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COVID-19 Causes Malaysia to Seek Review of China-backed Construction Projects

Ray Sherman
Kuala Lumpur
2020-06-19
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A worker walks past tunnel construction at the East Coast Rail Link project in Dungun, Terengganu, Malaysia, July 25, 2019.
A worker walks past tunnel construction at the East Coast Rail Link project in Dungun, Terengganu, Malaysia, July 25, 2019.
Reuters

Malaysia this week sought a re-examination of One Belt, One Road (OBOR) construction projects with China as the region and the world combat the coronavirus pandemic.

Foreign Affairs Minister Hishammuddin Hussein raised concerns about the projects during a high-level video conference of more than two dozen nations on Thursday. China hosted the meeting, which focused on international cooperation on OBOR and maintaining solidarity while battling COVID-19, which has infected more than 8.5 million people and killed more than 450,000 worldwide.

“For our discussion today, it will be beneficial for us to be advised on how previously announced initiatives under [One Belt, One Road] will progress, especially if the pandemic has disrupted our plans to move forward,” Hishammuddin said, according to a transcript of his statement that was released on Friday.

“As we know, the global landscape has now changed, and business cannot be as usual. It is imperative we receive some guidance as to how future plans will be tailored or fine-tuned to best match our situation, moving forward,” he said.

Pointing to its success in controlling the spread of COVID-19, the Malaysian government has slowly eased lockdown restrictions to allow economic sectors to resume operations.

The easing allowed construction to resume on the Chinese-financed East Coast Rail Link. Approved in 2016, the OBOR project had been halted for more than a year before resuming in July 2019 after the government of then-Prime Minister Mahathir Mohamad renegotiated to slash its price by about a third.

One Belt, One Road is Beijing’s geopolitical strategy to build a modern-day Silk Road through a network of ports, railways, roads and trade routes, which will connect China to markets in Southeast Asia, South Asia and beyond.

On Friday, an official with China’s Ministry of Foreign Affairs said about 20 percent of the OBOR projects had been seriously affected by pandemic, but he did not give any details, according to Reuters news service.

Wang Xiaolong, director-general of the ministry’s International Economic Affairs Department, told reporters in Beijing that another 30 percent to 40 percent of the projects had been somewhat affected, adding that the results were better than expected. China has contracts with more than 100 countries for railways, ports, highways and other infrastructure projects.

“As the situation improves we have confidence that the projects will come back and the execution of them will speed up,” he said, according to Reuters.

Strategy statement

Following the video conference, attendees released a 19-point joint statement regarding their efforts to work together.

“The COVID-19 pandemic poses a serious threat to human health, safety and well-being as well as the socio-economic development of our countries and the world at large. Our first priority is to contain the spread of the virus, save lives and safeguard global public health,” the statement said.

The attendees called for investment in sound and resilient health-related infrastructures: “We will provide necessary health care support for each other’s citizens affected by COVID-19 in our territories including the frontline health workers.”

They also reiterated their commitment to implementing the 2030 Agenda for Sustainable Development and the Paris Climate Change Agreement.

“Building on the progress already made, we will move forward with our cooperation on economic and transport corridors, economic and trade cooperation zones and other Belt and Road practical cooperation, in accordance with respective national development agenda[s], to further boost economic growth, social development and the improvement of people’s livelihood,” the statement said.

Malaysia: A united response required

In his remarks to the conference, Hishammuddin said the pandemic must be effectively controlled to allow economies to fully recover.

“Malaysia’s efforts alone will not be enough to restore global trade and flow of goods and services in the post-pandemic era. This requires a united response, because of how connected and interdependent our economies are,” he said. “This is what [OBOR] is all about – ensuring supply chain connectivity along with the smooth flow of essential medical, food, and supplies across borders.”

He said critical infrastructures for trade and trading routes through air, land and sea must be preserved and kept open to gradually reestablish economic stability and security around the world.

China has been Malaysia’s largest trading partner since 2008. Trade between the two countries accounted for 17.2 percent of Malaysia’s total in 2019 and is valued at 315.9 billion ringgit (U.S. $74 billion), according to Malaysia Trade External Statistics.

This year, bilateral trade has dropped significantly because of the COVID-19 pandemic, according to officials, who listed Malaysia’s partial nationwide lockdown and closing of borders to contain the pandemic as among the actions that eroded the economy.

Along with host country China and Malaysia, other countries participating in Thursday’s teleconference included Indonesia and Thailand.

On Friday, the Thai government signed a multi-billion dollar contract with the U-Tapao International Aviation Co. to construct an airport in the Eastern Economic Corridor that will be linked to an OBOR railway project, officials announced.

“This signing ceremony confirms the commitment in government-private cooperation involving government-initiated projects,” Prime Minister Prayuth Chan-o-cha said. “Thailand will be the regional hub in aviation, spurring investments, job creation, new town creation and industries in the EEC.”

Nontarat Phaichareon in Bangkok contributed to this report.

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