KUALA LUMPUR: The government has finalised the cancellation of the East Coast Rail Link (ECRL) contract with China Communications Construction Company (CCCC) at a Cabinet meeting two days ago.
Economic Affairs Minister Datuk Seri Mohamed Azmin Ali said the decision was taken after reviewing the costs which were deemed too high and beyond the government’s financial capabilities for the time being.
“If the project is not terminated, the government will have to bear the interest rate of about RM500 million a year.
“Therefore, the project needs to be terminated without affecting relations with China,“ he told reporters after officiating the Silat Cekak Hanafi Annual General Meeting 2019 and Outstanding Awards here today.
The contract was awarded by CCCC, while the financing will be provided by Export-Import Bank of China (Exim Bank of China).
Works relating to the engineering, procurement, construction and commissioning scope of the ECRL were suspended in July 2018.
Spanning 688.3 kilometre, the rail project linking Port Klang in Selangor with Pengkalan Kubor in Kelantan was to be developed in two phases.
Azmin said Malaysia still welcomes all forms of investment from China but would take into account the country’s financial capabilities first.
On compensation, Mohamed Azmin said the amount of the compensation to be paid following the cancellation of the contract would be scrutinised by the Ministry of Finance through a comprehensive review to ensure that it would not burden the country’s financial position.
He said the government has yet to decide on the new developer for the ECRL project, but would continue to evaluate new investment applications.
“So far, Malaysia has received all forms of investments into the country from any parties but is mindful of the country’s financial position.
“We always evaluate all new applications for investment in Malaysia, not only ECRL, because we want to maintain foreign direct investment (FDI) inflows,“ he said, adding that the government policy was to ensure that the FDI remained intact to create jobs for the people.
Singapore-based Straits Times in a news portal report claimed that CCCC’s contract was terminated following its failure to reduce the project cost by half to RM40 billion from RM81 billion previously, as well as meeting several requests made by the government. — Bernama
