Why It Matters

Malaysia's heavy reliance on China

An artist's impression of the Melaka Gateway, which will be completed in 2019. PHOTO: MELAKA GATEWAY

Malaysia has talked up expectations that a new port in Malacca will be the region's largest after it is completed in 2019. But while the government insists the new harbour is necessary to serve a growing economy, industry players are concerned about a glut as its existing ports are underutilised.

The five Peninsular Malaysia ports, including the main Port Klang, all have excess capacity in terms of container throughput and some are eyeing expansion.

The Melaka Gateway port is just one of several infrastructure plays that Prime Minister Najib Razak is rolling out. There are three MRT lines in the works, a highway that spans the length of Sarawak and Sabah in Borneo, and extensions and upgrades to existing rail networks.

The Malacca port project, however, is yet another project in which China has taken up a major stake.

The Malaysian leader returned from Beijing earlier this month after inking a RM55 billion (S$18 billion) deal to link Port Klang to Kuantan - where a Chinese company also has a large stake in the port and industrial park - on the east coast and on to the north-eastern outpost of Kota Baru.

Even Bandar Malaysia, the much-vaunted new township that will be the Klang Valley's new transport hub, is now being spearheaded by a Chinese-controlled consortium.

Foreign investments in multiple mega-projects are usually a good sign for the economy.

Still, Malaysia also has its fair share of white elephants, such as the underutilised National Stadium complex, the Formula One circuit, and the forgotten Biovalley project to boost agricultural efficiency.

To supporters of the new, heavy reliance on China, Beijing's involvement could signal a flood of business opportunities from the world's second-biggest economy heading to Malaysia, in a time of deep uncertainty over the trade leanings of United States President-elect Donald Trump.

A version of this article appeared in the print edition of The Straits Times on November 16, 2016, with the headline 'Malaysia's heavy reliance on China'. Subscribe