In the spring, Mongabay was on the ground, at the front lines, to report on the mammoth infrastructure construction projects occurring against the backdrop of the national election. Our intent was to understand the dimensions of Malaysia’s contemporary makeover and the environmental consequences for a nation of 31 million people that ranks as Southeast Asia’s fourth-largest economy.
We discovered that while the concerns about the security of air, water and land are justified, Malaysia’s big investment in new operating equipment also produced unexpected economic gains, as well as considerable financial and political challenges.
Over the coming weeks, in this and five other reports, Mongabay will assess the development strategy in Malaysia’s 11 peninsular states, and its value or its flaws as a model for 21st-century nation building. We did not visit the two states on the island of Borneo, where a big highway is being built and a Chinese-financed natural gas pipeline was just blocked.
As might be expected, Malaysia’s infrastructure development is a story evolving in many dimensions. In Kuala Lumpur, Malaysia is steadfastly realizing transportation and real-estate development goals it set over two decades ago to ensure that the capital is competitive with Shanghai, Hong Kong, Singapore and Jakarta as a principal center of international finance in Asia.
Much of it displays Malaysia’s interest in joining environmental performance with infrastructure investment.
Mongabay will examine Najib’s grand vision of connecting the capital region with fast, clean and convenient rail transport — and the ways in which this year’s elections may derail those plans.
In Kuala Lumpur, we look at the $1.3 billion River of Life project, one of the world’s largest river restoration attempts. Its target is the Klang River, which flows through Kuala Lumpur and essentially served as an open sewer. The multi-phase program, underway since 2012, fits wastewater treatment with stormwater management and diversions, trash and grease control, and urban park construction. Now 90 percent complete, the project is intended to make the Klang’s water clean enough for swimming and to lure shoreline development.
Our project also will report on how flooding, mudslides and other severe ecological disasters are challenging real-estate development and seabed reclamation on Penang Island, one of the country’s fastest-growing areas.
We look at Kuantan, where titanic industrial parks, a new port, the expensive East Coast Rail Link project, and mixed-use real-estate development are planned to serve China’s Belt and Road Initiative. Malaysians worry that China’s sphere of influence, which Citibank researchers estimate could amount to $100 billion in Malaysia alone over the next two decades, is too robust. Prime Minister Mahathir latched onto the issue as part of his winning election campaign.
And we will report on new construction practices and environmental challenges in Johor, Malaysia’s southernmost state, bordering Singapore, where a Chinese real-estate developer is building Forest City. The mammoth mixed-use project, constructed on artificial islands reclaimed from the sea, is the largest real-estate investment by a Chinese developer outside China. Its scale and land-acquisition practices, mimicking similarly enormous projects in China, also became an issue in the elections over concerns about the extent of Beijing’s influence in Malaysia.
This project comes during a socially raucous season, a time when political decisions are having significant economic outcomes. Events are moving fast. Mahathir launched audits and turned investigators loose to determine how 1MDB operated, where it invested sovereign funds, how much was allegedly stolen, and the extent of the losses. Among its investments was a big financial center that is under construction in Kuala Lumpur and appears on solid financial footing. Another investment in a natural gas plant, and Chinese financial deals to pay off some of 1MDB’s debt, may have been diverted to personal accounts of 1MDB managers, including Najib. The former prime minister denies any wrongdoing.
Investigators dispatched by the new prime minister have recovered tens of millions of dollars in cash, jewelry and luxury goods from residences owned by Najib. In May, Mahathir barred Najib and his wife from leaving the country. Then, in early July, Najib was arrested and charged with theft and money laundering. He was released on bail and remains under investigation.
The 1MDB fund is insolvent and cannot pay its debts, Mahathir announced after the election. The new finance minister says the government will be held responsible for around $13 billion in liabilities. The losses pushed the national debt to $250 billion, the government said, and concerns over the debt have caused the stock market to fall 5 percent. Analysts in Asia said Malaysia’s financial crisis could erode the country’s international reputation for political and financial stability and weaken government programs, including for land conservation and environmental enforcement.
“The financial situation of the Malaysian government is more severe than previously thought,” wrote Kota Hirayama, an emerging market economist for SMBC Nikko Securities, a Japanese financial services group, in a May report.
“The government has been opaque,” added Steve McCoy, a sustainability consultant based in Kuala Lumpur. “We don’t really know how bad things are. We don’t know how they are paying for this stuff that’s been built.”
This story first appeared on Mongabay
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