Najib bullish on China FDI despite deal flip-flops

By Yow Hong Chieh, The Malaysian Insider

KUALA LUMPUR, Oct 22 — Malaysia expects foreign direct investment from China to grow despite a slate of recent last-minute reversals on deals with Chinese firms.

Prime Minister Datuk Seri Najib Razak said today FDI from China in the first eight months of 2011 had already grown 62 per cent from last year’s total of US$208 million (RM645 million) to US$337 million and that there was still room for expansion.

“I hope China continues to see Malaysia as a good source of investment opportunities and that, in return, China will become an increasingly important source of FDI, not only in Malaysia but also in Asean,” Bernama quoted him as saying at a roundtable with leading Chinese firms at this year’s China-Asean Expo.

Najib (picture) also said the Malaysian Investment Development Authority (Mida) was in talks with Chinese companies on several projects, including in the agriculture, plantation, chemical, renewable energy and green technology sectors, some of which would materialise in the coming months.

Malaysia has in recent weeks snubbed Chinese firms in billion-ringgit deals in favour of local interests, prompting opposition lawmakers to warn Putrajaya its shifting position would further dent Malaysia’s chances of spurring trade.

Earlier this month, the Finance Ministry dropped Chinese developer Everbright International Construction Ltd’s US$1 billion redevelopment plan for Pudu Jail in favour of splitting the eight-hectare prime land into three parcels to be developed by mainly Bumiputera companies.

The Malaysian Insider understands that Pudu Jail land owner UDA Holdings Bhd had been told by the ministry to reject the Chinese bid despite a majority board decision in favour of the plan.

Putrajaya also decided to forgo a cheap RM2.6 billion loan from China to build the Second Penang Bridge and has instead asked state-owned Bank Pembangunan to further underwrite the construction of the 24km bridge, due in 2013.

The loan, seen as a sign of closer ties between Malaysia and its largest export market, was set with an interest loan of three per cent for 20 years, understood to be marginally lower than the rate offered by Bank Pembangunan.