Abstract
This chapter analyzes Malaysia’s participation in the Belt and Road Initiative (BRI), focusing on the types of BRI projects, financing mechanisms, and economic implications for Malaysia. The BRI, initiated in 2013, has significantly broadened the horizons of trade and investment between China and Malaysia. Nevertheless, there are various concerns, criticisms, and reservations about BRI projects among participating countries, largely stemming from the controversial nature of BRI-linked projects. These controversies primarily stem from a lack of transparency in project implementation, the scale and risks associated with mega projects, funding mechanisms, and uncertain impacts on host countries. Issues such as project viability, debt sustainability, control over strategic assets, socioeconomic and environmental impacts, and operational effectiveness are central to the discourse on BRI investments. The impact of the BRI on Malaysia’s debt sustainability is contingent on the commitment and approaches of both the lender and recipient. Malaysia’s manageable external debts, predominantly denominated in its currency, coupled with strong export earnings and economic growth prospects, create a positive outlook. In addition, Malaysia’s exposure to Chinese debt is manageable and comparatively low. However, to ensure the long-term sustainability of BRI projects, close collaboration between the governments of Malaysia and China is essential to enhance transparency in loan negotiations, mitigate potential risks, and channel financial resources toward viable projects to ensure sustainable BRI development in Malaysia.
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Notes
- 1.
Tritto (2019).
- 2.
McKenzie (2022).
- 3.
Nedopil (2022).
- 4.
Khor (2018).
- 5.
[Press Release] (2018).
- 6.
World Development Indicators (2022).
- 7.
Cheng (2021).
- 8.
“China remains Malaysia’s largest foreign partner for manufacturing sector (2021).
- 9.
Gomez (2020).
- 10.
See footnote no. 13.
- 11.
Hutchinson (2020).
- 12.
Brautigam (2021).
- 13.
Jones (2020).
- 14.
Singh (2021).
- 15.
Other official flows (OOF) (indicator), OECD, 2023, http://doi.org/10.1787/6afef3df-en.
- 16.
Ibid.
- 17.
Malik 2021.
- 18.
Ibid.
- 19.
Horn (2022).
- 20.
Custer (2021).
- 21.
Belt and Road Initiative (2019).
- 22.
IMF official: BRI an ‘important contribution’ to global economy (2019).
- 23.
Yeap (2022).
- 24.
Malaysia: 2022 Article (2022).
- 25.
Ibid.
- 26.
Bank Negara Malaysia (2022).
- 27.
Explainer: Malaysia’s ex-PM (2022).
- 28.
Malaysia says recovered 1MDB (2022).
- 29.
1MDB: The playboys (2019).
- 30.
Ali (2018).
- 31.
China’s Belt and Road (2018).
- 32.
Yeap (2022).
- 33.
According to the definition of AidData, “AidData first converts the financial commitment (or pledge) amount in its original currency of denomination to nominal U.S. dollars at the average exchange rate in effect during the commitment (or pledge) year, and then converts this amount to constant 2017 U.S. dollars using the OECD’s deflation methodology to adjust for inflation and ensure comparability over time and space.” (Custer et al., 2021).
- 34.
IWH-CREC Sdn Bhd (ICSB) (2021).
- 35.
Chow (2022).
- 36.
Cheng (2021).
- 37.
World Bank classification is based on Gross National Income (GNI) per capita using the World Bank Atlas method. The World Bank divides the world's economies into four income groups: high, upper-middle, lower-middle, and low income countries. The threshold and countries classification will be adjusted every year on July 1. As of 1992, upper middle income economies are defined as those with a GNI per capita range from US$2,696 to US$8,355. https://datahelpdesk.worldbank.org/knowledgebase/articles/378834-how-does-the-world-bank-classify-countries.
- 38.
Tham (2018).
- 39.
Dychtwald (2021).
- 40.
China Becomes Top Filer of International (2020).
- 41.
Malaysia digital economy blueprint (2021).
- 42.
The “Two Countries Twin Parks” refers to the sister parks of the China-Malaysia Qinzhou Industrial Park (CMQIP) located in Qinzhou, China and the Malaysia-China Kuantan Industrial Park (MCKIP) in Kuantan, Malaysia.
- 43.
Cheng (2022).
- 44.
Cheng (2022).
- 45.
Cheng (2022).
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Cheng, M.Y., Fok, K.F. (2024). BRI in Malaysia: Debt Trap or Leapfrogging Opportunity?. In: Peng, N., Cheng, M.Y. (eds) The Reality and Myth of BRI’s Debt Trap. Indo-Pacific Focus. Springer, Singapore. https://doi.org/10.1007/978-981-97-1056-0_8
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