Malaysia Government under PM Dr. Mahathir finally decided to cancel infrastructure projects, in particular two gas pipelines backed by China as well as the East Coast Rail Line. However, the postponement has been approved (with conditions) by China…
Malaysia Prime Minister Mahathir Mohamad told a press briefing last Tuesday at the end of a five-day visit to China that the government agreed with the Chinese government to differ two mega-projects. He was referring to the US$20 billion East Coast Rail Line (ECRL) which is due to link Kelantan to Pahang and further to the Klang Valley as well as to two gas pipelines worth US$2.3 billion.
According to the PM, both projects are “only to be deferred until we can afford, and maybe we can also reduce the total cost if we do it differently,” Dr Mahathir declared during the briefing. The Malaysian new governmental team had already asked Chinese companies involved to look at the cost issue- obviously without any success…
“It is all about borrowing too much money which we cannot afford, cannot repay, and also we do not need those projects for Malaysia at this moment,” added the Prime Minister
While China showed its good will by stating that it understood Malaysia’s concerns, the Chinese government however still stressed that any project cancellation would have to be financially compensated. Like for the High Speed Rail Link to Singapore, compensating costs could eventually skyrocket.
The 688km East Coast Rail Link was due to connect the South China Sea in the east coast of Peninsular Malaysia with strategic shipping routes in the west and was part of China’s infrastructure push across Asia. The redevelop;ent of Kuantan Port was also part of the mega-project.
Already in early July, the government ordered Chinese companies working on the construction site to suspend their work on the project. The ECRL project had been approved in 2016 by the former Najib Razak administration.