Last week’s election of nonagenarian ex-leader Mahathir Mohamad in Malaysia, widely hailed as an important democratic milestone for the region, will also likely have wide-reaching strategic implications.
Mahathir’s return to power promises to bring a more robust and assertive Malaysian foreign policy, particularly vis-à-vis China, and with it a possibly firmer collective regional position.
As an undisputed strong leader who for decades played a central – and often controversial – role in regional affairs, Mahathir is expected to resume quickly his previous outsized role at the Association of Southeast Asian Nations (Asean), a ten-member regional bloc.
His critical position on China, a stark contrast to his predecessor Najib Razak, who struck a cozy and lucrative accommodation with Beijing, is already notable. From Mahathir’s perspective, Chinese investments have not necessarily been beneficial to ordinary Malaysians or local companies.
“Here we gain nothing from the [Chinese] investment…[w]e don’t welcome that,” he said on the campaign trail before the May 9 elections. He has also questioned the terms and economic value of Chinese investments in the country, particularly in the real estate and infrastructure sectors.
The former Malaysian strongman and current prime minister has also warned about an “influx of huge numbers of foreign [Chinese] people” into the country’s luxury real estate market, which he says could push up housing costs across the country.
In particular, he has questioned the Country Garden Holdings Co Ltd, a Guandong-based company that plans to invest as much as US$100 billion in Malaysia’s southern Johor state to build apartments with an average price tag of US$258,000. “We don’t have enough people with wealth to buy all those very expensive flats, so you’re bringing in foreigners,” exclaimed Mahathir in an interview with Bloomberg.
He has also raised doubts about the viability, as well as long-term strategic implications, of large-scale Chinese investments in Malaysia. Mahathir has cited examples like Sri Lanka, which recently conceded to a century-long debt-for-equity lease of public infrastructure (the Hambantota port) to China as repayment for debts it could not service.
“Lots of people don’t like Chinese investments,” Mahathir said. “We are for Malaysians. We want to defend the rights of Malaysians. We don’t want to sell chunks of this country to foreign companies who will develop whole towns,” he continued.
China was the top investor in Malaysia last year, responsible for as much as 7% of total foreign direct investment inflows. But many of those investments could soon become ensnared in local politics, as Mahathir moves to open investigations into his predecessor Najib’s financial and business dealings.
China became Najib’s main external backer, a relationship that may have pulled Beijing into the now notorious 1Malaysia Development Berhad (1MDB) scandal, in which the ex-leader stands accused of pilfering billions of dollars from a state fund.
“One of our partners in building the high income, high skills Malaysia of the future is China’s business community. I make no apology for saying that,” argued Najib earlier this year amid rising criticism over his reliance on Chinese investment.
Najib’s critics believe China essentially bailed out his administration by providing a financial lifeline to 1MDB, a state investment arm Najib created.
In recent years, traditional partners ranging from the United States to Singapore and France have launched criminal probes and frozen accounts associated with the 1MDB fund, which Najib oversaw as the chairman of its advisory board.
By going after the former administration’s questionable deals, Mahathir’s government is bound to reevaluate, if not downgrade, some of Najib’s major business deals with China. In fact, Mahathir has promised to place Chinese investments under greater scrutiny.
Malaysia may follow in the footsteps of the Philippines in the early 2010s, when the former Benigno Aquino administration launched investigations into major corruption scandals under the predecessor Gloria Macapagal-Arroyo regime.
Aquino’s government zeroed in on various big-ticket Chinese infrastructure projects, including a scheme to outfit government offices with broadband internet, which were mired in irregularities and graft that allegedly benefited Arroyo’s family and allies.
Setting a new tone, Mahathir has also taken a tougher stance on the South China Sea disputes. In previous years, Malaysia adopted a “keep quiet” diplomacy vis-à-vis China’s maritime assertiveness, in apparent hopes of preserving robust economic ties.
In a departure, Mahathir has raised concerns over China’s militarization of the disputes and seeks to “ensure our voice is heard because Malaysia does have islands in the area and this we must uphold.”
