Kuantan rides China wave on land and sea, but at what cost?

SPECIAL REPORT | Driving from the Malaysia-China Kuantan Industrial Park (MCKIP) through the Gebeng Industrial Park and on towards Kuantan Port, one is bound to pass a 1.8km stretch that has come to be known as “Jalan Qinzhou.”

Qinzhou is a city in Guangxi, an autonomous region in southern China.

The road, formerly known as Jalan Gebeng 1/11, received its new name on April 6 last year, at a ceremony overseen by the Pahang executive councillor in charge of basic infrastructure and environment, Mohd Soffi Abdul Razak, as well as Kuantan Municipal Council president Fadzilla Salleh.

The MCKIP and Jalan Qinzhou are part of Kuantan’s twinning with Qinzhou city, where a similar China-Malaysia Qinzhou Industrial Park (CMQIP) is being constructed, and with a road there being renamed “Jalan Kuantan” in turn.

But for China, its influence in Kuantan extends beyond just the one industrial park or road.

Since ancient times, the Malaysian peninsula has maintained economic relations with China through the Maritime Silk Road. At the height of the Middle Kingdom’s power, the sultanates here also submitted to the superpower’s protection.

Fast forward to the 21st century, the country’s presence in this region is being increasingly felt amid a resurgent China, exemplified by unprecedented development in southern Johor, which includes the Forest City project.

However, China’s key strategic foray lies not to the south, but to the east coast of Peninsular Malaysia, specifically Kuantan.

China’s investments are not homogenous. The country’s projects in Johor are largely private sector-led, such as Country Garden, revolving mainly around property development.

However, in Kuantan, China’s investments are being spearheaded by government entities, with a clear focus on industry and infrastructure.

The Guangxi autonomous region, through its vehicle Guangxi Beibu Gulf International Port Group Co Ltd, controls 49 percent of MCKIP. The remaining shares are owned by Kuantan Pahang Holding Sdn Bhd, a Malaysian consortium.

As with any industrial development, infrastructure is paramount for the import of supplies and export of products, be it through land, sea or air – two of which are already under China’s influence in Kuantan.

In September 2013, seven months after the launch of MCKIP, Guangxi Beibu acquired a 40 percent stake in Kuantan Port, which overlooks the South China Sea, a large swathe of which is being claimed by Beijing.

Guangxi Beibu and its majority partner IJM Corp have invested RM4 billion to construct a new deepwater terminal (photo below) at the port to cater to growing industrial activities – including MCKIP, which is expected to be ready by next year.

By 2024, Kuantan Port will also be connected to Port Klang in Selangor through the Beijing-funded East Coast Rail Link (ECRL).

Putrajaya agreed to allow China to nominate the contractor of the RM55 billion project in exchange for favourable loan rates.

Beijing nominated the state-owned China Communications Construction Company (CCCC) – which is also vying for the Kuala Lumpur-Singapore High-Speed Rail (HSR) project.

The ECRL, like Kuantan Port, is a key gateway for Kuantan’s industrial sector, especially the MCKIP and the Gebeng Industrial Park.

‘China needed to breathe new life’

Critics argue China’s involvement in Kuantan’s industry and infrastructure is getting too close for comfort. However, proponents point out that Kuantan, and the east coast as a whole, is in need of a boost since it lags behind the west coast.

According to the Transport Ministry, Kuantan Port handled 40.03 million freight tonnes of cargo in 2015, which pales in comparison to the volume of cargo handled in Port Klang (219.79 million freight tonnes) and the Port of Tanjung Pelepas (136.28 million freight tonnes).

What was once Kuantan’s industrial rail infrastructure also lies in ruin.

Heading south on Jalan Qinzhou from the MCKIP towards Kuantan Port, the first intersection leads to the Lynas rare earth processing plant, while the next intersection bears a signboard that reads “Gebeng Railway Yard.”

There lies a section of the now abandoned Kerteh-Kuantan Port railway line.

The single-track Kerteh-Kuantan Port railway, which stretches over 70km, was built with Petronas funding in the 1990s to link the Kerteh Industrial Park in Terengganu and the Gebeng Industrial Park in Pahang. It ceased operation in 2012.

Surveying the abandoned site, Malaysiakini found the metal components of the tracks stripped by scavengers, while faded “Petronas” signs can be seen on what remains. Surrounding buildings are left in a dilapidated state.

It is unclear if the ECRL will revive the abandoned Kerteh-Kuantan Port railway track as part of its alignment, but a map published by MCKIP shows the RM55 billion line will run close to the abandoned line.

The ECRL, when completed, will not only link Kuantan Port with Port Klang in Selangor, but also with Terengganu and Kelantan.

As such, proponents say these infrastructure projects will breathe new life into Kuantan’s industry, adding that China exerting its influence is an inevitability.

However, for the Kuantan folk who have long struggled against the Lynas rare earth processing plant, China’s influence is not the only concern.

Environmental concerns abound

Semambu assemblyperson Lee Chean Chung noted that the factories planning to set up shop within MCKIP are from the heavy industry sector, which will potentially result in high pollution levels.

International headlines in the last decade screaming of high-polluting factories in China will do little to ease the fears of the local people.

“Besides the current steel plant (photo above) at MCKIP, we have heard that there will be an aluminium plant and a factory producing car batteries.

“The people of Kuantan do not want to be traumatised with pollution again,” Lee said.

It was not long ago that the city was blanketed in red dust to feed China’s insatiable appetite for bauxite, an aluminium ore.

In 2014, Indonesia imposed a ban on bauxite exports in an attempt to promote added value production in the country.

Met with a supply shortage, China turned to Kuantan, and the lucrative price led to a mad rush for bauxite, with farmers selling their lands and uprooting their oil palm trees for the mineral.

The Pahang government’s failure to regulate led to indiscriminate mining, that eventually forced Putrajaya to intervene and impose a moratorium in 2016, which will remain for the rest of this year.

But the moratorium will no longer matter when the aluminium factory sets up shop within MCKIP.

Lee said he was not opposed to foreign investment, but past experiences have not exactly inspired confidence.

“We are concerned about the environmental issues.

“We also wonder why China needs to move its factories to foreign countries, and whether it has anything to do with tightening regulations in China,” he said.

China has indeed, in recent years, taken an increasingly tough stance to rein in pollution in the country, slashing coal consumption and shutting down aluminium factories that fail to meet environmental standards.

Lee said the Department of Environment and other regulatory authorities must apply similarly strict standards on such factories operating in Kuantan.

He also pointed out that Putrajaya will offer up to 15 years’ tax exemption to companies that set up shop within the MCKIP, but stressed that the benefit of that move must be weighed carefully against the cost.

With Beijing’s ambition to revive the Silk Road of old, on land and sea through its One Belt One Road (Obor) Initiative, Malaysia’s economy is becoming increasingly connected to China.

The MCKIP, ECRL and Kuantan Port are strategic components that will further deepen those connections.

But in the haste to embrace a new economic order, prudent questions about the costs and benefits cannot be ignored – lest Malaysia goes the way of Sri Lanka, the oft-cited cautionary tale of unrealised grand ambitions and indebtedness to the Middle Kingdom.

 

Artikel disiar pada October 11, 2017 - 2:44 pm oleh Susan Loo

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