What is China’s “One Belt One Road” (OBOR) initiative? How does it affect Malaysia’s economy?

Will China’s recent curb on capital outflows affect the investment in Malaysia’s property industry?

Malaysia Real Estate Promoting Association vice president Ronald Pua shares his view on the prospect of OBOR and the effects of China’s recent policy.

Who is Ronald Pua?
Ronald Pua is the vice president of Malaysia Real Estate Promoting Association and also acts as a consultant of Malaysia-China Economy Development Foundation (MCEF ASIA).

He frequently goes overseas to share the investment prospect in Malaysia and has given over 100 talks at China, Taiwan, Hong Kong, Brunei and Vietnam.


Lee: What are the short-term effects of OBOR?

Pua: On the positive side, there is a lot mega project collaboration between the Malaysian government and the Chinese government linked companies and agencies, such as Bandar Malaysia, Malacca Gateway and so on. There are a lot of collaboration between government agencies and a lot of Chinese investment.

On the negative side, Malaysia’s SMEs are facing a difficult challenge. Malaysian Ringgit is weakening and dropped almost 20 to 25% of its value. SMEs need to explore opportunities outside of Malaysia. But at the same time, they are also facing more competition pouring in from China. This creates a very competitive market.

Lee: Do you think China curbing capital outflows will affect OBOR?

Pua: Definitely. This policy has created a lot of issues lately, even a famous Chinese developer in Malaysia was heavily affected by it. This will cause a huge impact to Malaysia’s developers. Why? Because Malaysia’s developers often go to China to organise some sales event, exhibitions and talks. If this policy continues, it will affect them adversely.

However, this is not a new policy by China. Before this, China has a restriction that citizens can’t bring more than 50,000 USD out of the country every year. But now the control is becoming more stringent. Although more Chinese investors would like to buy houses or invest in Malaysia, they are restricted by these policies.


Lee: There are some who question OBOR’s usefulness and claim that this is a grand idea with little substance. What do you think?

Pua: Yes, I agree that there is little effect in some ways. For people who don’t understand mandarin, they don’t understand the concept of OBOR. Even if they want to participate, they can’t due to the language restrictions.

For example, there are many business organisations that actively promoted OBOR. But they used Chinese as the language medium. Malaysia government has not really collaborated with China to implement the OBOR initiative.

There might be reports that OBOR brings in all sorts of benefits, but there are no real strategy in terms of investment and others to reap benefit from OBOR. There is no comprehensive investment strategy to make use of this initiative, such as 10 years of tax exemption and so on.

These should be done to let local enterprise reap the benefits of OBOR.

Lee: In your opinion, what are the hotspots of foreign investment?

Pua: Now, Iskandar Malaysia is the up-and-coming area. We always said it will be the next Shenzhen. It is next to Singapore and spread across a huge area. It has great potential. If you look at the whole country, Iskandar Malaysia is still the most popular area.

This is not only because there are many Chinese developers at the region. Many developments in Iskandar Malaysia are built with a great concept. Also, there is the Senai airport that is well connected with many international destinations, such as Guanghzou, Shenzhen and other places.

Iskandar Malaysia will only get hotter. It is not just concerning the local housing properties. The whole Iskandar Development Region plan spanning across 20 years also presents as an opportunity for the foreigners.

I want to point out that Iskandar Malaysia is not only targeting the Chinese buyers. Investors from other countries such as the Middle East also have high hopes for Iskandar Malaysia.