KUALA LUMPUR: The government has decided to cancel the RM81 billion East Coast Rail Link (ECRL) project with contractor China Communications Construction Co Ltd (CCCC) due to the high interest. Economic Affairs Minister Datuk Seri Mohamed Azmin Ali said the country cannot afford the RM500 million annual interest on the project. He said the cabinet decided to scrap the project during its meeting on Thursday. “This is the final decision. "It was decided that the cost to develop ECRL is too high, and we don’t have the financial capability to see it through at this moment. “If this project is not cancelled, the interest that the government would have to pay reaches nearly half a billion ringgit,” he said. Azmin said the government had tried to look into other options to build the 688km rail project connecting the Klang Valley to the east coast of Peninsular Malaysia, but found the amount still too high. On the compensation to CCCC, Azmin said it would be determined by the Finance Ministry. "It is being looked into and being refined. "The Finance Ministry has done the due diligence process to ensure that the compensation would not further burden the country,” he said. Asked if the government was looking for another contractor to take over the project, Azmin said the matter had not been decided. He, however, said Malaysia welcomed all forms of new investment into the country. "We want to maintain the FDI into Malaysia so that we can create wealth for the country and job opportunities for the people," he said. Previously, Finance Minister Lim Guan Eng was reported as saying that the controversial China-backed project had been given a reprieve by the government, as RM20 billion of the project cost had already been paid, subject to a re-negotiation of the price tag. In previous media reports, Prime Minister Tun Dr Mahathir Mohamad had described the ECRL project as a “strange contract”, because Malaysia has to fund the project with a loan from China, while also hiring contractors from China. It was also reported that the ECRL project, which is owned by Malaysia Rail Link Sdn Bhd, had progressed by almost 14 per cent. The progress made was mostly related to technical work and land acquisition. MRL is a special purpose vehicle wholly owned by the Minister of Finance Incorporated (MoF Inc).
Malaysia has scrapped a $20bn China Communications Construction-backed rail project. The cost of the East Coast Rail Link project was "beyond the government's financial capability", said an economic affairs official, noting the high interest rates that were involved in the scheme. This project was part of China's "One Road One Belt" initiative, which critics are increasingly calling "debt-trap diplomacy".