China unveils hug Malaysia investment

China unveils hug Malaysia investment

KUALA LUMPUR (AP): China announced yesterday it would establish its largest foreign investment project in Malaysia, signing a joint venture to build a pulp and paper mill on Borneo.

A statement issued at the signing of the 4.3 billion ringgit (US$1.6 billion) project in the presence of Chinese Premier Li Peng and Malaysian Prime Minister Mahathir Mohamad said the project "represented the single largest foreign investment by the (People's Republic of China) outside their country."

The joint venture was signed between the Lion Group of Malaysia and China Pulp and Paper Industry Co. Ltd for the plant to be built in Sabah state on Borneo island.

The project will produce 750,000 tons of pulp and 225,000 tons of paper annually. A substantial portion will be exported to China, generating annual earnings and savings of more than 1 billion ringgit ($3.7 million) for Malaysia, the statement said. It will provide 6,500 jobs, including 200 managerial and technical positions.

The project will have its own sustainable forest management program which will include converting and rehabilitating waste and idle land into productive forest plantation, the statement said.

About 220,000 hectares of forest plantation will be developed with an annual production of 3.8 million cubic meters of pulp wood to feed the pulp mill.

Two companies will be created in Malaysia to undertake the forest plantation project and the paper mill. The company for the plantation project will have an equity structure of 60 percent Malaysia and 40 percent China while the company for the paper mill will have an equity structure of 60 percent China and 40 percent Malaysia.

The partners are also looking into other possible sites in Malaysia to establish another pulp and paper mill of similar capacity.