Chinese investors flocking to Malaysia(2)

New targets

Tan Sri Dato' Haji Muhyiddin, deputy prime minister of Malaysia, has vowed to provide Chinese investors with a profitable investment conditions.

Muhyiddin said that apart from the traditional fields, infrastructure including real estate has become Chinese investors' new target in Malaysia.

The Construction Industry Development Board of Malaysia has also called on Chinese companies to increase their investment in the industry.

The Malaysian government has budgeted a total of 230 billion ringgit ($75 billion) for its investment plan. And 60 percent of this government development expenditure is allocated for physical infrastructure development, while the rest will be spent on non-physical infrastructure development.

According to the board, domestic market participation by foreign contractors in Malaysia accounted for 16 percent of the total project value in 2011, compared to 10 percent in 2010.

The number of projects awarded decreased by 22 percent but the monetary value increased by 34 percent. This indicates that foreign contractors are securing fewer but higher value projects.

Foreign contractors undertake projects that require specialized expertise or those financed by foreign investors, the report said.

According to the Ministry of Commerce, Chinese contractors completed contracted construction valued at $21.5 billion in ASEAN markets.

China Harbour Engineering Co Ltd is building a 22.5-km bridge connecting Penang to peninsular Malaysia. Construction of the bridge began in 2008, and 90 percent of the project has been completed so far.

The Export-Import Bank of China has so far offered loans totaling $286 million to the project.

Many Chinese construction contractors have already started to invest in projects in the country.

"As the biggest market among ASEAN countries, we will seek business opportunities there to deepen our presence in emerging markets," said Zha Changmiao, a spokesman for China Communication Construction Co Ltd, the parent company of China Harbour Engineering Co Ltd.

China and Malaysia have boosted their investment ties in recent years. In 2010, China's investment in Malaysia reached $65.97 million, up 22.7 percent year-on-year.

Ong said that Malaysia is taking measures to boost Chinese investment in Malaysia, as it's still in its infancy, compared to Malaysian investment in China.

By the end of 2011, Malaysia had invested nearly $6 billion in China, while China's investment in Malaysia stood at just $800 million, according to the Malaysian embassy in China.

"The establishment of two economic cooperation zones will further boost bilateral investment and trade between the two countries," Muhyiddin said.

The China-Malaysia Qinzhou Industrial Park in the Guangxi Zhuang autonomous region is the third industrial park created through a partnership between China and a foreign government. The park serves as the latest symbol of the friendship between the two nations and a platform for cooperation.

A second industrial park between China and Malaysia will be opened at the end of the year in Kuantan in the Malaysian state of Pahang.

"There is no doubt that the Qinzhou and Kuantan industrial parks will create many trade and investment opportunities for both countries," Ong said.

"We are expecting to attract 7 billion yuan in investments and create 5,500 jobs upon its full completion by 2020."

Datuk Seri Liow Tiong Lai, vice-president of Malaysian Chinese Association, said the 607-hectare park was expected to boost economic growth and generate downstream activities for the local business community.

Liow said the project would not have materialized without the full support and commitment of the state government led by Mentri Besar Datuk Seri Adnan Yaakob.

"The federal and Pahang governments share a close working relationship and mission to bring about economic prosperity and lift up the well-being of the people," Liow said.

After the completion of Kuantan Industrial Park, Malaysia's iron ore could be exported from Kuantan port to Qinzhou port to support the development of the shipping and automobile industries in the China-Malaysia Qinzhou Industrial Park, according to Ong.

Meanwhile, Kuantan port will become a container terminal hub in Southeast Asia, establishing smooth interaction with the Qinzhou tax-free port.