After PM sets tone in Beijing, now comes the hard part

While local headlines may suggest that a number of China-financed mega projects are now cancelled following Prime Minister Dr Mahathir Mohamad's talks with the Chinese leadership, things are not as simple as it seems.

Mahathir, in his first interview after returning from China, told Malaysiakini that what he had done was to set the principle on how to move forward but whether the project will be cancelled, deferred or resolved through other means had yet to be established.

"You see, these are details and details are never discussed by prime ministers or presidents. Most of this work will have to be done by the officials," he told Malaysiakini in an interview at the Perdana Leadership Foundation.

Mahathir said what he had stated was that Malaysia's preference was for the cancellation of the East Coast Rail Link (ECRL) and Strategic Energy Resources (SSER) pipeline projects.

"I said if we can, we would like to cancel it. If we cannot, we would like to defer and look towards other ways of solving our financial problems.

"These are the options. It is not a black and white kind of decision. You have to leave room for negotiations," he said.

Main goal

Mahathir believed his biggest achievement from his five-day trip to China was to convince Beijing that Malaysia was not being hostile to China but needed to put those projects on ice due to genuine financial concerns.

"The Chinese understood that - none of them said 'no' or anything like that. I explained to all three leaders - the prime minister, the head of the party as well as the president.

"They never rejected nor said that it was not right... they all admitted that we have a financial problem which can only be resolved by cutting down on the expenses," he said.

Mahathir also rebutted critics who claim that Beijing was unhappy at him.

"They didn't seem to be unhappy... I was well received by them and we had very good discussions at the official level and subsequently, I had lunch with the prime minister and dinner with the president.

"During that time, the relationship was also very good," he said.

The hard part then depends on whether the Chinese's leadership sympathetic position can trickle down to its bureaucrats who will be engaging with Putrajaya on how to move forward.

'Very big' compensations

The projects have largely fallen under the ambit of the Finance and Economic Affairs Ministries and they are expected to play important roles in negotiating the details.

Mahathir said the expected compensation was "very big" and will have to be hammered out in the future negotiations.

"Their compensation is mentioned in the agreement. I didn't discuss that because obviously when we do the real negotiations at the official level, we will have to take up that point," he said.

Mahathir also reiterated his frustration at the previous BN government for entering into what he believed was unfair agreements for the projects, including disbursing payments according to a fixed time frame instead of work progress.

"It would look as if the people who went there to negotiate with the Chinese were very stupid. They didn't know what is meant by agreements and contracts and all that," he said.

Both the RM55 billion ECRL and RM9.4 billion SSER were being constructed through loans financed by Import-Export Bank of China (Exim Bank).

The ECRL project was awarded to the China Communications Construction Company (CCCC) and the SSER to China Petroleum Pipeline Bureau, both Chinese state-owned companies.

Mahathir had said the projects were unsustainable and would cause the country to be saddled by a heavy debt burden. - Mkini