated with less inequality, but has nothing to say on other DB indicators.

Other studies — by the OECD, IMF, ADB and the United Nations — negatively correlate inequality and the tax/GDP ratio. Higher taxes enable governments to spend more on public health, education and social protection, and are associated with higher government social expenditure/GDP ratios and lower inequality. The DBR’s total tax rate indicator awards the highest scores to countries with the lowest tax rates and other contributions (such as for social security) required of businesses.

Bias

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The DBR’s bias to deregulation is very clear. First, despite the weak empirical evidence and the fallacy of claiming causation from mere association, it makes a strong general claim that less regulation reduces inequality. Second, in its selective reporting, the DBR fails to report on many correlations not convenient for its purpose, namely advocacy of particular policies in line with its own ideology.

The World Bank had suspended the DBR’s labour indicator in 2009 after objections — by labour, governments and the ILO — to its deployment to pressure countries to weaken worker protections. But its push for labour market deregulation continues. For example, Tanzania’s score is cut in 2017 for introducing a workers’ compensation tariff to be paid by employers while Malta is penalized for increasing the maximum social security contribution to be paid by employers.

New Zealand beat Singapore to take first place in the latest DBR rankings following reforms reducing employers’ contributions to worker accident compensation. Nothing is said about how it has become a prime location for ‘money-laundering’ ‘shell’ companies.

Meanwhile, Kazakhstan, Kenya, Belarus, Serbia, Georgia, Pakistan, the United Arab Emirates and Bahrain — eight of DB 2017’s ‘top 10 improvers’ –– have recorded poor and, in some cases, worsening workers’ rights, according to the International Trade Union Confederation. A DBR 2017 annex claims that labour market regulation can ‘reduce the risk of job loss and support equity and social cohesion’, but devotes far more space to promoting fixed term contracts with minimal benefits and severance pay requirements.

In support of its claim of adverse impacts of labour regulations, DBR 2017 cites three World Bank studies from several years ago. Incredibly, it does not mention the extensive review of empirical studies in the Bank’s more recent flagship World Development Report 2013: Jobs, which found that “most estimates of the impacts [of labour regulations] on employment levels tend to be insignificant or modest”.

DBR 2017 adds gender components to its three indicator sets — starting a business, registering property and enforcing contracts — concluding: “For the most part, the formal regulatory environment as measured by Doing Business does not differentiate procedures according to the gender of the business owner. The addition of gender components to three separate indicators has a small impact on each of them and therefore a small impact overall”.

Should anyone be surprised by the DBR’s conclusion? It ignores the fact that the policies promoted by the Bank especially adversely affect women workers who tend to be concentrated in the lowest paid, least unionized jobs, e.g., in garments and apparel production or electronics assembly. The DBR also discourages regulations improving working conditions, e.g., for equal pay and maternity benefits.

Despite its ostensible commitment to ‘equal opportunities for all’, the DBR cannot conceal its intent and bias, giving higher scores to countries that favour corporate profits over citizens’, especially workers’ interests, and national efforts to achieve sustainable development.

Sadly, many developing country governments still bend over backwards to impress the World Bank with reforms to improve their DBR rankings. This obsession with performing well in the Bank’s ‘beauty contest’ has taken a heavy toll on workers, farmers and the world’s poor — the majority of whom are women — who bear the burden of DBR-induced reforms, despite its proclaimed concerns for inequality, gender equity and ‘equal opportunities for all’.

 http://www.ipsnews.net/2016/12/more-of-the-same-world-bank-doing-business-report-continues-to-mislead/

 

Sagging Confidence in Asia toward Business Conditions–Malaysia an exception?


December 15, 2016

Sagging Confidence in Asia toward Business Conditions--Malaysia an exception?

by Reuters@ http://www.khmertimes.com.kh

Confidence in Asia toward business conditions over the coming six months dropped in the final quarter of 2016 to its lowest level in a year as firms fretted about sluggish demand in a persistently low-growth economic environment, a Thomson Reuters/INSEAD survey found.

