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Malaysia’s ECRL: US$20 billion rail deal still ‘being negotiated’

  • The Malaysian prime minister has repeated his stance even as his predecessor Najib Razak shared documents online suggesting the country had definitively cancelled the project

Malaysia’s Prime Minister Mahathir Mohamad late on Friday was insisting his government was still negotiating with China over the US$20 billion East Coast Rail Link (ECRL), even as his nemesis and predecessor Najib Razak re-shared images of documents on Facebook that suggested the country had definitively cancelled the project.

With his administration equivocating over the issue in recent days, Mahathir was for the fourth time this week collared by journalists on the status of the project at a late-evening press conference following a meeting of his Pakatan Harapan coalition.

“The status of the project is that now it is being negotiated, and I cannot say what is happening because I have to wait for the result [of the talks],” Mahathir said when asked about the rail link.

Asked when the decision would be finalised, Mahathir replied in Malay: “maybe soon”.

At around the same time as the press conference, Najib, who had signed the deal in 2016 with the railroad’s main contractor China Communications Construction Company (CCCC), re-shared a Facebook post that appeared to be screenshots of a letter dated January 31, Thursday, from a Malaysian official to the mainland company indicating the government had come to a final decision to cancel the project.

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The former premier re-shared the post from a Facebook user called “Ab Jalil Backer”.

This Week in Asia could not independently verify the authenticity of the letter, and officials from the finance ministry – overseeing talks with CCCC – did not immediately respond to requests for comment.

Najib has in the past released information about official dealings that later were found to be authentic, suggesting he continues to be fed information from within the Mahathir administration.

The images of the letter suggested current negotiations have to do with “termination related costs” that the Malaysian government owes CCCC after its decision to cancel the project.

His Finance Minister Lim Guan Eng earlier this week had said talks are now in a government-to-government phase, in contrast to previous negotiations between the Malaysian government and CCCC. He did not specify what the talks were about and said no other official but Mahathir was authorised speak about the status of the project.

That pronouncement came after the Economic Affairs Minister Azmin Ali over the weekend told reporters the project had been cancelled.

The government later scrambled to walk back his statement.

There have been multiple news reports citing anonymous sources that said CCCC had dramatically reduced the price of the project to convince Malaysian officials to give it the green light.

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But the letter shared by Najib, the premier from 2009 until the election that deposed him last year, said the “avenue of mutual termination was agreed upon at a leadership discussion in August 2018”.

Mahathir and Xi had a summit meeting in Beijing last August, in which government sources had previously told This Week in Asia that the controversial 688km rail link had been discussed.

The purported letter suggested that CCCC had made counter-proposals since then.

“All of CCCC’s proposals, including your letter dated 9 January 2018, have been carefully considered by Malaysia Rail Link,” the letter said, referring to the Malaysian government-owned entity that was to own the project.

“None of the proposals submitted by CCCC sufficiently meet MRL’s expectations or are workable within the parameters of Malaysia’s needs and budgetary constraints,” the letter said.

“This is not a position that MRL or the government of Malaysia takes lightly. The national and public interests are paramount considerations of the new government, especially in the climate of various concerns expressed in international and local media of the links between [the] ECRL project and 1Malaysia Development Berhad’s debts,” it said.

Economist KS Jomo, who sat on an advisory panel set up by Mahathir to help with power transition after last May’s election, on Wednesday suggested the ECRL “was designed to profit certain parties with a possible aim of covering up the lies and losses”, of the 1MDB financial scandal in which Najib has been implicated. He said he hoped the government would be given the time to find a solution “and maximise what can be saved”.

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Soon after it took power from Najib in May, Mahathir’s government named the ECRL as being among the China-linked infrastructure projects it hoped to cancel because it viewed them as too expensive and unnecessary.

Officials have also previously said they believe Najib struck deals for the projects as a quid pro quo for Chinese state companies’ purchase of assets from 1MDB when its losses were first made public in 2015.

Najib, who has pleaded not guilty to all the criminal charges brought against him in relation to the scandal, has challenged Mahathir to make public the terms of the ECRL contract with CCCC, which he characterises as favourable.

Apart from CCCC, other major players involved in the ECRL include the Chinese Export Import Bank, which was to finance 85 per cent of the project.

Source: https://www.scmp.com/week-asia/politics/article/2184735/malaysias-ecrl-us20-billion-rail-deal-still-being-negotiated-says

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