A win-win partnership

 By PATRICK TEH


 AMID the growing palm oil stockpile and unstable prices, the government has rolled out its B10 biodiesel programme, an increase of three per cent palm oil content compared with the previous B7 version.

Unfortunately, the European Union (EU) has labelled biodiesel as an unsustainable fuel. Thankfully, China has come to our rescue by buying more of this commodity, amid declining imports of palm oil by EU.

If EU were to implement its resolution to import only sustainable palm oil certified by a single EU-sustainability certification scheme after 2020, the impact on this industry would be too great. How will the local plantation companies and 650,000 smallholders who rely on this commodity for their livelihood fare?

The Chinese government is helping our country, not only in buying more palm oil but also in developing infrastructure projects through the Belt and Road Initiative. Prime Minister Tun Dr Mahathir Mohamad has announced the revival of two mega projects — the East Coast Rail Link and Bandar Malaysia. Two Chinese companies are carrying out these projects.

For the past 20 years, China has been developing so rapidly that it overtook Japan as the world’s second largest economy in 2010. With so much excess capacity, it has to invest a substantial portion of its surplus in other countries in order not to overdevelop its country to an unsustainable level. By helping others, China is also helping itself because the progress of other nations will directly enhance bilateral trade. It’s a win-win situation.

The revival of the Bandar Malaysia project is a step in the right direction. It will focus on developing the country as a regional trade and financial hub instead of directing resources to an unviable third national car project.

Alibaba and Huawei have signalled that they will set up their information and communications technology centres there. The strategic location of this project may attract other multinational corporations too.

The local stock market has been in the doldrums for too long. The revival of the two mega projects will spur interest in the market again, as many stocks are trading below their net asset values. Initially, the momentum may start with construction and building material manufacturing stocks before it spills over to other counters.

Obviously foreign funds will not want to miss the opportunity to share a slice of the pie.

Those who voted in the Pakatan coalition on May 9 last year are eager to see corrupt politicians put behind bars. However, they also expect the new government to take effective measures to stimulate the stock market like what it is doing now.

A bullish share market can act as a catalyst to stimulate the economy.