Malaysia Suspends Three China-Backed Infrastructure Projects

06 July, 2018, 20:50 | Author: Myra Gill
  • Malaysian PM says law must take its course in Najib case

Malaysian Prime Minister Mahathir Mohamad today said he is set to visit China next month to discuss "unfair" terms for several big projects signed by his scandal-tainted predecessor Najib Razak.

The East Coast Rail Link, one of the projects suspended, would connect Malaysia's east coast to southern Thailand and the Malaysian capital Kuala Lumpur.

In May, Mahathir announced that Malaysia would withdraw from a high-speed rail project linking Kuala Lumpur with Singapore.

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

"The decisions are exclusively directed towards the related contractors relating to provisions mentioned in the agreements, and not at any particular country", Eng said in a news release.

Organized before his election victory, Mahathir's first overseas visit as prime minister, to Japan last month, was nonetheless seen as a signal he would look beyond China for key foreign investment.


Najib courted billions of dollars of Chinese investment and was one of Southeast Asia's most enthusiastic supporters of President Xi Jinping's signature Belt and Road Initiative.

Najib was charged on Wednesday with three counts of criminal breach of trust and one count of power abuse in relation to RM42 million allegedly misappropriated from a former 1Malaysia Development Berhad (1MDB) unit, SRC International Sdn Bhd. "While the duration of the suspension has not been specified, we are concerned about incurring additional cost, losses and damages arising from the suspension".

SSER has instructed contractor China Petroleum Pipeline Bureau (CPPB) to suspend work on the pipelines on July 4, said the finance ministry source, who declined to be identified. But critics say many agreements lacked transparency, fuelling suspicion they were struck in exchange for help in paying off debts from a financial scandal that engulfed the state fund 1MDB which ultimately helped bring down Najib's regime.

"We respect and comply with Malaysian laws".

CCCC said it hoped both sides can find a win-win solution through negotiations and that the suspension will be lifted soon. Last month, Eng announced he had asked the Malaysian Anti-Corruption Commission to probe a "highly suspicious" payment of US $2 billion made to China Petroleum when only 15 percent of its work on the two pipelines was complete.

The suspension came just a day after Finance Minister Lim Guan Eng called for a sharp price reduction in the 688-kilometer East Coast Rail Link after discovering that the project's actual cost is 81 billion ringgit ($20 billion), almost 50 percent higher than that estimated by the previous government.

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