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Malaysia’s No. 1 Problem–The Source of Political Uncertainty

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2015

Firms also flagged political uncertainty as a key near-term risk, including that brought by the election of Donald Trump to the US presidency – an outcome some cited as a key risk in the same survey three months prior.

The Thomson Reuters/INSEAD Asian Business Sentiment Index, representing the half-year outlook of 118 firms, fell to 63 from 68 in the September quarter, although it remained above the 50 mark separating optimism from pessimism.

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2015

“The fall in the business sentiment index confirms what we have seen over the past few years. The world economy is growing but in a way that looks suboptimal,” said Singapore-based economics professor Antonio Fatas at global business school INSEAD. “It seems very difficult to regain a high state of confidence.”

Asian companies are particularly reliant on demand from China where slowing economic performance has been the main cause for concern over the past few years. But in recent weeks, political worries have come to the fore.

Mr. Trump has advocated more US-centric trade relations and the cancellation of the Trans-Pacific Partnership trade pact. He has also vowed to repatriate jobs such as in the outsourcing industry which flourishes in the Philippines, where new president Rodrigo Duterte is known for anti-American rhetoric.

In South Korea, lawmakers have voted to impeach President Park Geun-hye over an influence-peddling scandal after weeks of protests, while in India, Prime Minister Narendra Modi abolished 86 percent of the country’s cash overnight to tackle corruption.

Firms have to navigate such events “with the possibility of either ‘muddling through’ as we have managed to do over the last two years or hitting a wall because one of these uncertain events turns negative,” said Mr. Fatas.

Thomson Reuters and INSEAD polled firms across Asia from November 28 through December 9. Of 118 respondents, just over 42 percent were positive toward business prospects over the next six months, 41 percent were neutral and 16 percent were negative.

Respondents included Australia’s Transurban Group, India’s Reliance Industries Ltd., PT Telekomunikasi Indonesia (Persero) Tbk., Japan’s Asahi Group Holdings Ltd., Korea Aerospace Industries Ltd. and the Philippine National Bank.

Firms in Australia were the most positive with their subindex of 86 although that was still two points lower than three months prior. Only Singaporean firms were negative with a subindex of 46, albeit an improvement from the 38 of September.

Sentiment tumbled the most in the usually upbeat Philippines, to 70 from 94. Though optimistic, the subindex compared with that economy’s average of 91 over the survey’s seven-year life.

Sentiment fell in China, to 80 from 90, in India to 70 from 75 and in Thailand to 60 from 72. But in South Korea it rose to 57 from 50 despite the political turmoil.

“Outside of Thailand, we expect to see a slower pace of economic growth in our main markets in Asia-Pacific, including Australia, China and Singapore in the near term,” said chairman and chief executive William Heinecke of Thai hotelier and retail distributor Minor International PCL.

Mr. Heinecke also said his company expected global tourism to be resilient in the current climate, and that the retail food service industry would be stable in its key markets.

By sector, the retail and leisure subindex fell to 56 in the fourth quarter from 68 in the third. Household, food and beverage firms were the most optimistic at 79, up from 72, whereas those in the autos sector were the most pessimistic at 40 from 60.

http://www.khmertimeskh.com/news/33160/poll–asia—s-confidence-slips/

The business of US economic diplomacy in Asia


December 7, 2016

The business of US economic diplomacy in Asia

by  Dr. Martin Parkinson PSM, Canberra

The outcome of the US election has created considerable uncertainty at the country’s future policy directions towards the Asia-Pacific. While it is difficult to predict how US economic diplomacy in the region will change, the rule-based order it has led remains crucial to regional security and stability.

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As a general rule, the United States has had more care for the development of the international system of global trade and investment than many other countries. Rather than acting unilaterally, the United States often deliberately constrains itself by acting through the IMF, WTO, the World Bank and other multilateral bodies. While it has used explicit economic levers at times — such as infrastructure spending, concessional finance or highly preferential trade deals — the United States has done so to a noticeably lesser extent than other powers for at least two reasons.

