Local contractors, suppliers lose out to Chinese firms

SME Association of Malaysia says locals are worried as China owns and controls the entire supply chain in its projects.

PETALING JAYA: Chinese construction companies involved in development projects in Malaysia are bringing little or no benefit to local contractors and suppliers as they use their own workers and materials specially brought from China.

The Straits Times cited Malaysian businessmen as expressing concern over the activities of the companies from mainland China who do not tap on resources available here.

It said the massive scale of Chinese firms together with the sudden and rapid development projects they are participating in have ignited fear among Malaysian businesses.

According to business owners, Chinese firms would typically operate independently, with little inclination to get skilled domestic workers and raw materials from Malaysian companies.

The report quoted SME Association of Malaysia president Michael Kang as saying that the local industries are apprehensive about the presence of Chinese firms as they stand to lose out to the huge competition posed.

“The problem with China is that it will own and control the entire supply chain,” he was quoted as saying.

“China comes here with a volume game. Of course, local businesses are worried about the competition,” he added.

The report said the Chinese are inclined to bring their own skilled and unskilled workers, while also importing supplies such as steel and machinery from their own country.

They also implement their projects with a speed and scale that most Malaysian companies are unable to match, it added.

The steel sector is among those economically impacted by the Chinese.

The report quoted Malaysian Iron and Steel Industry Federation president Soh Thian Lai as saying that the Chinese developers and contractors relied on millers in their own country to purchase steel that they needed. This situation persisted until the Malaysian government imposed rules on the matter.

The steel imports from China to Malaysia are so large that they amounted to 8% of total Chinese imports last year, it added.

The report said Malaysian steel companies are also not able to compete with the volume of output generated by the Chinese.

Citing figures from the World Bank and the Statistics Department, it said state-owned Chinese firms constructed and invested US$35.6 billion (RM154.42 billion) worth of projects in Malaysia from 2010 to 2016.

Construction projects with heavy Chinese investment include the Forest City reclamation and urban development in Johor, the Melaka Gateway port and mixed development, the East Coast Rail Link from Gombak in Selangor to Wakaf Baru in Tumpat, Kelantan, and the completed 24-km long Sultan Abdul Halim Mu’adzam Shah Bridge, also known as Penang Second Bridge, which was opened in April 2014.

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Your thoughts on the winding down of China investments in Malaysia. 

All China related theme to face a sell down?

what would that be?