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Chinese Projects to Gain Further Momentum in Malaysia in 2018: Closer Economic Ties

Updated:2018-1-8 10:17:40    Source:www.tannet-group.comViews:270

Over the past years, Malaysia has been seen as a key investment destination for Chinese companies. The trend is expected to pick up momentum in the new year.

Closer Economic Ties
Economists expect the economic relationship to further improve over years.

"Malaysia is well-positioned to benefit from the higher connectivity due to its central location for sea, air and land transportation, favorable policy environment and strong capacity to absorb foreign investment inflows," Sunway University Economics professor Yeah Kim Leng told Xinhua.

While there have been concerns over low spillover effects to the economy, Yeah opined that the positive benefits of Chinese investment for Malaysian economy will include expansion of production, export and infrastructure capacity.

Besides, Chinese investment also offer more diversified sources of inward foreign direct investment (FDI), and increased access to Chinese markets for Malaysian manufacturers and service providers as the economic and business linkages expand over time, said Yeah.

"Given that both the Association of Southeast Asian Nations (ASEAN) and China are expected to continue to grow at a healthy pace, there are certainly further areas for growth," said Edward Lee, the chief economist for Southeast Asia at Standard Chartered.

"Consumer markets in both economic areas will grow larger and provide final demand for companies in both economies," he told Xinhua.

"There has been an increase in investments from China into the region, more so in real estate and construction sectors. But as China develops further, there may be increasing investments in other areas," Lee said.

Bigger Role of Renminbi
Economists also believe the expansion of China in regional trades and economic ties will encourage the usage of Renminbi (RMB), the Chinese yuan, in Malaysia.

Greater foreign direct investment inflows from China and initiatives such as the DFTZ are likely to promote more two-way trade and investment flows between Malaysia and China.

Ultimately, the willingness of businesses in Malaysia to integrate the usage of Renminbi for cross-border should improve.

As the Belt and Road Initiative gains traction, she believed the expansion of trade and investment links between China and its neighboring regions, including Malaysia, will encourage further adoption of the Renminbi.

Proposed in 2013, the Belt and Road Initiative aims to build trade and infrastructure networks connecting nations on and beyond the ancient Silk Road routes.

It comprises the Silk Road Economic Belt and the 21st Century Maritime Silk Road. Malaysia is one of the first countries that supported the initiative.

Concurred with Chia, she said, the Belt and Road Initiative will promote wide use of the Renminbi and increase other local currency-denominated funding, as the Chinese government has committed to help fund overseas businesses under the initiative.

However, it may still need time to see more usage of Renminbi as US dollar remain dominated world payments currency. (Source: China Daily)

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