Malaysia revives China-backed rail link, cost cut by a third

Malaysia revives China-backed rail link, cost cut by a third

Malaysia revives China-backed rail link, cost cut by a third

In this September 8, 2017 photo, visitors view a scale model of the ECRL (East Coast Rail Link) during the launching of the train project in Kuantan, east coast of peninsula Malaysia.

The supplementary agreement that was signed at 11am today represents an improved deal on the ECRL, said Daim, being the result of negotiations since July 2018 to reduce costs.

Kok said with this new development, the Ministry hopes that China will make more commitment to purchase Malaysian commodities, especially palm oil and rubber.

The Prime Minister's Office (PMO) revealed in a statement that this agreement came after many months of discussions between the companies involved as well as the Malaysian and Chinese government.

The project, part of China's Belt and Road Initiative, was among a number of large infrastructure projects put on hold by the Mahathir government after last year's elections. Further details are scheduled to be announced on Monday.

The East Coast Rail Link (ECRL) project is back on track, with its new alignment shortened by 40 km from 688km to 648km, according to the Prime Minister's special envoy Tun Daim Zainuddin. The lower cost also means the government can save in terms of interest on a lower loan, he said.

"We believe this creates a renewed confidence among Chinese investors to continue investing in Malaysia", he said.

Dr Mahathir has shown more willingness to revive some infrastructure projects after embarking on spending cuts and a corruption crackdown a year ago.

Mr Mahathir initially suggested the rail project will be called off because the high cost could burden the country with debt for decades.

Critics said the projects lacked transparency, could saddle the government with debt, and were in reality aimed at quickly funnelling money to former leader Najib Razak to help him pay back cash looted from a sovereign wealth fund.

"This is a reduction of RM21.5 billion from the original cost of RM65.5 billion".

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