Malaysia restarts China's Belt and Road rail project with after cost reduction
MALAYSIA has restarted its East Coast Rail Link Belt and Road project with China after reducing projected costs by a third to lighten the government's debt burden, reports Caixin
MALAYSIA has restarted its East Coast Rail Link Belt and Road project with China after reducing projected costs by a third to lighten the government's debt burden, reports Caixin.
The rail project, led by China Communications Construction Co and Malaysia Rail Link, had been cancelled a year ago by Prime Minister Mahathir Mohamad's new government over concern of the MYR65.5 billion (US$16 billion) expenditure. The project was revived after the Malaysian government stuck a deal with China to slash the cost to MYR44 billion.
This came after a sudden project derailment when Malaysian authorities in mid-July seized US$241.43 million held by China Petroleum Pipeline Engineering Corp (CPP), a Chinese state-owned company, said Caixin.
The on-again off-again Belt and Road projects were again off when the new government found they were too financially burdensome and required the presence of 'too many warships'.
But Beijing persuaded Kuala Lumpur to resume the $10.7 billion Belt and Road projects last April. Malaysia reportedly backed down when with faced $5.3 billion 'termination costs' contained in initial agreement, according to London's Financial Times.
The rail project is one of several infrastructure projects that Prime Minister Mahathir has sought to revive after a wave of spending cuts and a corruption crackdown last year.
Other Asian governments from Myanmar to the Maldives have also reassessed Belt and Road Initiative investments amid concerns over sovereignty and large borrowings, said Caixin.
Malaysia will sign a supplementary agreement soon with Export-Import Bank of China that will reduce the interest cost of its loan for the East Coast Rail Link project, said Malaysia's Transport Minister Loke Siew. The Exim Bank loan is to finance 85 per cent of the MYR44 billion project, he said.