Kuala Lumpur: Terming the cost of China-backed rail project as too high, the Malaysian government has dropped the project. the 81 billion ringgit ($19.6 billion) east coast rail link (ECRL) would have connected the eastern and western coasts of the peninsula.
This is not the first time that Malaysia has suspended a project like this. In a bid to cut down the country’s massive one trillion ringgit debt, the government scrapped several major projects inked under the country’s previous scandal-plagued regime in the recent times.
According to reports, Economics minister Azmin Ali said that the decision was made two days ago. The country doesn’t have financial ability at this time and that the cost of the ECRL development was too big, he told reporters.
He added that Malaysia would have to pay an annual 500 million ringgit interest payment if the project continues.
Reports allege that the previous government signed up a string of Beijing-funded projects as it had warm ties with China. But many of these projects lacked transparency. There is also a speculation that the deals were made in exchange for help in paying off debts from a massive financial scandal involving state fund 1MDB. Najib was accused of plundering billions of dollars from 1MDB, with the former leader charged with corruption over the scandal. He will stand trial over these charges in February, and has denied any wrongdoing.
The scandal played a major factor in Najib’s shocking defeat in May last year and it saw Mahathir Mohamad return to power. Mahathir then ordered a review of mega-projects signed by Najib during his rule, adding he would discuss “unfair” terms supposedly set in these deals and high interest rates levied on Chinese loans used to finance the projects.