China-backed rail ‘will still be reconsidered if it was a US project’


The East Coast Rail Link (ECRL) will still “be reconsidered … if it was a US project”, Chinese analysts said, noting its cancellation by the Malaysian government is not targeted at “any particular country”.

Yet source with contractor China Communications Construction Co said China and Malaysia “are still discussing the project”, according to China’s state media.

Malaysia’s economics minister said the country will cancel the US$20 billion ECRL project with CCCC.

“The decision was taken because the cost of the project was too high,” Mohamed Azmin Ali told reporters on Saturday.

“If the project is not canceled, the government will have to bear the interest rate of about half a billion ringgit a year, which we can’t afford,” Azmin Ali said. “Therefore, the project needs to be terminated without jeopardizing relations with China.”

But he also gave an assurance that Malaysia would welcome all forms of investment from China on a case-by-case basis.

Graphic by the Star

The minister’s comments on Saturday are the clearest indication yet that the Malaysian government has reached a final decision on the 688km rail link after expressing an interest in cancelling the project last May.

It was to have been built by the China Communications Construction Company and 85 per cent financed by the Export-Import Bank of China.

“If this project is not cancelled, the interest that will need to be paid by the government is almost half a billion ringgit (US$121 million),” Azmin Ali said.

A person close to CCCC told the Global Times on Friday that he two sides are still discussing the project, despite it was “temporarily halted”.

Xu Liping, a senior research fellow at the Chinese Academy of Social Sciences, told the Global Times on Friday that the long-halted project was largely due to the unsatisfactory financial conditions in the country.

“The decision was hard to make, since even the compensation amount is not a small one for the country, not to mention the amount for the project construction,” Xu said.


“It’s not targeted at any particular country. If it was a US project, the Malaysian government would also reconsider it, given its poor financial situation,” Chen Fengying, a research fellow at the China Institutes of Contemporary International Relations in Beijing, told the Global Times on Friday.

However, Chen noted that while it’s understandable that the policy would change with the shift in government in Malaysia, China should also conduct a greater risk evaluation before making similar investments in other countries.

Experts also noted that Malaysia should provide full compensation based on the contract if the deal was cancelled; otherwise, it will hurt the credibility of the Malaysian government itself.

“There are many other projects two sides are engaged in, and some projects are urgently needed in Malaysia, such as technology and internet projects. Thus, the two sides will continue to cooperate,” Liang Haiming, chairman of the China Silk Road iValley Research Institute, told the Global Times on Friday.



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