Chinese Investment in Malaysia: China is Malaysia's biggest foreign investor

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The man leading Malaysia's opposition alliance in the May 9 general election, says if his pact wins power they will review all of China's foreign direct investment into the country. In doing so, the former prime minister is risking alienating the country's number one investor and trading partner. Rian Maelzer reports from Kuala Lumpur.

During his 22 years as Malaysia's prime minister, Mahathir Mohamad welcomed foreign direct investment. But he says Malaysia gains nothing from most investment from China, which has become his country's largest foreign investor. China invested 2 billion dollars in Malaysia last year, with tens of billions more in the pipeline.

RIAN MAELZER KUALA LUMPUR "Mahathir has criticized the high cost of properties Chinese developers are building in Malaysia's south, and the economic viability and cost of a rail line to the east coast to be funded and built by China."

And he's angry about that China's Geely Group bought half of Proton, the national carmaker that he founded, even though Proton was near collapse. Mahathir argues that his rival for power, Najib Razak, is not protecting Malaysia's national interests.

But economists think otherwise. China has invested in train building, rail projects, port expansions, real estate and construction, power, heavy industry and capital-intensive industry.

PROF. YEAH KIM LENG, ECONOMIST SUNWAY UNIVERSITY "Importantly there are also other manufacturing and services, telecommunication services that we are seeing Chinese investment come in that are helping the country move up the value chain."

China's FDI has surged as investment from elsewhere slipped.

PROF. YEAH KIM LENG, ECONOMIST SUNWAY UNIVERSITY "I think it's important to see that the Chinese investment has some kind of offset the slowdown in other countries that will help to sustain the economic growth of the country."

Malaysia's east coast has seen strong interest from China.

JEBASINGAM ISSACE JOHN CEO, EAST COAST ECONOMIC REGION "In the case of the Chinese, they bring in their technology, they provide jobs and you know provide the skills and training for our people. So you know it is well in synergy with our overall game plan and strategy for development in Malaysia."

In contrast to Mahathir's harsh rhetoric, the manifesto of his Pakatan Harapan alliance says it would continue to encourage investment from Asian countries including China, but would review ALL megaprojects regardless of who is behind them. Rian Maelzer, CGTN, Kuala Lumpur.