In an interview with the Financial Times, he described China’s new leadership as “more ambitious” in its willingness to “flex their muscles a bit and that is very worrisome.”
He also raised has concerns over China’s ability to rapidly “increase their influence over many countries” in Southeast Asia, even “[w]ithout actually conquering” them.
Mahathir is expected to leverage his influence within Asean to push for a more robust and coherent regional approach to the South China Sea disputes.
Along with former Singaporean Prime Minister Lee Kuan Yew, Mahathir played a sustained and influential role in shaping Asean into a geopolitical force in the world.
And in a regional body where seniority carries weight, the 92-yeear-old Mahathir’s larger-than-life figure could portends a more assertive Asean via-a-vis China and in handling regional security crises.
Maher is too old to rule
casts a cold hard gaze? dear richard, I think you pick the wrong profession, you are more suitable to write fiction than news article.
The dude is 92 and living on borrowed time. He’ll be lucky to serve out his term.
"China was the top investor in Malaysia last year, responsible for as much as 7% of total foreign direct investment inflows."…..
7%? WTF!
If you believe the hype this author and other western media is trying to stir up, you would think this number should be 35-70% of total foreign direct investment inflows.
Cold hard gaze? Right. Dream on. Malaysia will do what’s best for Malaysia, and trade and investments will be welcomed, from China and everywhere else. There will be more transparency and discernment, but this is not a country that is in for confrontation and conflict.
As Mahathir says, Malaysia is friendly with everybody. The fact of the matter is the US has no capital to invest abroad. In fact, it is lobbying for investment to rebuild its infrastructure — something which Najib absurdly promised little Malaysia for the world biggest economy. That contributed in part to his downfall. The writer is engaging in wishful thinking.
Very good assessment, reflected the political thinking of the new pm.
Any article likes this will no doubt attract Chinese trolls!
Clowns like Hayderian will grab at any straws to support their narrow view and agenda. Mahathir is very pragmatic. He fully agreed with the Belt and Road and AIIB. You can see a youtube where he said this. In the youtube, he fully agreed with the way the CCP is governing China unlike the colonial whites, like the Australian Foreign Minister, Julie Bishop who thinks she is qualified to lecture the CCP on how to run China.
Mahathir’s only intention is to review the contract for better terms and to expose any corrupting clauses that may be forced onto the contractors by the previous government. A very common corrupting trick is to require the contractor to appoint consultants ( recommended by the previous corrupt government ), thus pushing up the total contact price.
Richard Truong, please read the article. And better please pay attention to the campaign rather challenge my comment.
Richard Javan Heydarian,
Let me start by assuring you that you wrote a splendid article. But who wrote the heading and the short preamble that followed it?
Totally and blatantly egregious and outrageous! Totally out of context! It is incongruous with your more genteel matter of fact account.
Read it again yourself to see how it appears to have the intent to provoke, to stir discontent and suggest that Tun M has some personal chip on the shoulder against China or the Chinese, that he is essentially inimical, ill-disposed and castigatory of all things Chinese,
"Mahathir casts a cold hard gaze at China. Malaysia’s leader looks to go toe to toe with Beijing, from scrutinising Chinese investments to challenging its moves in the South China Sea"
You make our PM look so disparaging and unfriendly!
Our good PM has consistently assured the world that it wants good friendly relations with all nations particularly those it has a special or strong link of relationship with. And China is our largest trading partner!
He has also said in the past that Malaysia is a small country and has no intention to take a global stage and get embroiled with geopolitics. So why would you imply that our PM could be so pompous as to go ‘toe to toe’ with Beijing as if ‘thrust and parry’ in fencing between the U.S. and China. We would not be so swell-headed!
What do you mean by ‘scrutinising’ Chinese investments? Our PM made a ‘down to Earth’ comment only about the Chinese developing luxury housing township built in basically remote or rural and therefore traditionally culturally conservative areas. He was concerned about social and cultural sensitivities and impact on our traditional landscape. The same would apply if the Americans were to do the same as the Chinese. We do not want our native rural landscape to turn into downtown Beijing or New York! The Chinese would feel the same themselves if we Malaysians flushed over their rural landscape. But more to point our PM expressed an open opportunity to our participation in China’s OBOR! These investments are more to do with enhancing economic productivity and capacity, which obviously we have no objection to.