 

First, the great and successful US experiment with constitutionalism has led to clearly defined and separate roles for the public and the private sector. The constitution constrains what various US administrations may do in the short run. But in the long run this increases certainty and enables businesses to prosper through hard work and ingenuity. Separation of powers also limits the US government in its discretion on how to achieve economic ends internationally. The United States simply doesn’t have large state-owned enterprises or development banks that can be directed to international ends.

The second reason why the United States has been exceptionalist in economic diplomacy is pure realpolitik. As the dominant global power, the US benefited from economic activity almost irrespective of where it occurred around the globe. Immediately after World War II, the institutions set up with the support of the United States to regulate businesses around the globe to a significant extent set rules for its own businesses. But as we transition to a more multipolar world there is a risk that the link between US interests and the interests of the global economy is becoming less clear-cut.

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History shows that increased trade and investment delivers job opportunities and rising living standards. We have all benefited from the US inclination for international rules over the exercise of arbitrary power. Global rules and norms have allowed businesses, and even countries, to specialise in production and for investment to flow where it is most valued. As I have said elsewhere, the rules-based order effectively underwrote the massive explosion of regional incomes – from Japan, to the Asian Tigers of South Korea, Taiwan, Hong Kong and Singapore, and now China, India, Indonesia and others.

Despite some shortcomings, the US model of economic diplomacy is still the right bet for our region. First, it’s flexible. The rules-based order creates the conditions for markets to flourish — and markets pivot faster than governments. Second, it’s voluntary. Relying on markets fits neatly with the ‘ASEAN way’ of doing economic diplomacy which emphasises non-interference and relationship building.

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It is a strength of the system that the rising emerging countries now want to participate in setting the global rules. These aspirations are legitimate and the alternative scenario of competing trade and investment blocs is deeply unappealing.

The rules-based order encourages countries to implement best practice policy settings. For example, in recent decades we have seen US multinationals bring expectations around the rule of law and transparent regulations to markets around the world.

Perhaps most importantly, the US model of engaging internationally — with soft power and economic dynamism — is a success. Economic success is the foundation of economic diplomacy. Failing to pursue policies that foster dynamism, help manage shocks, and deliver citizens what they desire and value, risks the capacity to project power and sustain influence. Economic success makes US society attractive around the world, and it is US businesses abroad which help sell the American dream. US soft power remains unsurpassed.

Without a doubt, developments during President-elect Trump’s term will have a lasting impact on how the United States does business in this region. Yet if the United States retreats, whether in terms of economic, trade or military engagement, there is really only one other single player that could attempt to fill the vacuum. China’s economy is as big as the next 13 largest emerging countries combined, though its GDP growth is obviously slowing as it approaches the technological frontier, and with its ageing and shrinking working population.

It is clear that the United States needs help in maintaining support for global rule setting.

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The United States needs the support of its friends and allies to maintain its focus on this region and on far-sighted and open regionalism. This is in our interest — indeed, in the interest of all countries in the region. With the slump in trade growth, the world has lost a key engine of economic growth that benefits all in the world. This requires other countries to step up and do more of the heavy lifting to advocate for the promotion of open markets, the importance of foreign investment and trade, and the benefits of immigration.

While we all need to get used to US dominance being replaced by pre-eminence, continuing to develop the rules-based order could be the most important legacy bequeathed to our region from the US primacy of the 20th century. US president Calvin Coolidge famously said that, ‘After all, the chief business of the American people is business. They are profoundly concerned with buying, selling, investing and prospering in the world’. Since business is certainly something the new US President-elect knows a lot about, we should all aim to ensure that this legacy will continue.

Martin Parkinson is the Secretary of Australia’s Department of the Prime Minister and Cabinet. This is an edited version of an address originally delivered at the American Chamber of Commerce in Australia in Sydney on 16 November 2016

http://www.eastasiaforum.org/2016/12/05/the-business-of-us-economic-diplomacy-in-asia/

China’s Commercial Diplomacy–The Triumph of the Middle Kingdom


November 9, 2016

China’s Commercial DiplomacyThe Triumph of the Middle Kingdom

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by Dennis Ignatius

http://www.asiasentinel.com

At the height of the Cultural Revolution, “The East is Red became the de facto national anthem of the People’s Republic of China. The composer, reportedly a farmer from Shaanxi province, had, of course, no way of knowing that his song was in fact a harbinger of things to come.

