Impactful China investments for post-Covid recovery
Published on: Sunday, October 25, 2020
By: Datuk John Lo
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My article was NOT a political statement but is for sheer economic survival necessity for Sabah. Between the publication of this article and now, the Covid-19 cases have skyrocketed. Sabah is by far the worst, with more than 50pc of total cases in Malaysia and a number of deaths. The re-imposed ongoing CMCO will trigger more knockout blows on our already fragile economy.
Listen to the Hakka folklore wisdom: “more fight, more dead”. Now more than ever, unite to fight our way back to normality. No point fighting to worsen the dire economic mess we are already in. We must unite and fight to regain prosperity
Empowerment policies and investments to expedite economic recovery.
I don’t have privy to the latest Sabah government’s financial position but won’t be surprised that it is not robust. Even the federal government has been forced to seek parliament’s approval to increase the national debt ceiling. Sabah does not have the luxury of this option nor many fiscal and monetary options. Adding to this woe, Sabah government’s traditional revenue sources are shrinking. Its reserve must be depleting quite rapidly for a while already.
To replenish state government’s weakened financial resources and to spur economic recovery, it can [a] implement empowerment policies for the private sector to take up the slack. [b] introduce policies to encourage investments. I like to touch on attracting Chinese investments today.
Why China?
This question is best answered by looking at the map. In the very much weakened global economy, Sabah cannot succeed to attract investments from South Korea, Taiwan, Singapore. Domestic investments are also unlikely. USA has no investment in Sabah for years. The Americans may come if we allow them to build a military base here!
Some key points on Why China? [a] First is close proximity. Flight time is only 3 hours away, shipping only a day or two. [b] Sabah can produce many things that can meet Chinese requirements like food security and raw materials. [c] China has gone a very big way to help with development in Africa for economic complementary reasons. Sabah can be China’s option. [d] China and Sabah have little communication, cultural and food barriers. [e] China is the only major economy that has firm economic recovery in 2020. All other countries are languishing in negative territory.
Important advantage if Sabah leaders know how work with China.
A deeper understanding and appreciation on how China works in term of oversea investments by Sabah leaders are pre-requisites. W Malaysian leaders are miles ahead.
There is a vast difference in quality of economic returns from China’s presence in W Malaysia and Sabah. Sabah leaders’ lack of economic leadership in this respect is very obvious. China has set up many manufacturing and infrastructure facilities, logistic support and commercial linkages in W Malaysia, more are expected because of the ongoing trade and geopolitical tension from USA. Sabah has nothing like these. We have got contractor companies which by their very nature, will earn money from Sabah. China’s contribution to Sabah’s economy is very little. This is not a China problem. This is Sabah’s problem. The problem is our leaders – too much politics and not paying sufficient attention to Sabahans’ economic sufferings.
Good examples are the lack of positive results from official visits [a] by government leaders and trade delegations to China. [b] signing of billions of “investment agreements”. [c] visits by Chinese investors. Reasons or excuses are many but it is still all thunders and lightnings but where is the rain?
To know what can attract Chinese investments, Sabah leaders can equip themselves with a better knowledge on China, May I recommend them to watch Martin Jacques’ YouTube “Why we need to know about China”
YouTube “Why we need to know about China”
[https://www.youtube.com/watch?v=LRewnxIjo8w
Martin Jacques is a renowned British journalist and academician.
Renowned British journalist and academic
95pc economy, 5pc politics for ministers to promote investments.
China is no longer the China 10 years ago. Example – 6 of world’s 10 largest banks are Chinese. Many, many Chinese companies have revenue far larger than Sabah government’s budget. We can promote some of these companies to invest in Sabah. Their executives are hard nose businessmen. This being the case, our relevant ministers, when promoting Sabah to these companies, must come down from their high horses. Stop being a YB and act appropriately to fight for investments. Yes sir, fight for investments. Quality/Genuine investments don’t come knocking on our doors on their own. Mere courtesy calls, photo sessions for newspapers or superficial discussions are a waste of time for these company executives. They fly all the way to Sabah for serious discussions, not to drink coffee with ministers. Indifference can only drive them away. Be prepared to roll up the sleeves to work, be knowledgeable in the project/industry being promoted and above all, be convincing. Talk business sense. At the same time, be duty bound to safeguard Sabah’s economic interest. Ministers should lead and take charge of investment negotiations. These are the trademarks of economic leadership.
