KUALA LUMPUR (Feb 13): Thanks to the RM55 billion East Coast Rail Link (ECRL), the long-forgotten East Coast of Peninsular Malaysia has somewhat come under the limelight again, despite the numerous questions raised about the railway’s price tag and the eventual benefits it could bring to the country.
Among the questions raised was whether the East Coast would have sufficient economic activities to fully utilise the 600km railway described as the world’s most expensive track.
But it seems the East Coast Economic Region (ECER), one of three economic corridors launched in 2007 under the leadership of then prime minister Tun Abdullah Ahmad Badawi, has been on track in attracting investment in the corridor, which covers Kelantan, Terengganu, Pahang and the district of Mersing in Johor.
Last month, the East Coast Economic Region Development Council (ECERDC), the statutory body that spearheads the execution and implementation of the ECER Master Plan, announced that the economic region had attracted private investment of RM13.5 billion in 2016, surpassing its RM12 billion target for the year.
As at end-2016, total private investment in the ECER had clocked in at RM101.0 billion, 91.8% of its RM110 billion investment target by 2020.
Last November, the ECERDC signed a memorandum of understanding (MoU) with Guangxi Zhuang Autonomous Region, which it said will pave the way for accelerated economic and investment partnership opportunities in manufacturing, trade, finance and logistics in the two regions. The MoU was signed during Prime Minister Datuk Seri Najib Razak’s official visit to China.
“The MoU reaffirms the shared commitment between the two governments to strengthen cooperation on trade and investment,” said ECERDC chief executive officer Datuk Seri Jebasingam Issace John in a recent email interview with The Edge Financial Daily.
He said the ECERDC and Guangxi Zhuang had agreed to engage in and promote mutually beneficial cooperation in economic, commercial and human capital development activities; facilitate effective collaborations between the public and private sectors; and organise and participate in joint economic and investment promotional activities.
“It is expected to further strengthen the bilateral cooperation on trade and investment, especially in advanced manufacturing, alternative and renewable energy, clean technology, petrochemicals, bio-economy, shipping and logistics,” he added.
Jebasingam said the proposed ECRL is seen as a game changer to reduce the economic disparity between the East Coast and West Coast.
“The ECRL will run through key industrial nodes in the East Coast, and will help facilitate investment and movement of goods, as well as improve the mobility of people. This will further spur economic activities in the economic region,” he added.
To date, the ECER’s industrial parks had attracted RM28.2 billion in private investment. Among them, the Malaysia-China Kuantan Industrial Park (MCKIP) stood out as it had secured near to RM20 billion of total investment in high-technology industries, including plastic and metal equipment, automotive components and steel, said Jebasingam.
The MCKIP has been one of the key accelerators of the ECER’s growth. The industrial park, which began in 2013 with 1,400 acres (566.56ha), has been expanded to 3,000 acres.
“The latest investment in [the] MCKIP is an RM4 billion project by a company from China, Wuxi Suntech Power Co Ltd and its partners to set up a production base for solar cells and green energy equipment. This production base will be the largest, single solar cell factory in Southeast Asia,” he said, sharing that the RM5.6 billion steel mill by Alliance Steel (M) Sdn Bhd is expected to be completed soon and be in operation by early 2018.
The development of key infrastructure to support rapid growth in the MCKIP is also on track, he said.
“The first phase of the Kuantan Port expansion into a deep water port, initiated through a public-private partnership, is expected to be completed by the third quarter of 2017.”
It will be capable of handling 52 million freight weight tonnes and vessels of up to 200,000 deadweight tonnage, providing quicker and a more direct route between the ECER and ports in China’s eastern region.
“The completion of infrastructure projects in 2017, such as the expansion of Kuantan Port and Central Spine Road, will not only facilitate logistic requirements of investors of [the] MCKIP — [it will] also [be] a key component in attracting further investment.
“The expansion of Kuantan Port will give investors direct access to major markets across Asia, positioning Kuantan as the next Rotterdam of the East,” Jebasingam added.
Since 2008, Jebasingam said the government had allocated RM7.2 billion under the 9th, 10th and 11th Malaysia Plans through the ECERDC to improve public infrastructure, promote investment and enhance human capital development.
In Budget 2017, the government has approved 34 high-impact projects and programmes in the ECER to further accelerate the region’s socio-economic transformation.
Meanwhile, the ECERDC, together with the international trade and industry ministry and Malaysian Investment Development Authority, will continue to promote investment opportunities in the ECER.
‘China’s large interest in ECER not a cause for concern’
Although China is the largest source of foreign direct investment in the ECER, Jebasingam was quick to point out that there should be no concerns about China’s investment here as half the investment in the region still comes from local companies.
“China’s investment is less than one-fifth of the total value of investment attracted to-date, and this should not be a cause for concern,” he said. Domestic direct investment remains the key driver of investment in the ECER, he said, making up 52% of the total investment in the ECER now.
The remaining 48% is foreign direct investment, of which 19.2% is from China, followed by the US and South Korea (3.6% each), the Netherlands (2.2%), Japan (1.8%) and others (17.6%).
“China is the largest foreign investor because it has the capacity and desire to invest outside its shores, which is not limited to Malaysia. China has grown to become the second largest economy in the world, and they are aggressively venturing beyond their own borders for investment purposes,” he explained.
Malaysia, too, is constantly focusing on expanding its trade relations with other countries, he said.
This article first appeared in The Edge Financial Daily, on Feb 13, 2017.