 Some 50-something years later, “The East is Red” is more than an old song. It has become a disquieting political and economic reality.

China has certainly come a long way from the days of the Cultural Revolution. Today, it is a massive economic and political behemoth with equally massive regional and global ambitions. Its new leaders have long since abandoned the veneer of modesty and respect for diplomatic niceties it adopted when it was seeking to gain acceptance in the region.

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China’s new rulers are now focused on the single-minded pursuit of regional hegemony as the first step in their quest for global supremacy.

Giant economic footprint

Nothing better illustrates China’s ambitions than its frenzied regional investment strategy. When viewed as a whole, the investment projects scattered across the region paint a picture of a country determined to use its wealth and economic influence to decisively dominate the region.

Consider, for example, the ambitious “One Belt, One Road” or New Silk Road initiative, which, among other goals, aims to position China as the hub of the entire region.

Stripped of all the rhubarb, it’s really a neo-mercantilist strategy of opening markets for China’s excess industrial capacity, making the yuan Asia’s international currency of choice, and cementing China’s economic dominance of the region.

In pursuit of its ambitions, Chinese state corporations are currently engaged in a staggering array of infrastructure projects, especially rail projects, in Myanmar, Laos, Cambodia, Thailand, Malaysia and Indonesia.

China is also building a deep-sea port in Myanmar which will give it direct access to the Indian Ocean. The project involves the construction of an oil pipeline as well that will allow Middle East crude to be offloaded in Myanmar and then transported overland to China, bypassing the Straits of Malacca. A third of all Myanmar’s foreign investments already come from China.

In Laos, Chinese investments already exceed US$S31 billion, a sum larger than the country’s GDP. China also built, financed and launched Laos’s only communications satellite. In neighboring Cambodia, Chinese companies completely dominate the country’s special economic zone.

Singapore, for its part, plays host to more than 7,500 Chinese companies. Its status as a banking and financial center in Southeast Asia is increasingly dependent on China’s regional economic plans.

In Indonesia, China may already be the largest foreign investor if investments through subsidiaries based in other countries are taken into account. Indonesia’s Investment Coordinating Board expects to secure Chinese investments worth USD30 billion in 2016, doubling to USD60 billion the following year.

Bandar Malaysia – China’s new regional capital

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Malaysia needs China–1MDB Rescue

Malaysia, vulnerable, exposed and ripe for exploitation as a consequence of the massive 1MDB scandal, is set to be the jewel in the crown of China’s ambitious regional agenda. In exchange for a Chinese bailout, significant national assets and lucrative contracts are being handed over to China in a series of murky deals.

China Railway has been awarded both the RM7.13 billion (USD1.71 billion) Gemas-Johor Baru electrified double-tracking rail project and the RM55 billion East Coast Railway project and is a shoo-in for the RM60 billion Kuala Lumpur-Singapore High Speed Railway project as well.

And this comes after China was awarded the RM43 billion Malacca Gateway Project (deep-sea port and ocean park) and the main contract for the first package of the second Penang Bridge project (the longest bridge in Southeast Asia).

One has to wonder whether someone somewhere is dreaming up these projects just for China’s benefit? Is there some secret agreement giving China a lock on all mega-infrastructure projects in Malaysia?

The biggest catch of all, however, is expected to be the Bandar Malaysia project, a colossal monument to avarice and arrogance. With an expected gross development value of RM160 billion, it will feature the world’s largest underground city, shopping malls, indoor theme parks, a financial center as well as the RM8.3 billion regional headquarters of China Railway. When completed, it will turn the Malaysian capital into the most impressive Chinese railway station along the so-called Iron Silk Route linking Beijing with Singapore.

Malaysians haven’t as yet woken up to the monstrosity that is being foisted upon them. Bandar Malaysia, which will cost almost four times the reported cost of Putrajaya, the nation’s administrative capital, will distort the property market, add to the city’s already intolerable traffic congestion, reduce the city’s livability and see the introduction of thousands of PRC workers, contractors and staff.

