Malaysia and China to tap Borneo resources

China and Malaysia on Monday signed a deal to build large projects in a controversial development corridor in resource-rich Borneo, one of the world’s last great wilderness areas. Najib Razak, the Malaysian prime minister, said the agreement could result in projects worth $11bn (€7.6bn, ?6.9bn) in the Sarawak corridor of renewable energy, which runs along the northern coast of the island his nation shares with Indonesia and Brunei. Mr Najib said the deal was signed in Kuala Lumpur by China State Grid Corporation, the country’s leading power transmission and distribution company, and 1Malaysia Development, an agency the prime minister set up to promote economic development and attract foreign direct investment. Neither side gave details of the projects, beyond the State Grid saying the talks involved an aluminium plant, or the amount of funding from Beijing. “We are still negotiating with the Malaysian side for these projects but currently we are not authorised to release any news. We may make some announcements later,” said Mr Yan, deputy director of the international department. The Sarawak development corridor plan also includes proposals for at least four dams, substantial coal mining and a number of plants producing chemicals, aluminium, steel and glass. According to the state government, the 320km corridor covers 70,709 sq km, including 1.46bn tonnes of coal reserves, just under 41,000bn cu ft of natural gas, and the potential to generate up to 28,000MW of hydro-electric power. The state says the development will transform Sarawak’s economy by allowing it to produce competitively priced energy and encouraging investment in energy intensive industries that will trigger further industrial development. However, development on this scale is also likely to require the relocation of some of the 608,000 people who live in the area, generating international concern about the future of indigenous people. Meena Raman of Friends of the Earth in Malaysia said there would be concerns about the scale of the investment, especially since environmental protection laws were weaker in Malaysian Borneo than in mainland Malaysia. “If there is going to be [an aluminium] smelter there will be massive environmental impact, and we don’t need more dams when we already have Bakun, which has more than enough energy to supply the whole of Borneo,” Ms Raman said. The 207m-high Bakun dam is designed to generate 2,400MW from a reservoir about the size of Singapore when it opens this year or next. Copyright The Financial Times Limited 2010. You may share using our article tools. Please don't cut articles from FT.com and redistribute by email or post to the web.