What to Watch During Mahathir’s China Visit

Recent Features


What to Watch During Mahathir’s China Visit

Industrial parks and palm oil are two areas ripe for new agreements.

Malaysian Prime Minister Mahathir Mohamad will head to China from April 25-28 for the second Belt and Road Forum for International Cooperation in Beijing. This will be his second China visit since once again becoming Malaysia’s prime minister. As a new East Coast Rail Link (ECRL) deal, a disrupting factor in Malaysia-China relations after Mahathir pulled the plug on the railway last year, has been just inked, many believe the visit will function as a “fence-mending trip.”

On April 18, Chinese Ambassador to Malaysia Bai Tian released Mahathir’s China schedule. Mahathir will attend the opening ceremony of the summit on April 26, and speak at a round-table discussion and high-level meeting on April 27, one of which is devoted to anti-corruption. What’s more, Mahathir  will meet Xi Jinping and Li Keqiang separately to discuss bilateral relations. Among all the bilateral issues Mahathir will touch on in these conversations, industrial parks and palm oil can be expected to be the focus and some good news is likely in store on both fronts.

The “Two Countries Two Parks” initiative is one of the most important cooperation programs between China and Malaysia. The two parks are Malaysia-China Kuantan Industrial Park (MCKIP) in Kuantan of Pahang, Malaysia, and China-Malaysia Qinzhou Industrial Park (CMQIP) in Qinzhou of Guangxi, China. The two parks have racked up lots of achievements. Malaysia directly benefits from the MCKIP, as the park has brought 6.64 billion Malaysian ringgits ($1.6 billion) in approved investment value, 10.69 billion ringgits in committed investment value, and another 25.23 billion ringgits in potential investment value to the country. Meanwhile, it is recorded that CMQIP has attracted in total about 90 billion Chinese renminbi ($13.4 billion) in investment and will become China’s first bird nest processing center, featuring the whole production-supply chain to turn Malaysian edible bird nests into finished food products. Malaysian bird nest companies are set to be major contributors and beneficiaries. However, problems should be noted as well — for example, the two parks are not equally developed and there’s a lack of cooperative mechanisms between the two.

Although Mahathir criticized the MCKIP’s “Great Wall” last August, which could possibly indicate his lack of support toward the project, his quick dismissal of the subsequent headlines illustrates that he does not want a misunderstanding to jeopardize the development of the park. In February, Dr. Ong Kian Ming, Malaysia’s deputy international trade and investment minister, publicly said that Mahathir’s April visit will bring more Chinese investment to MCKIP, which confirms the Mahathir’s administration’s determination to continue developing the park. With the increasing confidence in China-Malaysia relations under Mahathir, more investment intentions or even deals could be expected during Mahathir’s upcoming working visit, especially since it is reported that he will specifically meet with the Chinese business community.

In addition, at the end of January, Mahathir’s special envoy to China, Tan Kok Wai, led a delegation to Qinzhou to get more information about CMQIP’s development. During Tan’s visit, Malaysia and China agreed to resume the regular meetings of the joint council on “Two Countries Two Parks” and set up a secretariat for the collaboration mechanism, in order to improve cooperation. During Mahathir’s meetings with Xi and Li, the idea of setting up a permanent body to coordinate the development of the two parks will very likely be further discussed. Details or announcements could be expected.

Palm oil is another issue to watch for more announcements during Mahathir’s visit. China is the second largest export market for Malaysia’s palm oil, and the largest single export market for Malaysia’s palm oil along with related products. In 2018, Malaysia exported 3.03 million tonnes of palm oil and related products to China, an increase of 2.9 percent over the previous year.

Some actions have already been taken this year to deepen cooperation on palm oil. For example, this March, China signed documents to purchase 1.62 million tonnes of palm oil, with a combined estimated worth of $891 million. However, Malaysia apparently needs more Chinese promises on palm oil, as the country is very likely to suffer a huge loss in European markets. Although it has been clear that ECRL negotiations do not directly involve palm oil exports, Mahathir has admitted that Malaysia is “taking advantage” of the new ECRL deal to increase palm oil purchases from China. Finance Minister Lim Guan Eng and Primary Industries Minister Teresa Kok have also urged China to increase palm oil imports many times. At the same time, China’s Ambassador Bai Tian also recently revealed that China is “keen” to buy more. Therefore, palm oil will definitely be a major subject in Mahathir’s meetings with Xi and Li, and also the major product that Mahathir will emphasize to Chinese companies. There is a high possibility that both countries will sign more deals at the end of this April.

2019 is the 45th anniversary of the establishment of the China-Malaysia diplomatic relationship. In this special year, with the dispute on the ECRL being settled down, it is believed that the largest uncertainty in China-Malaysia bilateral relations has been eliminated. Mahathir’s acceptance of Xi’s invitation to the Belt and Road Forum itself is of important symbolic meaning to signal the two countries are on friendly terms as usual. If more good news regarding specific issues could be released, and industrial park and palm oil cooperation are the most likely candidates for progress, confidence in the Malaysia-China friendship will be further strengthened.

Li Xirui is a research assistant at the China-ASEAN Research Institute at Guangxi University, China.