ISLAMABAD – A multi-billion dollar China-backed rail project in Malaysiahas been scrapped, government officials said Saturday, adding that the costof building it was too high.
Malaysia has in recent months suspended several major projects signed underthe country´s previous scandal-plagued regime, in a bid to cut thecountry´s massive one trillion ringgit ($251 billion) debt.
Economics minister Azmin Ali said Malaysia made the decision two days agoon the 81 billion ringgit ($19.6 billion) east coast rail link (ECRL) thatwould have connected the eastern and western coasts of the peninsula.
“The cost of the ECRL development is too big, so we have no financialability at this time,” he told reporters.
He said that if the project was not terminated, Malaysia would have to payan annual 500 million ringgit interest payment.
Malaysia´s previous government under Prime Minister Najib Razak had warmties with China and signed up to a string of Beijing-funded projects.
But critics say many of these deals lacked transparency, fuellingspeculation they were made in exchange for help in paying off debts from amassive financial scandal involving state fund 1MDB.
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The scandal was a major factor in Najib´s shock electoral defeat in Maylast year that saw his former boss Mahathir Mohamad return to power.
Mahathir then ordered a review of mega-projects signed by Najib during hisnine-year rule, adding he would discuss “unfair” terms supposedly set inthese deals and high interest rates levied on Chinese loans used to financethe projects.
Azmin did not say how much compensation Malaysia would have to pay forcancelling the project, adding it would be determined by the financeministry.
Najib and his cronies were accused of plundering billions of dollars from1MDB, with the former leader charged with corruption over the scandal.
He will stand trial over these charges in February, and has denied anywrongdoing.
