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People pose with a model train for the East Coast Rail Link project. Photo: Xinhua

Exclusive | ‘Malaysia revived China deals to boost Belt and Road Forum spirits’, country’s foreign minister says

  • Foreign Minister Saifuddin ­Abdullah rejects opposition claims that government gave in under pressure from Beijing
  • Malaysia on April 12 announced the East Coast Rail Link would go ahead after China shaved off nearly a third of its cost

Malaysia had pushed through fresh pacts to revive two stalled China-backed projects worth billions to ensure the two countries went into this week’s Belt and Road Forum in “renewed spirits”, Foreign Minister Saifuddin ­Abdullah said on Sunday.

In an interview with the Post, Prime Minister Mahathir Mohamad’s top diplomat dismissed talk that the government had only grudgingly given the green light for resumption of the East Coast Rail Link (ECRL) project and the Bandar Malaysia township.

Malaysia’s opposition, headed by Mahathir’s predecessor Najib Razak, has been singing that tune – suggesting the government was arm-twisted into reviving the two projects to avoid diplomatic repercussions from Beijing.

The Mahathir government on April 12 announced the ECRL – stalled since it came to power last May – would go ahead after China shaved off nearly a third of its cost.

Last week the prime minister announced that work on Bandar Malaysia, a prime Kuala Lumpur property development shelved by Najib in 2017, would resume with the original China-backed consortium that won an open tender for the project.

The property project is said to have a “gross development value” of 140 billion ringgit (US$34 billion).

Talks had been protracted for months, but appeared to speed up before the April 25-27 Belt and Road Forum.

Mahathir is among 37 world leaders who will descend on Beijing for this week’s forum.

“Both sides wanted the deals before the [forum] … and we worked hard on the deals … the timing can never be better,” Saifuddin said in Putrajaya, the country’s administrative capital .

“I believe like any other good partners, before a big event you want to go into the event with renewed spirits.”

He believed there would be particularly buoyed spirits in Beijing because of the Mahathir government’s decision to resume work on the ECRL.

The link is viewed by Beijing as a major part of its “Belt and Road Initiative”, which seeks to boost transport infrastructure between China and the rest of the world.
The Golden Bridge sculpture on Silk Road outside the National Convention Centre in Beijing on April 19, 2019. Photo: Simon Song

“ECRL, as we understand, is like a trophy to Beijing. We appreciate that,” Saifuddin said. “We also appreciate the fact Beijing understands our problem, that we were faced with a lot of debts and we wanted to see how we can continue with some projects but it has to be renegotiated.”

Malaysia’s Foreign Minister Saifuddin Abdullah. Photo: Mohd Dzuha Zamedin

As part of a fresh memorandum of understanding, the rail link – to be built by China Communication Construction Company (CCCC) – will cost Malaysia 44 billion ringgit instead of the original 65.5 billion ringgit.

CCCC will help maintain and operate the 640km rail link when it opens in 2026.

Under the 2016 agreement, it was only responsible for building the railway connecting peninsula Malaysia’s busiest port, Port Klang, to its rural east coast.

Mahathir ordered work on the link to be suspended last July after he identified it as among a handful of Beijing-backed projects that he said was “lopsided” in favour of mainland contractors.

Malaysia’s former prime minster Najib Razak (third from left), looks at a modal of the ECRL in Kuantan in September 2017. Photo: AP

The 93-year-old prime minister said after the fresh accord on the ECRL that he hoped to “take advantage” of the deal to increase palm oil exports to China. China’s importance as one of the biggest buyers of Malaysia palm oil has heightened since the European Union’s decision to stop considering the commodity a biofuel.

Foreign Minister Wang Yi with Saifuddin in Putrajaya in July 2018. Photo: AFP/Malaysia’s Ministry of Foreign Affairs

Saifuddin brushed off questions about whether the government had signed the ECRL and Bandar Malaysia deals to preserve Chinese palm oil purchases.

He said Beijing had already committed to buying more of the commodity since Mahathir met President Xi Jinping last August.

But he did concede that both sides had adjusted their positions to accommodate each other.

“It’s quite normal that when you can’t get A, you try to get B. That is the simple logic of bilateral relations. I won’t say it is because of palm oil that we have to do certain things with the ECRL.”

Saifuddin said Malaysia’s experience showed that belt and road deals needed to be transparent. He said both debtor and creditor countries had an onus to ensure projects were viable.

“The lesson learned is that things must be done in a certain way. Transactions must be done by the rule of law. You have to be transparent about it,” he said.

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