Chinese Investment in Africa

Arab Spring Ramifications

China is showing less “enthusiasm” for making investments in various parts of Africa which has likely been caused by the “ramifications of the Arab spring.” Investments in the past have been extremely popular, due to what has been seen as very attractive conditions such as “lots of autocrats and presidents-for-life, very few rules and regulations, little concern for life or environmental impact.” According to a recent article on the matter, pretty much anything has been possible “as long as the money kept showing up in the appropriate offshore accounts.”

But this was the situation in the past and things are now changing. With a new five-year plan from the country’s Ministry of Commerce (which is still being finalized), investing in Asia just isn’t “what it used to be, according to a quote from the Economic Observer. For example, it is just much harder now to open a mine there as factors such as the environment, employment and economy need to be taken into consideration.

China in Libya

Looking to Libyan investment (which has been a more recent popular jaunt for Chinese investment), there is an anticipated expected surplus of $3bn loss due to the repatriation of approximately 36,000 Chinese employees. As well, over the last four years, Libya has “contracted some 50 engineering projects to Chinese companies, including several image projects to mark the 40th anniversary of the 1969 revolution.” According to the article, being a contractor however, China has been able to manage its “direct losses in the unrest.” Nonetheless, some of its assets in Libya (such as Sinopec) did encounter destruction in the aftermath of the Libyan unrest. In general however, Beijing has had to somehow cope with a big mess of “compensation claims, third party debts and the re-employment of all returned workers.”

Chinese Investment Drop

Figures released from the Ministry of Commerce have shown a huge plummet of new Chinese contracts in North African countries for the first quarter. In Algeria this drop was 70.8 percent and in Libya, 46.9 percent for the same timeframe of 2010.

Malaysia Strong Asian Investment Opportunity

Malaysia: Major Asia Asset

Just two days ago a $3.7bn investment announcement came from Malaysia, set to “to jumpstart foreign interest in its economy even as other Asian countries try to stem speculative inflows in search of higher-yielding markets.” The country’s Prime Minister (Najib Razak) intends to try and get $444bn worth of investments resulting in Malaysia becoming a “developed country by 2020,” including $165m by Asia Media to create digital media infrastructure as well as the establishment of a state-owned energy development agency to be able to attract $106m worth of investments this year. This is all part of the country’s “Economic Transformation Programme,” a project that is due to be put into practice over the next decade.

Other Asian Countries Less Successful

Malaysia has been doing pretty well recently vis-à-vis investments. Indeed it has already attracted around $5bn in pledges from Exxon Mobil and Royal Dutch Shell Pic as well as other (smaller) projects. For example Indonesia, the Philippines and Thailand are having quite a few issues attracting investments anything near to the success of neighboring Malaysia.

But this hasn’t deterred Najib who is determined to ensure Malaysia stays one step ahead, “transforming [it] into a high-income economy within 10 years by generating new growth areas and restructuring the economy to lure investors.” Yet this goal is not as easy as it may seem. Investment blueprints from the past aren’t showing such great results. As well, in general the economy has been suffering from a less-than-skilled workforce to enable it to develop into the “financial services hub” it wants to. Yet it is past the stage of being a low-end manufacturing center,” as countries such as Vietnam now have that role.

Notorious Najib

Still, given all these efforts made by the country’s premier, the public is remaining loyal to Najib. Although one has only to look at the facts on the ground to see where the country really is, given that the exchange was down more than 5 percent from where it was just four years ago. While there is now more opportunity for competition, in general, investors are expecting the government to “take more aggressive steps to reduce its fiscal deficit and overhaul an affirmative action policy they say hinders competition.”

Malaysia PJ: Malaysia Post Japan’s Trauma

It might not have been a surprise if any parts of Asia – including Malaysia – would have been negatively impacted by Japan’s trauma. But in fact this hasn’t been the case, according to Datuk Donald Lim Siang Chai, the country’s Deputy Finance Minister. He claimed that it will “have little impact on the Malaysian economy in 2011.” Vis-à-vis the country’s exports to Japan he said that actually some areas (like plywood and liquid natural gas) would actually probably “increase during the second quarter of this year as Japan increases its reconstruction work of earthquake-damaged areas.”

As well, Malaysia probably won’t be affected by Mid-East and North African troubles either since trade between those countries is anyway only at around 2 percent.

So all in all things are looking good right now for Malaysia. The country has developed a strong enough economy and excellent relations with regions with which to continue exporting to see it through any troubled times Asia may be encountering.