China has overtaken Singapore as the largest investor in Malaysia, while thousands of mainland Chinese are taking advantage of the Southeast Asian nation’s generous long-stay visa for wealthy foreigners.
Now, critics warn against the Chinese influx – both in terms of investments and people – as many people fear the Chinese are getting too dominant in the country.
“China is no ordinary investor, make no mistake about that,” Zaid Ibrahim, a Malaysian lawyer turned politician, said in a speech in April in Johor Bahru, a city in south Malaysia which is experiencing massive Chinese property investments.
In his speech, he heavily criticized Prime Minister Najib Razak’s “exceptional generosity” in allowing China to build many infrastructure projects on the basis of “build now pay later” as well as local politicians for giving freehold status for Chinese buyers.
“China is aggressively taking over all the ports in the country and building massive infrastructure. This is not a normal business investment plan; it looks to me to be something more. They are building universities, railways and power plants in Malaysia for their people to take over 20 years from now,” said Zaid who is a former minister in charge of legal affairs and judicial reform.
He welcomes investments, but adds that “we must have leaders who are able to tell the difference between foreign investment and foreign acquisition of national strategic assets.”
“The Chinese have already taken control of the South China Sea,” he said. “What is there to prevent China from owning all of our strategic assets like airports, ports and railways?”
Malaysia has emerged as a favored destination for mainland Chinese investors seeking a cheaper alternative to Australia and Hong Kong.
At the same time, Chinese property investments in cities like Hong Kong, Vancouver or Sydney have sent housing prices soaring, making it difficult for local people to buy homes in any o those cities.
China accounted for 46% of total real estate investment in Malaysia over the past three years and became the country’s number one investor, according to a report from Cushman & Wakefield.
When Malaysia’s Prime Minister Najib Razak returned from China with about US$34 billion worth of deals last November, he faced criticism back home that he was “selling off” his country.
“Malaysia’s economic dependence on any single nation is unreasonable and will affect the country’s freedom and geopolitical strategy and foreign policy,” jailed opposition leader Anwar Ibrahim said in a statement issued from prison.
One of the debated projects is Forest City, a gigantic real estate scheme across the strait from Singapore, developed by China’s third biggest property giant, Country Garden. When finished, it will house 700,000 people, most are expected to be from mainland China.
Former Malaysian prime minister Mahathir Mohamad has reportedly warned that the Forest City development will leech money and jobs to foreign companies while bringing in hundreds of thousands of immigrants.
“I categorically welcome foreign direct investment (FDI) from China as I welcome FDIs from any country. What I object to is the kind of FDI from China.
“It is not about investing in manufacturing industries in Malaysia. It is about acquiring land in Malaysia, building settlements, towns and cities, which are to be sold to mainland Chinese who will come and live here.
“It is this massive immigration that we object to. If the project is by Indians and a few million Indians are to come and live in Malaysia, we would also strongly object,” he said in a blog posting.
Malaysia has attracted a wave of Chinese expatriates lured by the promise of unpolluted skies, a low cost of living and closeness to Singapore. The Chinese are by far the single biggest nationality to have taken advantage of a foreign residency program launched in 2002, known as Malaysia My Second Home. The influx has been dubbed the “third wave” of Chinese immigration.
Faisal Hazis, of the National University of Malaysia’s Asian Studies Center, has warned that Malaysians might not be comfortable with an overabundance of foreigners coming to Malaysia and eating into the market.
“If this happens it may strain the relations between Malaysians – regardless of race – and Chinese nationals,” he said.