Prime Minister Tun Dr Mahathir Mohamad announced that the East Coast Rail Link (ECRL) and Trans-Sabah Gas Pipeline (TSGP) projects would be canceled, but that does not mark the end of major infrastructural projects involving Chinese investors but the beginning of a new stage.
Even though Beijing has said it understands that Malaysia has canceled the projects due to internal financial problems, Malaysia still needs to compensate China heavily for the decision, according to Mahathir.
The exact amounts of compensation, nevertheless, will depend on the outcome of the negotiations between the Malaysian government and involved Chinese companies.
In other words, while Malaysia can relieve itself of the massive construction cost of the three mega projects as well as astronomical sums of loans, it needs to bear the heavy cost of compensation.
As the three projects have already been initiated, all the monetary, technological and manpower input would now be rendered futile.
It is anticipated that the compensation amount is going to be colossal, not to mention the intricate legal issues.
Malaysia will be on the losing side if Beijing demands huge compensation. We will not only lose the economic spin-off from these three projects but also bear the massive cost of financial liabilities.
To the country, this is going to be a double loss. Of course, Mahathir can conveniently put the blame on the “stupid deals” signed between the previous BN administration and China, but is he fixing the mess created by Najib in a most pragmatic and proper way since he took over?
For example, has the government ever seriously talked to China to modify the development plans, reduce the scale of projects and loan interest, or even defer the projects in order to lighten its financial pressure while allowing the projects to go on?
From the perspectives of strategic considerations, sure enough Beijing wants these projects to go on so as not to jeopardize its “One Belt, One Road” plan, not so much about any short-term benefits from the projects. Any amount of compensation will not be enough to offset the loss of its strategic interests.
The future development of Sino-Malaysian relationship will be put to a new test, and we can only hope that the leaders of both countries will settle this matter amicably on the basis of mutual trust and understanding so that any negative impact could be kept at a minimum, given our cordial historical relations and the geopolitical and economic interests of both nations.
Over the long term, the importance of bilateral relationship far outweighs the cost of these few projects, and both governments must set their sights far and wide, and not to get overly obsessed with near term gains or losses.
– Mysinchew
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