Kuala Lumper: Malaysia is cancelling a project to build a high-speed rail link between its capital, Kuala Lumpur, and Singapore, Prime Minister Mahathir Mohamad said on Monday.
Mahathir, the 92-year-old who triumphed in a general election this month, has made it a priority to cut the national debt and pledged to review big projects agreed by his predecessor that he says are expensive and have no financial benefit.
"We have an agreement with Singapore", Mahathir said.
The project, valued by analysts at about $17 billion, is now out for tender and is scheduled to be completed by 2026. Helmed by Khaw Boon Wan, the Ministry had set aside S$3 billion in its budget for FY2018 for the Kuala Lumpur-Singapore High-Speed Rail (HSR) and the Johor Bahru-Singapore Rapid Transit System (RTS) Link.
The decision would deal a setback to construction and rail companies in Asia, including those from China and Japan, that are keen to gain a slice of orders.
Addressing the need to reduce the national debt and liabilities - which the government puts at around one trillion ringgit ($251.32 billion) or 80 percent of its GDP - Mahathir said "at one go we can reduce it by 200 billion ringgit ($50.26 billion) by doing away with all these huge projects".
Work on the 55 billion ringgit ($13.82 billion) East Coast Rail Link - the largest such project in the country and a major part of Beijing's Belt and Road infrastructure push - started a year ago.
When asked whether the decision has been communicated to Singapore, Dr Mahathir told reporters, "I don't know".
The Prime Minister said that the government had to talk to Singapore about it and the compensation that needed to be paid.
Dr Mahathir is also reportedly planning on holding discussions with the Chinese government about renegotiating "unequal treaties" such as the East Coast Rail Link - a Chinese-backed project that costs a whopping US$14 billion.
Mahathir is moving swiftly to stabilise the nation's finances after the government reported that debt was higher than previously disclosed under the former administration.
Najib has faced two rounds of questioning from Malaysia's anti-graft agency over a multibillion-dollar corruption scandal at state investment fund 1MDB following his shock election loss on May 9.
He estimated that Malaysia could cut nearly a fifth of its US$250 billion national debt and liabilities by scrapping such big projects.
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