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Ideas: Monitoring the Belt and Road Initiative

When Malaysia agreed to join the Belt and Road Initiative (BRI) in 2016, a slew of megaprojects involving Chinese investment began popping up across the country. Among them were two railway projects, the East Coast Rail Link (ECRL) and the Gemas-Johor Baru Electrified Double-Tracking Project (G-JB); the Trans Sabah gas pipeline, touted as a solution to Sabah’s power shortage problems; and the Melaka Gateway, a coastal property development expected to generate RM15 billion in revenue when completed.

These projects – all of which have carried the elusive label of “BRI” throughout their existence – have undergone several changes over the years. They have been suspended, quashed, embroiled in kleptocratic indictments, spontaneously resurrected, or left to languish as unrealized chimeras on the periphery of the public imagination. But why have so many infrastructure projects under this initiative been hampered by scandals, delays and corruption? Six years later, it seems important to re-evaluate how the Beijing BRI performed in Malaysia and consider solutions to their problems for future projects of this scale.

Conceived in 2013 by Chinese President Xi Jinping, the BRI is a land and sea network strategy to boost trade and economic growth through infrastructure along the ancient Silk Road. As Malaysia has supported the initiative since its inception, the country has been a regional focal point. However, the initiative has not escaped critical public criticism.

In 2019, the Institute for Democracy and Economic Affairs (IDEAS) partnered with four other civil society organizations to inform policy advocacy on major BRI projects in Southeast Asia and the Pacific . Their collaborative effort is the BRI Monitor, a website that serves as a repository of research from IDEAS Malaysia, Stratbase Albert Del Rosario Institute Philippines, Sandhi Governance Institute Myanmar, Institute of National Affairs from Papua New Guinea and the Future Forum from Cambodia. The site publishes key insights into governance gaps in China-backed megaprojects, insights gained through rigorous transparency assessments and assessments of regulatory frameworks. This is an overview of the BRI Monitor’s ongoing research, all of which will be published on its website in the coming months.

The BRI Monitor focuses on the implementation challenges that programs under this initiative have faced, with the aim of prompting a region-wide call for more effective project management. Based on his research, the main problems of the four Malaysian projects listed above can be identified as follows: (i) their inadequate legal frameworks; (ii) engagement with unfavorable Chinese loans; and (iii) a general lack of transparency. All of this led to a series of setbacks. IDEAS also noted several entanglements with the 1Malaysia Development Bhd scandal, particularly with ECRL. There were allegations that Beijing had inflated loans for railway and gas pipeline projects to bail out the sovereign wealth fund, fueling ever-widespread fears that Malaysia risked falling into a debt trap.

The turbulent political landscape in Kuala Lumpur was another cause of delay. In 2018, there was a wave of project suspensions in Malaysia as part of efforts to dismantle the outrageous administration of Datuk Seri Najib Razak. ECRL was temporarily suspended as Pakatan Harapan tried to negotiate better loan terms with China, while the Sabah pipeline was canceled when it was revealed that 88% of the project’s value had been paid to its Chinese contractors when only 13% of the work had been completed. (For no apparent reason, it was controversially announced that the project had been revived under the Perikatan Nasional government in February 2021. There have been no further updates since last October, when Transparency International expressed its concern about the relaunch of the project, without any explanation of its economic viability.)

Poor local governance is perhaps the most pressing concern with Malaysia’s BRI projects. Although there is a general tendency to blame all the problems on loans from Beijing – which all involve prepayments to contractors, high interest rates and closed tenders for supplies – the research of the BRI Monitor show that this view fails to address gaps in project governance in Malaysia. also responsible. No known environmental impact assessment or feasibility study has been published for any of the four megaprojects, or is even known to have been conducted. This lack of transparency is worrying for devices that were so likely from the start to disrupt the surrounding communities. Residents of the Portuguese colony of Melaka, for their part, have openly protested the land reclamation activities of Melaka Gateway due to its detrimental effects on the colony’s coastline and habitat diversity. As the Eurasian community is heavily dependent on fishing, the depletion of marine wildlife threatens their main source of livelihood, a fact that has been blatantly ignored in the planning of the project.

In 2020, the Melaka Gateway was canceled due to the developer’s inability to complete the island’s reclamation on time, but throughout its progress there has been little government oversight to ensure that she was on the right track. In a surprising turn of events, the state government returned the coastal development project to its private developer earlier this year after a series of legal disputes. While the BRI Monitor will continue to assess Melaka Gateway’s progress, we can only hope that its latest relaunch addresses its previous implementation mistakes.

In a nutshell, Malaysia’s BRI projects have shown that long-term thinking within federal politics needs to be critically revisited in our infrastructure planning. The BRI Monitor recommends that feasibility studies and long-term negotiations for foreign loans be rigorously conducted and communicated to the public. His research also emphasizes a more careful consideration of audience needs before embarking on these ventures. The very recent relaunch of two canceled projects highlighted the ever-changing nature of Malaysia’s infrastructure landscape and showed how much we still have to do. More than ever, initiatives such as the BRI Monitor are necessary tools to hold governments and private companies accountable and to ensure that their projects deliver on their promises.

Julia Merican is a senior research fellow at the Institute for Democracy and Economic Affairs (IDEAS)