Published June 4, 2009

M'sia, China to sign US$1.9b trade accord

PM Najib is trying to help firms open new markets

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(BEIJING) Malaysian Prime Minister Najib Razak, whose father was the first South-east Asian leader to open diplomatic ties with China, was due to sign accords yesterday for more than US$1.9 billion in trade and investment with the mainland.

Acacia Cellulose International Sdn will agree to buy US$1.2 billion of Chinese machinery for a pulp mill, and Kuala Lumpur-based CIMB Bank Bhd will complete the purchase of almost 20 per cent of Bank of Yingkou Co, according to a draft agreement obtained by Bloomberg. China's commerce ministry declined to verify the accords and Malaysian trade ministry officials could not be reached in Kuala Lumpur.

Mr Najib, who became Malaysia's sixth premier in April, is trying to help companies open new markets to counter a slump at home, where the economy may contract as much as 5 per cent this year. A fifth of Malaysia's small businesses may have to shrink operations, move to lower- cost countries or close in the current economic crisis, the Malaysian Business Times said yesterday, citing a survey.

The prime minister's visit marks the 35th anniversary of diplomatic ties between Malaysia and China, opened under the premiership of his late father, Abdul Razak, in 1974. The accords are scheduled to be signed at 6.30 pm in Beijing yesterday.

Mr Najib's younger brother Nazir Razak is deputy chairman of parent bank CIMB Group Bhd, which announced in March 2008 that it will pay 348.8 million yuan (S$73.3 million) for the stake in Yingkou, based in north-east China.

Adeline Ong, a CIMB spokeswoman, said that yesterday's signing is a only formality for the purchase, completed in April.

Acacia will use the machinery that it is buying for a planned plant in Bintulu in eastern Malaysia's Sarawak state that will make 850,000 tons of bleached acacia pulp for paper annually, said Ahmad Faizal Yaman, a spokesman for the company.

Dutaland Bhd, a Kuala Lumpur-based palm oil plantation operator and property developer, will spend RM600 million (S$248 million) building commercial and residential projects in Shijiazhuang near Beijing, according to the agreements. -- Bloomberg