Malaysia: China offered to nearly halve cost of Malaysia’s USD20bn rail project: sources

  • China offered to nearly halve the cost of a USD20bn rail project to save the centerpiece of its infrastructure push in Southeast Asia, two sources said on Thursday, but contradictory remarks by Malaysian ministers leave the outcome uncertain.
  • Negotiations on ECRL have continued since the Jul 18 suspension, with Malaysia indicating that it was looking for cheaper proposals on what would have been China’s biggest Belt and Road venture in Southeast Asia.
  • “If it was just about the cost, China has offered a big reduction on the cost, as much as around half,” said one of the sources privy to the talks.
  • Contractor China Communications Construction Co Ltd (CCCC) had offered to cut construction costs of MYR67bn for the 688-km project by as much as half, the sources said.
  • Despite the proposed discount, Mahathir’s government decided to cancel the contract this month, said the sources, who asked not to be identified because of the sensitivity of the topic.
  • The sources also said negotiations had been complicated by the involvement of too many Malaysian officials.
  • Apart from the finance ministry, CCCC and its domestic partner Malaysia Rail Line (MRL) have also had to present their proposals to Mahathir’s long-time adviser, Daim Zainuddin, among other government officials.
  • On 30 Jan 19, the Malaysian cabinet said it had decided to stop making comments on the project, save for those by Mahathir.
  • Ties with China deteriorated after Mahathir led a coalition of unlikely partners to election victory over Najib’s Barisan Nasional alliance that had governed the country for 60 years.

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