Malaysia banks on Chinese builder to boost business along East Coast Rail Link as project relaunches after wrangling
- Transport minister says securing China Communications Construction as an operator rather than just a developer is a ‘major breakthrough’
- Beijing-backed firm will help spur development along 640km route following nine months in which project’s future hung in the balance
The ECRL is viewed by Beijing as one of the flagship developments of the belt and road – China’s trillion dollar push to enhance infrastructure and communications connectivity between itself and the Eurasia region.
Loke said: “We are confident that we will work together with CCCC to ensure not just the reliability of the service, and the passenger trains and the cargo trains. But more so, you have products to be transported along the corridor.
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“We want to tap into foreign investment, in particular from China, and as I said, the joint venture company is a very strategic move to ensure there is more participation from China investment.”
Bai Tian, China’s ambassador in Malaysia, said there had been a “great wave of potential Chinese investors” coming to the Southeast Asian country for study trips soon after a fresh agreement on resuming the rail link was inked in April.
Many of them, the envoy said, viewed the relaunch of the ECRL as a “new milestone in China-Malaysia friendship and cooperation” and were expected to invest in the country.
He said that upon completion in 2026, the project could “double or quadruple” the number of Chinese tourists coming to Malaysia, which stood at 3 million last year, because of the increased connectivity offered by the rail link.
“Many Chinese tourists are very aware of the beautiful islands on the east coast of Malaysia, but sometimes they are turned off by the difficulty of travelling to these islands,” Bai said.
Mahathir had also questioned the necessity of the project, and claimed the country could not afford another mega development in the wake of 1MDB’s multibillion-dollar fraud-related losses, for which Najib is currently facing trial.
But following renegotiations – helmed by Mahathir’s top confidante Daim Zainuddin – the ECRL was revived, with its price tag reduced by 33 per cent to 44 billion ringgit (US$10.68 billion).
Malaysia also obtained extra concessions from CCCC for more local contractors to be given opportunities in the project following murmurs that the Chinese builder was almost exclusively using mainland resources, from labour to raw material.
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At the relaunch event in peninsula Malaysia’s northeastern state of Terengganu, Loke said the Export-Import Bank of China would continue as the main financier of the development.
Like in the original agreement, the Chinese bank is expected to finance 85 per cent of the project, with the remaining 15 per cent financed by sukuk, or Islamic bonds.
Company officials said 10.18 per cent of the rail link had been completed so far. When finished in seven years, it will link the country’s busiest seaport in the west of peninsula Malaysia to the region’s largely rural east coast. It will pass through the states of Selangor, Pahang, Kelantan and Terengganu.
Loke said he hoped the link would bring in new industries, and that the government did not intend for a migration of factories from the wealthy state of Selangor to the less developed states.
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