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Asia Pacific> Asia Weekly> Content
Tuesday, August 15, 2017, 16:35
Industrial park holds promise
By DENG YANZI
Tuesday, August 15, 2017, 16:35 By DENG YANZI

Bilateral government project in South China’s Guangxi opens doors for more investments between China and Malaysia 

Rows of coconut palms stand before a striking building with a horn-like curved roof above a wooden and glass facade on a sizzling day.

It could be a scene from almost any Southeast Asian tourism hot spot, but a Chinese-language signboard reveals the building is the Investment Promotion Center for the China-Malaysia Qinzhou Industrial Park (CMQIP).

Qinzhou is a coastal port city in South China’s Guangxi Zhuang autonomous region, and this China-Malaysia project is a government-to-government collaboration initiated in 2012.

Given Guangxi’s proximity to Association of Southeast Asian Nations member countries (it borders Vietnam), it is seen as an important channel for China to link with the ASEAN bloc and an increasingly important conduit for foreign investment between the two regions.

A majority of the companies based in the park are Chinese, but Malaysian firms will soon be bringing in their competitive industries, such as the production of edible bird’s nest, to utilize the park’s favorable policies and Guangxi’s positional advantage, said Ong Chong Yi, president of China-Malaysia Qinzhou Industrial Park (Guangxi) Development Co.

Malaysia was China’s biggest trade partner among ASEAN countries until 2016 and China has been Malaysia’s since 2010.

Room for development

Yet there is room for further development in the foreign investment field between the two countries, and the industrial park project will facilitate that, Ong said.

“The establishment of CMQIP is one of China’s concrete moves to capitalize on the connection between Guangxi and ASEAN,” Ong said. 

Responsible for developing and operating the industrial park, Ong’s company is a joint venture established by Chinese and Malaysian investors.

CMQIP is also the sister park of Malaysia-China Kuantan Industrial Park (MCKIP) as part of Two Countries, Twin Parks, a new collaboration model to boost investment between Guangxi and ASEAN. Two Countries, Twin Parks comes under the Belt and Road Initiative, the China-led drive to improve connectivity along the historical Silk Road trading routes.

MCKIP is the Chinese government’s flagship investment project in Malaysia, including a 1.4 billion yuan (US$208 million) steel project, a 1 billion yuan aluminum product processing facility and 500 million yuan invested by Guangxi companies. 

Chinese State-owned Guangxi Beibu Gulf International Port Group is one of the major investors in both parks. In the development of MCKIP in Malaysia’s East Coast Economic Region, the group partnered with IJM Corporation, one of Malaysia’s biggest construction contractors. 

Gaining local support for these foreign investment projects was an essential but challenging task for Chinese investors, according to Zhou Xiaoxi, chairman of Guangxi Beibu Gulf International Port Group.

Before its construction, MCKIP had the full support of Malaysia’s central government, but the state government of Kuantan had its own concerns, Zhou said.

“The Chinese government and companies showed their sincerity and integrity by continuous communication, and offered a donation to the state when it suffered from floods. We eventually won the trust of the state government and the local community,” he recalled.

Economic boon

Malaysia is a popular outbound investment destination for Chinese companies, but Kuantan had been underrated by investors compared to other parts of Malaysia. The development of MCKIP has been a boon to local economic activity, Zhou said.

He is optimistic about further growth in Chinese investment in Kuantan. 

“The establishment of the industrial park has paved the way for Chinese companies who are interested in investing in Kuantan,” Zhou said. 

Aside from the most popular destinations, Chinese investors continue to seek investment opportunities among promising members of the ASEAN bloc. 

For instance, Guangxi Beibu Gulf International Port Group has made a move into Brunei this year after its first foreign project in Malaysia’s Kuantan Port in 2015.

Zhou said the group will continue to explore new investment possibilities in other fast-growing destinations in ASEAN, including the Philippines and Indonesia.

However, he emphasized that such moves should not be made hastily in an investment frenzy.

ASEAN investors, meanwhile, are becoming increasingly aware of the investment opportunities in some competitive industries in Guangxi. 

Thailand, for instance, has more than 120 companies investing in Guangxi, mainly in agricultural industries such as sugar, tapping Guangxi’s strong capacity as the source of 60 percent of China’s sugar production, according to Thailand’s Consulate-General in Nanning, capital of the Guangxi Zhuang autonomous region.

However, there are challenges among foreign investors when investing in Guangxi, according to consul-general Chairat Porntipwarawet.

“This is a common challenge in many investment destinations, but we still hope for a good investment environment, and the rule of law to protect the interests of foreign investors in a just way,” he said.


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