For emulation, here are examples of working styles of two Singapore ministers –
[a] 18 Hours: A Day In The Life of A Minister – Shanmugan.
https://www.youtube.com/watch?v=f6vNQhY-sYw
[b] Minister S. Iswaran interview: The path to job creation in Singapore’s digital economy
https://www.youtube.com/watch?v=dtia71thvC0
Outstanding features – [a] They are truly in charge because they know their stuff. [b] they are committed to their job.
China is a civilisation state, not a nation state.
Martin Jacques has pointed out the subtle difference between China and the west. In dealing with China, you are dealing with a civilization state with 4,000 years of unbroken nationhood. Compared to China, USA is a young little boy.
Our leaders must take cognizance of China as a civilisation state. China pays a lot of importance to long term relationship and investments. Unlike the western approach, relationship and investments always go hand in hand. A fatal mistake is when a new government takes over, it refuses to honour agreements/understandings from the previous government.
Craft appropriate approaches, policies to attract Chinese investments.
Fundamental question is why Sabah has failed to attract wealth generation investments from China like Selangor, Negeri Sembilan, Perak and Malacca have succeeded? Sabah has its own comparative advantages even though they may be dissimilar to W Malaysia. Can Sabah succeed in getting good investments? Definitely YES. The only barrier is the lack of appropriate approaches, policies and insufficient economic leadership.
I will not go into areas with potential as I have written on these a few times in my previous articles.
I must mention that the federal government’s KLinvest initiative with focus on attracting impactful Chinese investments in W Malaysia has been successful. Can Sabah launch SABAHinvest?
Chinese impactful investments can boost income, create jobs, business opportunities and expedite post Covid-19 economic recovery if only we know how to promote investments from China. https://www.investkl.gov.my/Media_Release-@-InvestKL_is_One_of_ the_Asia_Pacific_Regional_Top_Investment_Promotion_Agencies_for_2019_.aspx
All roads lead to Beijing.
Yes, bear this in mind all major China investments, whether from SEO [State owned enterprises] or private, will need “blessings” from the mandarins of the Middle Kingdom in one way or another. Approval from the ultimate authority is required for projects that have major policy considerations and implications.
The Chinese Consulate General in KK and the Ambassador in KL have vital roles.
Oil and gas.
I like to conclude with a reiteration on oil/gas which I hope Sabah leaders will take notice. This is for the long-term future of Sabah. I mean the exploration of oil/gas in South China Sea which is reputedly to have 10pc of world’s deposits. That is why USA is fighting to keep China out.
Right at our door step, China and Philippines have agreed to restart exploration in the Spratly Islands 2 days ago. In addition to re-negotiating for a more equitable relationship with federal government/Petronas, Sabah should establish with federal government Sabah’s right to talk to China DIRECT on potential collaboration in the exploration, upstream and downstream for oil and gas from the South China Sea. Reasons for this: -
[a] Spratly Islands [Malaysia is also claimant country] are very near to Sabah. Should Malaysia/China agree to joint exploration, Sabah should be given priority to host related investments/facilities. Kudat is just a stone throw of 411 km away.
[b] I expect Chinese/Filipino relationship will be rocky after Duterte. His presidential term will end on 30 June 2022. With no exception, the political elite in Luzon, especially those in Manila, have strong economic/family ties in USA. In this context, they will not be as easy going with China as Duterte who is from Mindanao. Wise for Beijing to have an alternative in Sabah.
[c] Sabah should have priority on Malaysia’s share of oil and gas from Spratly for our industrialisation. Don’t allow another “gas to Bintulu” fiasco again. [d] Sabah government can also promote Chinese investments in oil and gas from South China Sea to Sabah.
If our political leaders can focus and give this their absolute energy on this matter, then Sabahans can see boom time in Sabah!
https://www.ft.com/content/b361afe9-9aa2-461a-b8ea-d8fc8850ddfa
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