Malaysia To Resume Rail Project With Chinese Funds

Malaysia on Thursday restarted a 44 billion ringgit (US$10-billion) China-backed rail project that is part of Beijing's Belt and Road Initiative, following its suspension last year when a corruption-plagued government was ejected from power.

China's Export-Import Bank is expected to finance 85% of the US$10.7 billion project, Malaysian Transport Minister Anthony Loke said.

The 640-kilometre line will link northeast Malaysia, near the Thai border, to the country's main port on the busy Strait of Malacca in the west, forming part of a network it is hoped will eventually run from southern China right through Southeast Asia.

At a ceremony in the northeastern state of Terengganu, Loke said the line would improve "public transport systems in rural areas, especially in the east coast of peninsular Malaysia".

The project was among several Beijing-financed infrastructure initiatives put on hold in Malaysia after last year's defeat of a long-ruling coalition.

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 Malaysian sovereign wealth fund 1MDB.

But after months of negotiations between the Malaysian and Chinese governments and the companies involved, an agreement was reached in April to resume the work at a reduced cost.

Work was originally started on the line in August, 2017, but only a small amount had been completed when it was suspended in July last year.

The cost of the 20-station line has been reduced to 44 billion ringgit from an original price of 65.5 billion ringgit, while the route of the line has been altered and the completion date pushed back to 2026.

Prime Minister Mahathir Mohamad has said the fact that the project's cost could be slashed by 21.5 billion ringgit showed initial projections were inflated in 2016. Mahathir chose to renegotiate the deal rather than pay compensation of 21.78 billion ringgit.

Apart from the rail link, the government also has cancelled two China-backed pipelines costing 9.3 billion ringgit after discovering that 90% of the project's costs had been paid but with only 13% of the work completed. (AFP, AP)