China’s envoy to Malaysia said Thursday he was hopeful that negotiations to resume construction of the East Coast Rail Link (ECRL) would succeed, after the Malaysian prime minister signaled a softening in his stance against the U.S. $19.5 billion project.
Following an official visit to a Chinese-owned railway equipment production center in Malaysia’s Perak state on Thursday, Ambassador Bai Tian told reporters he hoped the two countries could reach a deal to resume the stalled project.
A day earlier, Malaysian leader Mahathir Mohamad had indicated that the project might be revived on a “smaller scale.” Last year, he announced that his government was cancelling construction of the rail line and other China-backed projects.
“Both governments have been talking to each other about continuation of the ECRL project and both have agreed to leave the negotiations for the project to the contractors and the owner of the contract. So now we are still waiting for the report from the two parties,” the Chinese ambassador said.
“We haven’t got the report yet (but) we are still optimistic of the outcome and we hope by the mutual respect, by goodwill and the spirit of mutual benefit and equal footing, the businesses will come out with a win-win result,” Bai Tian said.
But Malaysian Transport Minister Anthony Loke, who was with the Chinese envoy, sounded less optimistic.
“It is only fair we wait for the final report before we can make any decision as both sides leave it to the working committee to negotiate before making a decision. As far as we are concerned, the Malaysian government has yet to make a final decision,” Loke told reporters.
In August 2018, Mahathir, the new prime minister, told Chinese officials that his government was shelving the high-speed railway line along with other China-backed infrastructure projects, which included two gas pipelines.
At the time, he said Malaysia did not need them and could not afford them. Mahathir also said then that he had inherited 1 trillion ringgit ($241 billion) in national debt when his government took over three months earlier.
On Wednesday, Mahathir told the Chinese publication Sin Chew Daily that the ECRL might be revived, but it could be smaller than originally planned.
“But this is not easy as we are bound by the contract and cannot terminate the project easily as we have no money to pay China,” he told the publication, adding, “we have paid a lot of money to China after the postponement.”
In August 2017, then-Prime Minister Najib Razak, hailed the 688-km (430-mile) project spanning the states of Selangor, Pahang, Terengganu and Kelantan, as a game changer for Malaysia, stating it was to be completed in 2024 at a cost of about $13 billion.
The ECRL was also a flagship project in Malaysia seen as part of Beijing’s One Belt, One Road (OBOR) initiative. Through this trillion-dollar infrastructure drive, Beijing plans to build a vast network of roads, railway lines and ports in South and South Asia that would allow China to trade more easily with European countries via the Indian Ocean and Central Asia.
The rail-link project was awarded to China Communications Construction Co. (CCCC) as the main contractor while Malaysia Rail Link Sdn Bhd (MRL) was listed as the owner. It received a loan from the Export and Import Bank of China.
Mahathir’s government, which took power in May 2018 after defeating Najib’s Barisan Nasional coalition in a general election, said the project’s cost had ballooned by 26 billion ringgit ($6.3 billion).
After Mahathir’s latest comments were published, Najib, in a Facebook posting, said he was surprised by the number of people who believed the country would be forced to lease land around the rail line to China.
“It is hard for me to believe why many Malaysians can still believe the PH propaganda and that Malaysia will become like Sri Lanka because of the ECRL,” he said using the abbreviation for Mahathir’s Pakatan Harapan government.
In 2017, Sri Lanka gave China a 99-year lease for a port in Hambantota after it failed to pay back loans for construction of the port project. The Sri Lankan port was one major pieces completed earlier as part of Beijing’s OBOR initiative.
Najib also said he did not believe that the government lacked money to go on with the project.
The former prime minister faces 39 criminal charges linked to the beleaguered state development fund 1Malaysia Development Berhad, which he established in 2009. The U.S. Justice Department alleges that almost $4.5 billion (18.7 billion ringgit) from the state fund was embezzled and laundered through real estate and other assets.
‘Question of pricing’
Meanwhile, Oh Ei Sun, a senior fellow at the Singapore Institute of International Affairs, said the negotiations could help improve relations between Malaysian and China, adding that Beijing wanted to complete the ECRL.
“I think there is a need for a rail link across the breadth of the Malay Peninsula to facilitate primarily the transport of goods from Port Klang to, say, the Kuantan port. The existing East Coast rail line can be upgraded to serve better goods and human transport needs,” he told BenarNews.
He said the cost of the project had been a sticking point.
“It has always been a question of pricing from the onset. As long as the price negotiations are satisfactory, then it can proceed,” he said.