Borneo expanding business with China inevitable
John Teo 
Sarawak Energy aims to be the ‘the Asean powerhouse’ by exporting power to Sabah, Indonesia and Brunei

IF one were to take a cursory look at any map of Southeast Asia – still very much at the crossroads of Asia in terms of being the market-place for both goods and political ideas – that huge blob of landmass that is Borneo lies unmistakably smack in the middle of it all.

Despite such geographic (perhaps even strategic) centrality, this major island – home to less than 20 million people in total – remains largely at the periphery of all the dynamism that the whole region is justifiably known for.

As the entire Asian region makes further economic advances and particularly with the rise of China and its rapidly evolving 1.3-billion strong, middle-class economy, Borneo’s diffidence and seeming indifference to the powerful political and economic forces sweeping all around it simply cannot stand idly by.

The island is very obviously the last main frontier landmass of the region with a long coastline (over a thousand kilometres long) fronting the South China Sea. If it cannot remain a frontier for much longer whether it chooses to be or not, the question that naturally arises is in what shape its development will take, going forward.

There is one clear answer as to why Borneo has remained a frontier outpost this long despite its very advantageous position vis-a-vis Southeast Asia and the larger region. That has to do with political leadership.


No exclusive domain

Borneo is not just a single political entity but three, with tiny Brunei the only sovereign independent entity while Sabah and Sarawak are part of Malaysia and the provinces of Kalimantan part of Indonesia. Thus, except for mostly inconsequential Brunei, key political and economic questions and decisions are not exclusively the domain of the powers-that-be within Borneo itself.

Even nominally independent Brunei is still under Britain’s security umbrella and takes its most important economic cues from neighbouring Singapore.

There are, of late, political stirrings in Sabah and Sarawak for greater autonomy to decide their respective own fates (including that over economic direction) even if most of the more credible such voices make plain the existing arrangement within Malaysia will stay.

The Kalimantan provinces have remained mostly quiescent politically as they settle in for the district-level autonomy prevailing throughout post-Suharto Indonesia. Such very narrowly-defined autonomy had been so designed precisely to curb any impulses for autonomy or even self-determination which may harbour thoughts they can be self-contained and self-sufficient and therefore able to go their own way.

As the still mostly resource-based economies of the entire island slowly but surely wind their way down over time, political arrangements clearly will need to adapt if the current power brokers hope to remain in their driver’s seats.

That is most in evidence in Brunei which has suffered several years of recession brought on by the lower prices for its economic mainstays of oil and gas (O&G) which are also rapidly depleting.

It is therefore a no-brainer that Sultan Hassanal Bolkiah has turned towards China for economic salvation as the largely Western-based O&G multinationals and financial institutions have lately retrenched in the sultanate in anticipation of businesses winding down.

The normally placid backwaters that is Brunei recently caught the attention of the international media which highlighted the substantial investments Chinese concerns are pouring into it in hopes of turning it into another link in the mammoth Belt and Road Initiative of Chinese President Xi Jin-ping.

Brunei, of course, is not alone in turning its sights towards China. Sarawak may in fact be the earliest significant economic beachhead China has established anywhere in Borneo, with the involvement of some of the biggest Chinese companies in the state’s dam constructions and the building of power plants.

Chinese companies have lately entered other fields such as the building of a high-rise new hotel in Kuching and other real-property developments.

In Sabah, Chinese tourists have very quickly established themselves as the dominant force in the state’s increasingly vital tourism industry.

Resource extraction all across the Kalimantan provinces now has a very clear China play in either direct or indirect ways.

China’s global economic expansion has lately caught much flak worldwide although much of it seems to have either originated from the West or being instigated by Western-oriented institutions.

Even here in Malaysia and especially over in the peninsula, there is growing debate over China’s growing economic presence. As long as there is no tendency towards overtly negative stereotypes about China’s economic policies and practices abroad, such debate should be healthy.

There is of course an understandable concern that China will use its clear economic dominance to run roughshod over smaller countries and economies. In a sense, that is somewhat inevitable perhaps. A colossus such as China – or the United States, for that matter – can be hugely disruptive for others even if all it does is a benign handshake!

A key manager of Sarawak Energy Bhd (SEB) – Sarawak’s wholly state-owned power corporation – however said recently that top corporate leaders in Beijing of affiliates directly involved in the state’s power industry find the time to give SEB executives a respectful hearing (when they need not have done so) and take appropriate remedial action when SEB on occasions hit a brick wall with those China affiliates working on the ground in the state.

It will have to be such complex and intricate interplay of human interactions across boundaries that will result in real “win-win” economic outcomes for all concerned.

And as such key Borneo-based entities as SEB look beyond Sarawak for their business expansion, positively engaging with their China counterparts may increasingly become both the norm and an inevitability.

As SEB CEO Sarbini Suhaili recently told the media, the company’s regional ambition is to be “the Asean powerhouse”, starting with exporting power to Sabah, Indonesia and Brunei.

Borneo coming out of its shell economically will naturally need to have as a key component a plan to powerfully electrify the entire island and not just it being the traditional exporter of raw energy to economic centres elsewhere.

It may be just the right time for Borneo to finally shed its frontier status at a time when China matures into a key global economic player.

John Teo is based in Kuching. Comments:

This article first appeared in Focus Malaysia Issue 279.