Malaysia in cost dilemma over rail megaproject with China

KUALA LUMPUR: Malaysia’s new government is facing a dilemma over the East Coast Rail Line (ECRL), due to the possibility of penalty charges if it decides to halt the Malaysian-Chinese megaproject.
Malaysian Prime Minister Mahathir Mohamad has reportedly questioned the project’s viability given the current state of the economy. Last week, he said the previous administration left Malaysia $250 billion in debt.
He added that his predecessor Najib Razak “knew very well that the ECRL… is not something we could afford. It is not going to serve any purpose, it is not going to give us any returns.”
The government is reviewing the project’s viability, with the possibility of renegotiating the terms of the contract.
But China’s Ambassador Bai Tian this week said “as far as I know, there are no changes” to the ECRL.
He has already met with Mohamad and Malaysia’s Council of Elders, the Malaysian Insight reported.
Mohamad has already dropped two megaprojects: The Kuala Lumpur-Singapore High Speed Rail (HSR) and the MRT 3 rail project.
The ECRL was Razak’s brainchild to develop the East Coast Economic Region (ECER). He signed the $36.1 billion deal during an official visit to China in November 2016.
Dr. Jayant Menon, lead economist at the Asian Development Bank, told Arab News: “The project shouldn’t continue because it’s not financially viable. The government should negotiate the best terms to exit the project.” Transporting cargo by sea is more economical than rail, he added.
ECER encompasses 51 percent of western Malaysia, covering the states of Kelantan, Terengganu, Pahang and Johor.
The ECRL will “form the backbone of ECER’s multimodal transport infrastructure,” and is estimated to take seven years to complete, Razak said on his website.
The project will be a “key socioeconomic enabler” in the region, creating jobs and reducing economic inequality, the website added.

Malaysia in cost dilemma over rail megaproject with China