No doubt much of the residential and office space at Bandar Malaysia will also be taken up by PRC nationals, already a growing presence in the local property market.

All in all, it is an outrageous project designed to benefit cronies, both local and foreign, at the expense of ordinary Malaysians. It serves China’s interest far more than it serves Malaysia’s.

And it would be naïve to believe that such massive investments will not translate into significant political and economic control especially given the almost total lack of transparency on most of these projects. At this rate, Malaysia may well find itself reduced to satrapy status within the emerging Chinese order with Bandar Malaysia the new Chinese regional capital.

ASEAN’s dependence on trade with China

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China also dominates regional trade; it has been ASEAN’s largest trading partner for the last seven consecutive years with trade growing at an annual rate of 18.5 percent. Last year China-ASEAN trade was valued at USD472 billion. It is expected to reach US$1 trillion by 2020. Bilaterally, Malaysia, Indonesia, Thailand, Myanmar, Singapore, Vietnam and Laos all count China as their largest trading partner.

Again, such a commanding economic position coupled with critical control of national infrastructure assets across the region by state companies of a single nation will undoubtedly translate into unparalleled influence, power and control.

ASEAN nations are already so dependent upon China for their economic prosperity that they have no wriggle room left on most issues affecting China. The same can be said of many of the region’s corporations and business enterprises. Even the region’s academic institutions and think tanks have largely shied away from critical commentary on China for fear of being locked out of the web of lucrative Chinese-funded academic institutions, exchanges, grants and conferences.

Common cause with autocrats and corrupt politicians

China’s ascendency has also been facilitated by the rise of illiberal leaders in the region who depend upon China for support and cover in the face of international opprobrium and domestic unpopularity.

Beijing has, for example, long supported the military junta in Myanmar while securing for itself privileged economic access. It is also the Thai junta’s staunchest ally while Malaysia’s leader, faced with a scandal that is being investigated by several international jurisdictions for corruption and money laundering, is regularly feted in Beijing as a special friend.

Indeed, Najib is set to make yet another visit to Beijing next week, his sixth since becoming Prime Mminister in 2009. The visit will decisively shift Malaysia into China’s orbit.

Unsurprisingly, as well, Beijing has also endorsed President Duterte’s murderous campaign against drug pushers at a time when he is facing international condemnation for his actions.

ASEAN effectively neutralized

Taken together, the growing economic and political reliance on China has also given China the upper hand on the South China Sea file.

Malaysia, for example, is so fearful of offending China that it regularly goes out of its way to play down persistent Chinese incursions into its waters and the harassment of Malaysian fishermen. While the Chinese aggressively press their claims, Malaysia dithers and pretends that its “special relationship” with China will keep it safe from Chinese ambitions.

The Philippines, having won a landmark victory at The Hague, now appears to have recklessly squandered its advantage for the better relations with Beijing (and perhaps to foolishly spite the Americans).

Beijing’s terms for a restoration of relations with Manila, however, might prove costly to the Philippines. In a Xinhua report issued on the eve of Duterte’s recent visit to China, it was stated in no uncertain terms what Duterte would need to do to regain Beijing’s favour: abandon “the farcical South China Sea arbitration case brought by Duterte’s predecessor against China… avoid his predecessor’s idiosyncrasies of colluding with outside meddlers [read the US] and making unnecessary provocations [read challenging China’s claims].”

It went on to add that the Philippines must accept dialogue and negotiations over confrontation, conveniently overlooking the fact that it is China who is the aggressor, not the Philippines.

The implications are clear enough both for the Philippines and other Southeast Asian nations: good relations with China must be premised upon an acceptance of Beijing’s maritime claims, an end to close military cooperation with the US and a commitment to engage in meaningless and open- ended dialogue that allows China to pretend that it is a responsible international actor.

ASEAN, which was formed to leverage its strength as a group when dealing with bigger powers, is now proving itself to be hopelessly dysfunctional in dealing with China.

Insisting that territorial disputes must be settled bilaterally (where it is able to exploit its asymmetrical advantage to the fullest), China, with the help of its proxies, Cambodia and Laos, successfully stymied ASEAN efforts to take a firm stand on the issue.

