Prime Minister Tun Dr Mahathir Mohamad revealed that there are grounds to renegotiate or scale down the RM55 billion East Coast Rail Link (ECRL), a massive project in Malaysia mostly funded by debt from China, reported The Star.
Some of the contract terms are disadvantageous to Malaysia. For instance, he said it’s “strange” that RM20 billion has already been paid to the project contractor even though only one-year worth of work has been done, as the release of funds is based on a pre-determined schedule and not on the completion rate. That’s equivalent to about 36 percent of the total cost and project is supposed to be constructed in seven years.
Moreover, even though 85 percent of the amount is loaned from China’s Export-Import Bank and the remaining 15 percent will be borne by Malaysia, the money coming from Beijing does not pass through the hands of the Malaysian government.
The money is passed directly to the ECRL’s main contractor China Communications Construction Co, which secured the contract in August 2016 from Malaysia’s Economic Planning Unit via direct negotiations instead of a transparent public bidding.
The opaqueness of the disbursement process also raises fears that a portion of the money intended for this massive project may have been diverted to repay debts of the corruption-ridden 1Malaysia Development Bhd (1MDB).
This is because the fund founded by former PM Najib Razak had ties with major Chinese firms before the ECRL agreement was signed in 2016. In fact, China General Nuclear Power Corp was named as the highest bidder for 1MDB’s power-generation assets in April of the same year.
Furthermore, Dr Mahathir believes that the project’s is too expensive. As a matter of fact, the ECRL’s price tag of RM55 billion does not yet include land acquisition cost, with only a third of 688km railway owned by the government.
Image sourced from Bernama
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