Malaysia leader: Still negotiating China-backed rail project

FILE - In this Monday, Jan. 21, 2019, file photo, Malaysia's Prime Minister Mahathir Mohamad arrives for meeting at the federal chancellery in Vienna, Austria. On Tuesday, Jan. 29, 2019, Mahathir says that proceeding with a multi-billion-dollar rail link project backed by China will “impoverish” the country, saddling it with heavy debts for the next 30 years. (AP Photo/Ronald Zak, File)

KUALA LUMPUR, Malaysia — Malaysian Prime Minister Mahathir Mohamad said Tuesday that proceeding with a multibillion-dollar China-backed rail link project would impoverish the country, saddling the government with excess debt for the next 30 years.

Since winning a historic vote last May, Mahathir's government has axed or reviewed large-scale infrastructure projects to rein in a surging national debt that it blames mostly on corruption in the previous government.

But there is confusion over the status of the $20 billion East Coast Rail Link following recent conflicting statements by two Cabinet ministers. Mahathir's comments Tuesday suggested it might be called off but he later said a final decision hasn't been reached.

Mahathir said the cost of the project could exceed 100 billion ringgit ($24.3 billion) upon completion.

"It is not that we do not want to honor our contracts, but we just cannot pay," Mahathir said. "It will impoverish us so we seek understanding of the parties concerned, that it is not because we just want to frustrate or throw out a contract, but because we are really tied in terms of finance."

Paying compensation won't be as much as "the amount of debt we will carry for the next 30 years," he added.

At another event late Tuesday, Mahathir said negotiations are still ongoing as both sides have different perspectives on the project, and the government hasn't made a final decision.

In Beijing, Chinese foreign ministry spokesman Geng Shuang said the project had been agreed to "on the basis of mutual respect and equality." He said the two sides were discussing the issue.

The 688-kilometer (430-mile) rail link is a key part of China's regional Belt and Road infrastructure initiative. It would connect Malaysia's west coast to rural eastern states. It is largely financed by China and the main contract was awarded in 2016 to the China Communication Construction Company, or CCCC, by former Prime Minister Najib Razak.

Officials have said the project's final cost is about 50 percent higher than estimated by the previous government.

During a trip to China last August, Mahathir initially said the project would be canceled. He later said negotiations were underway about scaling down the project or delaying it. The situation was muddled when Economic Affairs Minister Azmin Ali on Saturday said the Cabinet had agreed to terminate the project but Finance Minister Lim Guan Eng disputed that.

Mahathir said Tuesday that Azmin was merely trying to explain the importance of maintaining good ties with China as it is Malaysia's top trading partner and key investor. He said Lim will make an announcement on the matter but didn't say when.

The government has also said it is investigating whether any money in the rail project has been channeled by Najib's government to repay debts at the 1MDB state investment fund. A massive financial scandal at 1MDB led to the ouster of Najib's coalition. Najib is facing multiple corruption charges linked to 1MDB.

Must Read

2 Malaysian boys charged with murder for Islamic school fire

Sep 28, 2017

Two Malaysian teenagers were charged with murder after being accused of intentionally setting a...

Malaysian PM leads protest in solidarity with Palestinians

Dec 22, 2017

Malaysian prime minister leads thousands of Muslims in a rally to show solidarity with...

Faulty Takata air bag kills 6th person in Malaysia

Jan 30, 2018

Japanese carmaker Honda says another person has died in Malaysia after a flawed Takata air bag...

Malaysia cuts proposed penalty for fake news to 6 years

Mar 29, 2018

Malaysia's government has cut the proposed punishment in a bill prohibiting fake news from 10 to...

Ex-strongman seeks legacy as savior of Malaysia's democracy

May 11, 2018

Former strongman Mahathir Mohamad was an unlikely choice to steer Malaysia on a more democratic...

Weather, 20 December
Houston Weather
+7

High: +11° Low: -2°

Humidity: 83%

Wind: NNE - 7 KPH

Canberra Weather
+27

High: +27° Low: +17°

Humidity: 87%

Wind: W - 20 KPH

Roissy-en-France Weather
+6

High: +6° Low: -5°

Humidity: 87%

Wind: ENE - 7 KPH

Florence Weather
+9

High: +9° Low: +6°

Humidity: 97%

Wind: ENE - 17 KPH

Parga Weather
+7

High: +16° Low: +4°

Humidity: 100%

Wind: SE - 25 KPH

About Us

In Malaysia Corner, we’re here to bring back those days where you can still catch up with everyday news no matter which corner you are at.

Contact us: sales[at]malaysiacorner.com