Astonishingly, the Philippines Foreign Secretary called the Vientiane debacle “a victory for ASEAN.” If that was victory, what does defeat look like?

In any case, only the most gullible will believe that China is really interested in negotiations, bilateral or otherwise; it is simply buying time while it changes the facts on the ground and militarizes its positions in the South China Sea.

By keeping silent, waffling and pretending that somehow China is open to negotiations, ASEAN is simply acquiescing in a Chinese takeover of the entire South China Sea. It is also proving the hawks in Beijing right that strong-arm tactics work, that ASEAN does not have the courage to stand up to Beijing.

Witness also the timorous silence of ASEAN leaders with regard to the US policy of vigorously challenging China’s threats to impose exclusionary zones in the South China Sea. Though ASEAN leaders are too spineless to admit it, the US navy is now all that stands in the way of de facto Chinese control of the South China Sea.

Instead of backstabbing the only country that can help keep the region open and free, as President Duterte of the Philippines appears to be doing, ASEAN leaders should augment US efforts by insisting that China demonstrate its own sincerity by committing to a meaningful code of conduct, respecting the recent Hague ruling, and ceasing the militarization of disputed islands.

But, of course, China has so thoroughly neutered ASEAN that such a course of action is now unthinkable.

The triumph of the Middle Kingdom

More than 40 years ago, Southeast Asian leaders had a sense of foreboding about China. Even as they moved to normalize relations with China, they knew that there was going to be nothing normal about dealing with China. Nevertheless, they had hoped that they could foster close economic relations with China without being overwhelmed by it. They also felt confident that they could contain Chinese ambitions within a regional balance of power framework.

Clearly they underestimated the Middle Kingdom and the perfidy of their own successors.

Overdependence on China for investments and trade and the treachery of corrupt politicians have now rendered ASEAN completely vulnerable to Chinese hegemony.

The East is Red! ASEAN might as well hang its logo on the Chinese flag to reflect this new reality.

Dennis Ignatius served in London, Beijing and Washington and was Malaysian ambassador to Chile, Argentina and Canada

Ralph Marshall and Ananda Krishnan (AK) part company


October 8, 2016

 

Ralph Marshall and Ananda Krishnan (AK) part company, says Asiasentinel

http://www.asiasentinel.com/politics/1mdb-criminal-probe-separate-key-aide-malaysia-tycoon-empire/

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Augustus Ralph Marshall parts company with Ananda Krishnan

by Asiasentinel correspondent

Augustus Ralph Marshall, the trusted key aide to T. Ananda Krishnan – Malaysia’s second-richest man – has left all posts in the sprawling cross-media empire as of end September, several sources told the Asia Sentinel.

Marshall has been under investigation in the past few years in India and Indonesia over joint ventures by Malaysia’s dominant satellite television provider Astro and cellular provider Maxis, both part of Ananda Krishnan’s business empire.

Swiss prosecutors have also asked for information on one of the companies Marshall sits in – Tanjong PLC – over money missing in the USD11 billion 1MDB scandal.

Company insiders and those in business circles say Marshall’s exit from Ananda Krishnan’s companies is anything but amicable. “It is a terribly acrimonious break,” said an executive who has worked with Marshall.

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Corporate Malaysia heard rumors of the impending departure from Ananda Krishnan’s empire in the past month but are awaiting announcements to be made in Bursa Malaysia, the local stock bourse, when it opens after the October 3 public holiday to celebrate the Muslim New Year.

“He is leaving AK, and not in the best of ways,” according to a businessman who is close to Marshall. AK is the moniker for Ananda Krishnan, who first made his fortune in the oil and gas boom of late 1970s before entering the telecommunications and satellite television industries.

Ananda Krishnan’s key aide

Forbes has listed Ananda Krishnan as the 158th wealthiest person in the world with US$7.3 billion and second wealthiest Malaysian in March 2016. He was 129th wealthiest in 2015 with a personal fortune of US$9.7 billion but his wealth tanked due falling Maxis share prices.

