A new agreement to get a stalled China-backed railway project in Malaysia moving again indicated Beijing was willing to change the terms of belt and road deals, but there was also a risk more nations would seek cost cuts, analysts said. The assessment came after Malaysia on Friday said it had signed a fresh deal to proceed with the East Coast Rail Link after it had been suspended for months over cost concerns. Building the first two phases of the rail link will now cost 44 billion ringgit (US$10.7 billion), down from the original cost of 65.5 billion ringgit. The length of the railway will also be reduced by 40km to 648km. The project, part of China’s “Belt and Road Initiative” , was approved by Malaysia’s former prime minister Najib Razak. It was plunged into uncertainty after Najib was ousted by Mahathir Mohamad, who decided to renegotiate the deal, saying the terms were unfair. “Mahathir Mohamad doesn’t oppose the Belt and Road Initiative – he was dissatisfied with the contract that had been signed before, and he was more cautious about the cost,” said Wang Huiyao, president of Beijing-based think tank the Centre for China and Globalisation. Wang said the new deal showed China was willing to negotiate on projects under its global trade and infrastructure strategy, including lowering costs. “It means the belt and road projects are open to discussion, and this [experience] might be used for other projects,” he said. “On such a large project, it would be entirely possible to renegotiate on several terms before signing a new deal.” The original railway agreement had been criticised as a corrupt and expensive deal that could saddle Malaysia with unsustainable debt. Chinese state-run tabloid Global Times said in an editorial on Friday that under the new deal, the project would continue to bring “mutual benefit”. “Reducing the length of the railway and changing the route so that it goes through poor areas will cut costs, as will other design adjustments,” the editorial said. “The initial agreement was aimed at bringing mutual benefit, and the revised agreement will obviously aim to do the same.” It added: “The specific problems in this cooperation are not political.” Other belt and road projects are also facing uncertainty. There are growing concerns over the Chinese-built Hambantota port in Sri Lanka after it failed to provide a return on investment, while there are fears Pakistan will end up in a “debt trap” from the huge costs involved in the China-Pakistan Economic Corridor projects. Wang Yiwei, an international relations professor at Renmin University of China in Beijing, said renegotiating deals would not be the answer for all belt and road projects, and he worried that the Malaysia case could encourage other nations to ask for cost reductions. “I think it sets a bad example for other projects, that China can just lower the costs,” Wang said. “There are Belt and Road Initiative projects all over the world, so [Beijing] shouldn’t send the message to others that their costs can be cut in this way.” He added that Chinese companies involved in such projects should apply market-based principles when negotiating projects. But Zhang Jie, an international relations researcher at the Chinese Academy of Social Sciences, said the fact Malaysia had renegotiated a deal would not necessarily lead to more demands to lower costs on other projects, saying different nations faced different conditions. Additional reporting by Minnie Chan
