Will Pakistani leader learn from Malaysia’s Chinese experience?

IKM

Both countries have a sovereign right to review economic alliances and their terms in the best interest of their own people, and not the ruling families.

HUSSAIN SAQIB

Acknowledging its economic development under its revered leader, Pakistani prime minister Imran Khan has vowed to learn from Malaysia. He has been a long-time admirer of the Malaysian leader but in this statement which he gave on conclusion of his Malaysian tour, he did not specify if the lessons also included those Malaysia learned the hard way. This is no secret that the present leader of Malaysia, Dr. Mahathir Mohamad has bitter experience of Chinese investment in Malaysia and has been a vocal critic of his predecessor for having negotiated Chinese investment from a position of weakness.

Pakistan has recently concluded China Pakistan Economic Corridor (CPEC) with massive Chinese investment in infrastructure development. Although, the details of agreed arrangements and the nature of investments has been kept under tight lid, the CPEC was declared a game changer for Pakistan’s economic development. The security apparatus is keener to have this game changer for a variety of reasons including:

  1. CPEC benefits China more than it benefits its time-tested friend, Pakistan. It provides for a safer, cheaper and faster corridor for import of oil from Middle East and Africa and export of its consumer goods with the same degree of safety, economy and speed. Its advantages to Pakistan’s economy are incidental but those benefits despite being incidental could bring massive capital investment and decrease unemployment if the initiative is handled prudently. The Pakistani establishment wants a reliable regional power on Pakistan’s side to safeguard its strategic interests. Pakistani interests aligned with China’s through CPEC should be a win-win situation. On this assumption, the Establishment has apparently guaranteed a safe and smooth operation of the project. Reportedly, the project implementation is under way as envisaged.
  2. Pakistan was in dire need to develop infrastructure, especially in its largest, resource rich but thinly populated province of Balochistan. The CPEC initiative will bring physical infrastructure to the province, generate employment for the local population and create investment-friendly environment. Similarly, with construction of Gwadar Deep Sea Port, the coastal town will transform into a modern port city and has the potential to transform the life of the entire coastal area.
  3. Balochistan has vast gold and copper reserves and China, even before CPEC, was granted rights of gold exploration at Saindak. It is not clearly known how much gold was previously mined and at what conditions but Pakistan, if it plays its cards wisely, can hugely benefit from Saindak gold mines through CPEC.
  4. Although Pakistan doesn’t have a naval base in Gwadar, the Chines can develop it into one for Pakistan, adding another gen to its String of Pearls.

But the question remains; will it be safe to have Chines investment in the country? Why the other countries with similar investments feel bitter about Chinese debt trap? Was Dr Mahathir’s bitterness about Chinese investment a political rhetoric to discredit his disgraced predecessor Najib Razak? A few months into office, Dr M may have come across more information to strengthen or negate his views he held during his days out of the government. Incidentally, Pakistani leader share so many commons with his Malaysian counterpart including rampant corruption of their predecessors and their families.

On the other side, South China Morning Post is of the view that it is Malaysia which has benefitted immensely from China-Malaysia economic alliance. According to the newspaper, there is a surplus trade balance for Malaysia and Dr M should think very hard before deciding to revoke or review his country’s economic relations with China, including, of course, Chinese investment. There is no denying the fact that China has zero tolerance for corruption or corrupt practices within its system. But this is also a fact that Chinese corporations have no legal restraint to corrupt the decision-makers of other countries.

Malaysia-China trade

Apart from the above view, there are people who believe that the trade war between the US and China is hugely benefitting Malaysia. According to The Star Online Malaysia has emerged as a clear winner in an in-depth analysis on potential beneficiaries of import substitution, as a result of the US-China trade war with the biggest benefit likely to come from electronic integrated circuits, liquefied natural gas and communication apparatus.

The potential benefits from this trade war are import substitution and product relocation. High tariffs, which is the weapon used in trade wars, can incentivize the companies to locally manufacture or substitute from other countries. Malaysia can be one of those other countries. This analysis also includes Pakistan in potential beneficiaries of the war between trade titans.

It was not immediately known if Dr M briefed his Pakistani counterpart on the perils of Chinese elephant in the room but both countries have severely been hit by the menace of corruption which can be traced to infrastructure development projects. Both countries have sovereign right to review economic alliance and their terms in the best interest of their own people, and not the rulers or their families.

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