In our last two articles, I had gone through the pre-election background of and structural causes behind Malaysia’s crumbling democracy. Perhaps it is time to look at the international politics, specifically China, behind 1MDB.
In 2015, the China General Nuclear Power Group acquired 1MDB’s energy assets for 2.3 billion U.S. dollars to ease the latter’s financial pressure. In December 2017, 1MDB cleared 600 million U.S. dollars of debt with the International Petroleum Investment Company (IPIC) through the sale of properties near Port Klang and Northern Penang. This liquidation can too be traced to Chinese capital: although Malaysian authorities refused to disclose any information relating to the buyer, informed sources told The Straits Times that he or she is ‘linked to Chinese state-owned enterprises‘.
The acquisition of 1MDB properties by Chinese enterprises boosted the Beijing’s influence over Malaysian railroad, ports, and other transport infrastructures. Hence, extricating itself from its reliance on the Strait of Malacca, a maritime lifeline controlled by a relatively US-leaning Singapore.
“There are perceptions that Najib is being bought by the Chinese…” said Bridget Welsh, a political scientist at John Cabot University in Rome, in an interview on Bloomberg. In fact, that right there was the gist of former PM Dr. Mahathir’s anti-Najib campaign: the country must not be sold for Renminbi, local industries are not to be traded for foreign capital, and our territories must not be rendered colonies. The public echoed his worries (or vice versa) on a growing influence from Malaysia. In April 2017, the Persatuan Pribumi Perkasa advised caution against OBOR investments and the subsequent influx of Chinese workers:
“If we study what’s happening in Africa, Pakistan, Sri Lanka port projects, all these are Chinese investment. If we are able to study the weaknesses they had down there, by welcoming all these big projects from China, we are well prepared to handle them in order to avoid any future weaknesses or failures for that matter”, said former Umno MP Datuk Ruhanie Ahmad at the Perkasa forum in April 2017.
The Sino-Malaysian relation has indeed grown closer during Najib’s term. Since 2009, China had surpassed Singapore and became Malaysia’s top trading partner. By 2012, Malaysia started to incur a trade deficit against China and it has been growing ever since. In 2017, the state-owned China Communications Construction won the contract for Malaysia’s largest railway project and Beijing’s largest investment project in Malaysia: the East Coast Rail Link. Funded by the Export-Import Bank of China, the project would almost be 700 kilometers in length and connect port Klang to Malaysia–Thailand border. According to the “Nikkei Asian Review”, the purpose of this project is to, again, reduce China’s dependence on the Malacca and, by extension, strengthen its maritime power.
The Sino-Malaysian growing intimacy reflects China’s mistrust to an US-friendly Singapore. Though vehemently denied by Malaysian authority, according to The Strait Times, one of the agenda on Najib and Xi Jinping’s meeting in May was the latter’s proposal to build ‘a radar and missile system in Johor’. The East Coast Rail Link seems to face an abortive fate as well, as Chinese state-owned enterprise are shifting their operations from Port Klang to Singapore due to latter’s geographical and financial advantage.
Back in Malaysia, Najib found himself pressured by the public over his ties with Beijing. When the China Construction Bank Corporation (the first foreign bank to achieve an operating license in Malaysia since 2011) held its opening ceremony in Khala Lumbar, Najib assured to the public that: “I will never sell Malaysia’s sovereignty. Never“.