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Thu, 28 Apr 2011

BLOOMBERG/China’s Wen Will Spur Investment, Tap Resources

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Chinese Premier Wen Jiabao started a four-day tour of Southeast Asia on Wednesday during which agreements to spur investment and tap the region’s natural resources are expected to be sealed.

Wen will witness as many as eight deals on the first leg of his trip in Malaysia, spanning the economy, infrastructure and education, Foreign Ministry official Hu Zhengyue said. Agreements on plantations, coal and banking will be signed in Indonesia, Hu said.

Malaysian Prime Minister Najib Razak last year identified $444 billion of private sector-led projects, ranging from mass rail to nuclear power, to support this decade in a bid to boost growth and attract foreign investment. Wen will encourage companies to target the energy, agriculture and fishery industries and seal a deal on mutual recognition of academic degrees, Chai Xi, China’s ambassador to Malaysia said.

“We’ve received a very strong indication of investment interest from China,” Jalilah Baba, director-general of Malaysian Investment Development Authority, or MIDA, said. It is targeting more value-added industries than in the past, such as renewable energy and chemical products, she said.

Chinese foreign investment in the Southeast Asian nation’s manufacturing sector jumped to 639.5 million ringgit ($214 million) last year from 162.2 million ringgit in 2009 during the global economic slump.

China is also Malaysia’s biggest trading partner last year, with bilateral commerce rising more than seven-fold over the past decade to $45.7 billion, according to the Malaysian government. China was the country’s biggest source of imports and second-largest destination for exports including Sime Darby’s palm oil.

However, the emergence of China’s second largest bank, China Construction Bank Corporation, which is believed to have expressed interest to take over EON Capital just days before the High Court makes a decision in relation to Hong Leong Bank’s bid to acquire EON Cap’s businesses, has added another twist to a complicated and protracted takeover tussle, industry sources said on Wednesday.

China has been scouring the world for natural resources to feed an economy that has grown by an average 10 percent annually since 1978. In return, it has pledged financing and assistance with construction.