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Malaysia

Future of Malaysia’s China-backed East Coast Rail Link hinges on elusive report

  • Beijing and Kuala Lumpur have both distanced themselves from negotiations over the massive rail project, citing a long-awaited study that has yet to arrive
PUBLISHED : Thursday, 03 January, 2019, 7:33pm
UPDATED : Thursday, 03 January, 2019, 10:07pm

Beijing and Kuala Lumpur on Thursday sought to depoliticise the debate over a stalled China-backed megaproject in Malaysia, saying that negotiations on how to move forward would be left to contractors from both sides.

Malaysian Prime Minister Mahathir Mohamad put a stopper on the 80 billion ringgit (US$19.3 billion) East Coal Rail Link (ECRL) project last year after returning to power in a shock election victory.

At a press conference on Thursday, China’s ambassador to Malaysia, Bai Tian, said both governments were still awaiting a report from the project owner Malaysia Rail Link and main contractor China Communications Construction Company before any final decision was made.

“Both governments have been talking to each other about the continuation of the ECRL project. Both have agreed to leave the job of negotiation of this project to the contractor and owner … so now we are still waiting for the report from the two parties,” he said following a visit to a factory run by CRRC Corporation, a Chinese rolling stock manufacturer that is unaffiliated with the project.

Mahathir hands olive branch to Beijing on stalled Chinese rail project

“We haven’t got the report yet but we are still optimistic about the outcome. We hope that by mutual respect, by goodwill and the spirit of mutual benefit and equal footing, the two businesses will come out with a win-win result.”

The project will be good for Malaysia, he added.

Bai’s comments come just days after Mahathir announced that the project could continue on a smaller scale if Beijing was amenable.

The ECRL was one of several China-backed infrastructure projects suspended by Mahathir’s administration following May’s general election, citing ballooning national debts and a looming financial crisis.

Yet in an interview with Chinese language Malaysian daily Sin Chew earlier this week, the Malaysian prime minister said that the 80 billion ringgit (US$19.3 billion) project could continue if Beijing took into account the tough economic spot Malaysia was in.

“What we are trying to do is ensure that we will not spend much money and that China will not suffer a loss,” Mahathir said, before reiterating the two nations’ long friendship and noting that 2019 marks 45 years since the establishment of diplomatic ties.

As far as the Malaysian government is concerned, we have not made a final decision
Malaysian Transport Minister Anthony Loke

Malaysian Transport Minister Anthony Loke, who was also at the briefing, said that the matter would be left to a working committee to negotiate the details.

“As far as the Malaysian government is concerned, we have not made a final decision,” he said.

The railway – which would cross the Malay Peninsula if constructed, connecting Port Klang on the Malacca Strait with Kuantan on the eastern coast before running north through Tumpat on the border with Thailand – was to be financed in large part by the Export-Import Bank of China.

Malaysia has already paid 19.68 billion ringgit (US$4.8 billion) towards its construction.

While the ECRL dispute is ostensibly a commercial matter between two companies, a source directly involved in the talks told This Week in Asia last year that both governments getting involved was “inevitable”.