With nearly 40 years of experience in financial and general management, Marshall has been with Ananda Krishnan when the reclusive tycoon was given a cellular communications license and an exclusive 21-year concession to run Malaysia’s first and only satellite television provider. That license expires next year.

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The brilliant Malaysian Born and Harvard Business School Educated Entrepreneur in trouble with Law in India

The 64-year-old  Marshall was last the executive director of Ananda Krishnan’s private vehicle Usaha Tegas Sdn Bhd and also in ASTRO ALL ASIA NETWORKS plc, where he is also the deputy chairman, apart from being group chief executive officer of Tanjong Public Limited Company, where Usaha Tegas has a significant interest.

Marshall resigned in July 2015 as non-independent executive director of Maxis Bhd, the cellular provider which is partially owned by Saudi Arabia’s dominant provider Saudi Telecom Co, Usaha Tegas also has a significant stake in Maxis.

Marshall, who is regularly cited in the business media in Ananda Krishnan’s corporate deals, found himself in the other sections of regional newspapers in 2014 when police in India filed corruption charges against Dayanidhi Maran, who was India’s telecommunications minister between 2004 and 2007; and his brother billionaire Kalanithi Maran.

Both Ananda Krishnan and Marshall were named in the charge sheet with India requesting extradition but Malaysian police have said the request has not been made officially. Both Ananda Krishnan and Marshall have not discussed the matter publicly.

Reuters reported that India’s Central Bureau of Investigation (CBI) started investigating the Maran brothers and Ananda Krishnan in 2011 after allegations that the telecoms minister had forced the sale of mobile carrier Aircel, allowing Maxis to acquire a controlling stake in 2006.

Maxis Communications Bhd has denied any wrongdoing and said it would vigorously pursue all available legal remedies to defend itself and Marshall, the Reuters news agency said.

In 2012, Marshall was also named a suspect in a case that involved illegal use of operational funds in a company in Indonesia.

The Jakarta Globe reported the Indonesian police were in the process of requesting Interpol to issue a Red Notice against Marshall, who was then group chief executive officer of Astro All Asia Networks. The matter has since been resolved.

1MDB link

In January this year, Ananda Krishnan’s company Tanjong PLC, where Marshall is a top executive, was named in the Switzerland Attorney-General investigations into the 1MDB scandal, the biggest in Malaysia’s history, which has tarred Prime Minister Najib Razak.

The Swiss Attorney-General asked Malaysia’s assistance in its investigations into alleged misappropriation of US$4 billion linked to 1MDB – the first time that a foreign-government investigator has openly waded into the financial scandal.

The Switzerland’s Office of the Attorney-General (OAG) said funds were transferred to Swiss accounts belonging to former Malaysian public officials and were seeking information on 1MDB and its former subsidiary SRC International apart from Malaysian conglomerates Genting and Tanjong said to be connected to the money missing from government companies.

The OAG said four cases involve allegations of criminal conduct – bribery of foreign public officials, misconduct in public office, money laundering and criminal mismanagement. It said these occurred between 2009 and 2013 relating to PetroSaudi, Genting and Tanjong, SRC and Abu Dhabi Malaysia Investment Company (ADMIC), with the cases “each involving a systematic course of action carried out by means of complex financial structures”.

“So far, it has been ascertained that a small portion of the money was transferred to accounts held in Switzerland by various former Malaysian public officials and both former and current public officials from the United Arab Emirates,” the OAG said of the probe it opened in August last year.

Private Saudi energy firm PetroSaudi was involved in a plan in 2009 to jointly develop an oil field with 1MDB but the venture was aborted, with questions raised over the return of 1MDB’s initial investments.

Genting and Tanjong sold power plants to 1MDB at what were considered inflated prices in 2012. ADMIC was a joint venture between Abu Dhabi’s state fund Aabar Investments and 1MDB to jointly develop the Tun Razak Exchange financial hub in Kuala Lumpur.

Outside the tycoon’s ventures, Marshall has interests in the food-and-beverage sector in capital city Kuala Lumpur that ranges from upscale European restaurants to a cricket bar.