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1 Belt 1 Road

Aug 17 2017

What is OBOR? 一带一路

The OBOR (One Belt One Road) is China’s grandiose plan to revive the ancient Silk Route. It was unveiled in 2013 by Chinese president, Xi Jinping who proposed to create the world’s largest platform for economic, social and cultural cooperation. The proposed coverage area of OBOR encompasses 130 countries around Asia, Europe, Oceania and East Africa. An estimated investment of around $5 trillion’s needed to serve a population of 4.4 billion and command a share of whopping 30% of global economy.

Malaysia is one of the countries in Asia Pacific who will benefit most from the China OBOR Policy as it is strategically located in the centre of the Asean connecting one of the largest growing economy in the region with China fastest growing economy.

On May 13, 2017, Malaysia had signed 9 bilateral agreements with China during his five-day visit to China, including the Business-to-Business Memoranda of Understanding in various sectors, including construction, agriculture, financial market, infrastructure and investment cooperation worth US$22.7bil (RM31.26bil).

Most of these projects required large scale of local and foreign manpower from the Chinese investors. It is estimated that more than 250,000 skilled and unskilled manpower will be needed within the next three years (2018-2020). The Chinese investors have requested at least 30% of the manpower from China due to lack of communication and skilled factors.

In terms of manpower support, InterManpower will be working very closely with Malaysia Ministry of Human Resource (Jabatan Tenaga Manusia- Manpower Department) to identify and train (up-skill and re-skill) Malaysian skilled graduates required by the Chinese investors. And at the same time, working closely with China Human Resource partners  to help the Chinese investors in recruiting and managing skilled Chinese manpower in Malaysia.

InterManpower and its licensed recruitment agency Agensi Pekerjaan IRC Sdn Bhd JTKSM No 051C, have signed an MOU with FESCO, China largest Human Resource partner will be providing One Stop HR Services to Chinese investors to expedite the recruitment process of its expatriates and senior management team.

Among the 15 projects will be implemented in Malaysia are:

  1. Robotic Future City on a 1,000-acre (404.6ha) site in Johor Baru, which involves an investment of more than RM15bil and would include a holistic development in terms of research and development, manufacturing, education, services, and exhibition centre.
  2. Joint-venture factory producing methanol and derivatives between Sarawak Bumiputera Property Foundation, Consortium of Huanhqiu Contracting and Engineering Co. and Macfeam Sdn Bhd will be built at a cost of RM2bil and is estimated to be completed in 2021.
  3. Cooperation agreement to develop The Shore in Sabah (Kota Kinabalu) worth US$132.58mil (RM572.96mil) has also been signed
  4. AirAsia had also become the first low-cost carrier outside China that had been granted a licence to operate in the republic with an investment of US$100mil (RM432.16mil).
  5. Construction of the East Coast Rail Line (ECRL) by the Exim Bank of China.
  6. Memorandum of Understanding (MoU) between Felda Global Ventures Holdings Bhd and Sinograin Oils Corp.
  7. Malacca Gateway comprising mixed development on four artificial islands between KAJ Development Sdn Bhd with Power­China International Group Ltd for RM30bil joint investment to build and develop the islands, which are earmarked for various tourism, commercial, property and maritime developments.
  8. Alibaba DFTZ Regional hub will set up an e-commerce and logistics hub in Malaysia with Malaysia Digital Economy Corporation (MDEC), Malaysia Airports Holdings Bhd, CIMB and Maybank. The logistic hub will be located at KLIA Aeropolis on the 17.5ha site of the former Low-Cost Carrier Terminal. The e-hub will function as a centralised customs clearance, warehousing and fulfilment facility for Malaysia and the region. Alibaba also has plans for an e-service platform, e-payment and financing initiative, and e-talent development.
  9. Kedah Integrated Tuna Fisheries Terminal
  10. China-Malaysia Kuantan Industry Park
  11. Kedah Rubber City
  12. Lumut Maritime Termina – Perak
  13. Proton & Geely Joint Venture
  14. Edra Energy
  15. Bandar Malaysia and Carey Island Projects

Prime Minister Li Keqiang had given assurance that the Chinese government would continue supporting Chinese companies to invest in Malaysia.

The OBOR initiative has been categorized into two parts:

The ‘belt’ refers to the ‘Silk Road Economic Belt ‘which is land based. It will connect China with Central Asia, Eastern and Western Europe.

The ‘road’ refers to the ‘21st Century Maritime Silk Road’ which is sea based. It will connect China to South-East Asia, Africa and Central Asia.

The Silk Road Economic Belt will offer 3 major routes connecting China to Europe (via Central Asia), the Persian Gulf, the Mediterranean (through West Asia), and the Indian Ocean (via South Asia). While the 21st Century Maritime Silk Road is planned to create connections among regional waterways. These corridors will have energy and industrial clusters comprising of rail, roads, waterways, airways, pipelines, and information highways to promote development in the areas. There are six main corridors:

  • New Eurasian Land bridge, running from Western China to Western Russia
  • China–Mongolia–Russia Corridor, running from Northern China to Eastern Russia
  • China–Central Asia–West Asia Corridor, running from Western China to Turkey
  • China–Indochina Peninsula Corridor, running from Southern China to Singapore
  • Bangladesh-China-Myanmar Corridor, running from Southern China to Myanmar.
  • China- Pakistan Corridor, running from South-Western China to Pakistan

Besides the above Corridors, the Maritime Silk Road would run from the Chinese Coast through Singapore to the Mediterranean.

OBOR is a major way for China to expand their manufacturing capacity to developing countries.

The OBOR is the outcome of the need to bridge the ‘infrastructure gap’ across the Asia-Pacific, Central and Eastern Europe. Also China as the ‘World’s Manufacturer’ is seeking newer markets to absorb its excess production capacity. But its ultimate goal is to shift from low level manufacturing to higher level infrastructure goods i.e. high speed rail, energy generators and telecommunications equipment and markets which will find many takers in Asia and Europe rather than developed countries.