Will China Regain Its Lost Deals With Najib’s Return? | Malaysia News
December 9, 2021

Will China Regain Its Lost Deals With Najib’s Return?

Najib Razak, former Prime Minister, is back as an unofficial adviser to Malaysian Prime Minister Ismail Sabri Yaakob, representing a spark of hope for China.

It means that China may, after all, see its prized Belt And Road Initiative boosted with the revival of several abandoned rail and infrastructure projects in Malaysia.

During his 9-year reign as Prime Minister, Najib and China built a strong relationship. Najib gave banking licences to China Bank and roped Chinese construction companies in billion-dollar infrastructure projects in Malaysia.

He sold the national car company, Proton, the pride of his nemesis Tun Dr Mahathir Mohamad to the Chinese carmaker, Geely.

THE FALL OF NAJIB

But a surprise defeat in the 2018 elections at the hands of the Pakatan Harapan coalition led by the veteran Mahathir sent him packing.

The fall of Najib had far-reaching implications for China and its involvement in Malaysian development projects.

With the fall of Najib, the development projects in Malaysia led by China ground to a halt. China’s fortunes in Malaysia plummeted not only because of a regime change but also because of a surge in nationalist sentiment.

After all, Mahathir came to power following a campaign rife with anti-foreigner and anti-Chinese sentiments, and Mahathir felt compelled to stop China’s wholesale takeover of Malaysia.

It meant that several key projects with Chinese involvement were suspended or scrapped because of cost issues and debt woes.

Then-Prime Minister Mahathir renegotiated a rail development agreement with Beijing, forcing the Chinese to reduce the cost of the East Coast Rail Link, or ECRL, project through realignment.

Malaysia slashed the cost of the China-backed ECRL construction project by about a third in a “more fair” renegotiation with Beijing, avoiding a potential $5 billion cancellation penalty.

But that was not the only setback for Beijing in Malaysia. Mahathir’s government scrapped the High-Speed Rail between Malaysia and Singapore. Rumour had it that China would bag this $10 billion project altogether.

Another project that took the hit from the Mahathir government after the fall of Najib Razak is the Forest City in the state of Johor, which borders Singapore.

The rising anti-Chinese sentiment in Malaysia meant that the 1,370-hectare integrated residential development in Johor Bahru, inaugurated by then-Prime Minister Najib Razak and approved by Johor Sultan Sultan Ibrahim Ismail, was doomed to fail.

In Aug 2018, Mahathir Mohamad said he wanted to prohibit foreigners from purchasing residential units in the US$100 billion Forest City project. It was a massive setback for the Chinese developer Country Garden Holdings Co Ltd.

The plan was to build a city for 700,000 people in the Malaysian state of Johor, which borders Singapore. Uncertainty dogged the project over almost one million Chinese citizens will be the occupants of the luxurious apartments.

CORRIDORS OF POWER

However, the return of Najib Razak in the corridors of power, where his party, Umno, now holds the reins, may show that China has stuck good luck in the tiger’s year.

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It could also mean that the so-called ‘negotiator,’ Malaysian financier Jho Low or Low Taek Jho, suspected 1 Malaysia Development Bhd mastermind, has a lot more coming his way.

Jho Low appeared as a negotiator willing to broker a better deal for Malaysia in the ECRL project during the brief reign of the Pakatan Harapan government.

The Mahathir government also discovered that Jho Low was allegedly behind the deals in Malaysia involving Chinese construction firms, with Najib and the shady financier allegedly sharing kickbacks.

Tun Daim Zainuddin, a former finance minister during Mahathir’s first term as Prime Minister in the 1980s, also claimed Jho Low contacted him during the ECRL project’s lengthy negotiations with Beijing in 2018.

The latter wanted a cut of the action, but the Mahathir government was searching for Jho Low through Interpol. They turned him down. Jho Low denied contacting Daim or the Mahathir administration about the ECRL.

Nevertheless, the link between Jho Low and Najib came to light in the 1MDB-inked SRC International trial. It will raise additional concerns.

If these links are true, could they serve as a springboard for the revival of Chinese projects in Malaysia?

China regards the rail links and other infrastructure projects (ports and roads) in Malaysia as part of its prized Belt and Road Initiative.

Any help in reviving the abandoned and renegotiated deals with the Malaysian government would benefit China in the restructured global geopolitical situation.

A week ago, there were signals that China would find it desirable to see Singapore emerge as a reliable financial and technology hub in Southeast Asia.

The COVID-19 pandemic outbreak has exacerbated existing geopolitical tensions between superpowers, shattering the existing global order and nearly bringing the world to its knees.

Singapore is now ready to compete with Hong Kong in efficiency, stability, and trustworthiness, especially after the upheaval caused by the clampdown on Hong Kong’s democracy activists.

Adding Malaysia to the BRI’s missing links via the ECRL, HSR, and other major projects linked to Singapore will be a plus for Beijing.

Najib Razak’s presence in the corridors of power and as a non-official economic adviser to Prime Minister Ismail Sabri will instil hope in China.

However, both China and Najib will have to deal with the renewed nationalistic sentiments in the Umno.

The coalition of Umno, Bersatu (the party of former Prime Minister Muhyiddin Yassin), and the Islamic Parti Islam Se-Malaysia are shaky.

If Najib wants to see the revival of the old development projects he engineered with the help of China while he was PM, Najib will have to fight through the ruins of the 2018 defeat and the 1MDB trials to keep this alliance together.

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