And no, our PM is not openly challenging China in the South China Sea. We are not scared of our enemies if we have any if they come intruding directly into our territory. Speaking of what is near but outside our territory, our PM is speaking the obvious truth – that the presence of warships in the South China Sea would only attract other and more jwarships. We Malaysians would prefer our backyard and environs to be free from military action and from this ‘devil may care’ ‘I dare you’ sort of armwrestling between the two superpowers.
Do you really think that our PM would say or meant things the way and manner you insidiously connote when we are a multiracial society, and racial problems were partly the reason why the BN government was ousted in the recent GE14? And being truly Malaysian means we are very careful about race sensitivities. If we have something to say about the Chinese it would not be about the Chinese per se but about a particular item, incident or principle. We do not profile the Chinese as if we are xenophobic!
Vincent Cheok
Interesting piece and some interesting comments. I myself wonder if Mahathir’s campaign rhetoric will survive the light of real responsibility, but also think China has to pay attention to the negative reactions of some people all across Southeast Asia.
Personally, I love to see China rising, but it has to be a big country that is seen as benefiting those around it, not seen as exploting them. I haven’t enough information to give an opinion on whether its current practices are exploitative or not. But people’s impressions of them count.
A good article. A new chapter for Malaysia. Dean, EU.
Sorry to disrupt Heydarian wet dreams.
Yesterday Tun Daim and Dr Zeti, both from the Council of Eminent Persons briefed the bankers. One of the objectives of the Council is " no bias towards China investment as long as there is appropriate governance and the cost is not excessive." By no means can this be translated as " going toe to toe with Beijing."
Wishful thinking. Mahathir is an Asian nationalist. China is a rising economic power and Mahathir is wiser than Richard.????
That is a mark of an excellent leader!!! A two thumbs up to PM Mahathir
Why?
But his brain is stronger
Go ģo Dr.Mahathir people will support you against this bully.
To leaders like Mahathir, his country is important not his life. Wish we had wise leaders like him in India.
Return of this old stalwart is good for Malaysia. He will take tougher stance against China.
China entraps and explois host countries by providing soft loans. Developing countries like Shri Lanka, Pakistan, Bangla Desh and several African countries will soon find it hard to extricate themselves from the Chinese trap. China does what is good for China and there is nothing wrong in that. Do, accept Chinese investment, but exercise caution.
Agreed.He is no doubt a great leader but such a senior age is certainly supposed to create complications in running a modern state.
Hopefully he has got some wisdom in his old age. I didn’t like him when he was in power but he appears to be talking straight now. China will loan money, which Malaysia has to pay back. They will bring their own construction companies, engineers and workers and probably sell apartments to rich Chinese. The money will stay within the Chinese orbit and profits will go back to China. The only thing for Malays will be to sweep the drives and clean the aparments. You only have to look at the trouble the Chinese are making in Canada, Australia, Cambodia and elsewhere to see there will be nothing good coming out of Chinese money. For Malaysia, this foolishness will be paid for by grandchildren.
HIS brain is better than Du30
Another Nostrsdamus. Can you predict something about Donald Trump
All of us are living on borrowed time. No one is living here permanently.
Arif Abbasi He build the modern state
Deva Thasan – fortunately or unfortunately, he will be re-elected ????
GOD BLESS YOU! You are a great leader and someone like you is what the world needs now.
Philip Ling Exactly!
Tun M 93, willing to take on China’s expansionist muscle, makes Duterte looks like a kampung/village gangster.
Caloy Carpio Long live President Duterte! Down to haters!
RICHARD JAVAD HEYDARIAN is an old China detractor. He has nothing good to say on all things about China. Worse than Gordan Chang,
This article is now totally discredited by nione other than Dr Mahathir himself in his most recent interview on the South China Morning Post.
Sgp brings in investment that what M’sia needs yet received not word of praise from him
Caloy Carpio you’re definitely right in saying that!