Mahathir haggles with China to shave ECRL costs

High-speed rail to Singapore also being reviewed, cancellation will cost us a lot, PM says in interview.

Malaysia wants to cut costs of the proposed East Coast Rail Link project.

KUALA LUMPUR: Malaysia is haggling over the terms of a US$14 billion (RM55.73 billion) rail deal with its Chinese partners and can reduce its ballooning national debts by RM200 billion by doing away with mega projects, its prime minister said in an interview.

Mahathir Mohamad, the 92-year-old who triumphed over scandal-plagued Najib Razak in elections earlier this month, has made it a priority to cut the national debt and pledged to review major projects agreed by the previous government.

Work on the RM55 billion East Coast Rail Link – the largest such project in the country and a major part of Beijing’s Belt and Road infrastructure push – started last year.

The project was planned to stretch 688km connecting South China Sea ports in the east with the strategic shipping routes of the Straits of Malacca in the west.

“We are renegotiating the terms,” Mahathir told the financial newspaper The Edge. “The terms are very damaging to our economy.”

The project is being built by China Communications Construction Co Ltd, and is being mainly financed by a loan from China Exim Bank.

Mahathir also questioned the need for the project in the first place.

“He (Najib) knew very well that the ECRL, for example, is not something we could afford. It is not going to serve any purpose, it is not going to give us any returns,” said Mahathir.

Addressing the need to reduce Malaysia’s combined total debt and liabilities – which the government puts at around RM1 trillion – Mahathir said “at one go we can reduce it by RM200 billion by doing away with all these huge projects”.

Mahathir said Malaysia will also look into how it can reduce the cost of any potential exit from a deal for a high-speed rail (HSR) to link Kuala Lumpur with Singapore.

The project, valued by analysts at about US$17 billion, is currently out for tender and is scheduled to be completed by 2026.

“The terms of the agreement (for the HSR) are such that if we decide to drop the project, it will cost us a lot of money,” said Mahathir.

“So we are going to find out how we can reduce the amount of money we have to pay for breaking the agreement.” -FMT