China firm told to halt Malaysia rail link project

Malaysia suspends construction of major Belt and Road rail project

In addition to the ECRL, the finance ministry yesterday confirmed that two pipeline projects awarded in 2016 to China Petroleum Pipeline Bureau, together worth $2.3bn (9.4 billion ringgits), had also been suspended, The Edge Markets reports.

China Communications Construction Co Ltd said late on Thursday it halted all work at the request of the project owner Malaysia Rail Link SDN BHD.

Completing Malaysia's biggest rail project as previously planned would cost $20 billion, Lim said on Tuesday, almost 50 percent higher than estimates under the previous government.

Prime Minister Mahathir Mohamad says he will visit Beijing next month to renegotiate "unfair" terms for China-backed projects in Malaysia worth more than Dollars 22 billion.

In an interview with al-Jazeera's "Talk to Al Jazeera", Dr Mahathir said there was no proof to confirm or deny that the princely sum originated from and returned to the country, as previously alleged by the former prime minister.

Mahathir said he will visit China in August since China's president, Xi Jinping, was unavailable this month.

He says he will raise the issue of the unfair terms of the Chinese contracts and Chinese loan.

Apart from the cost, the rail project came under scrutiny for "unfavourable terms" in the agreement between CCCC and MRL, wherein the former is allowed a 15 percent upfront payment of the total project cost of 66.78 billion Malaysian ringgits as "mobilisation fee", as per the report.

Finance Minister Lim Guan Eng said he had ordered the suspension of two pipeline deals and a 688-kilometre (430-mile) rail link worth a combined 90.4 billion ringgit ($22.35 billion).

Song Seng Wun, a regional economist with CIMB Private Banking, said the latest suspensions could prompt some investors to hold back.

The new Malaysian government, led by Mahathir Mohamad, has disclosed in recent weeks how the Najib administration used federal agencies and government money to bail out debt-ridden 1MDB, which is being investigated in at least six countries. The indefinite suspension could cause additional costs, losses and damages, the company said.

The announcement by the foreign ministry came a day after Najib was criminally charged in a Kuala Lumpur court following his arrest on suspicion of corruption linked to 1MDB, a state investment fund he started in 2009.

In May, he postponed plans to build a high-speed rail link between Singapore and Malaysia, which had been agreed on several years ago, saying it was expensive.

Malaysian Prime Minister Mahatir Mohamad, right, and Deputy Prime Minister Wan Azizah Wan Ismail speak to the media at a press conference in Putrajaya, Malaysia, Friday, July 6, 2018.



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