Malaysian Prime Minister Mahathir Mohamad said on Thursday that he could give the green light to the China-backed 688-kilometer East Coast Rail Link (ECRL) – a mega-project designed to link Port Klang on the Straits of Malacca to Pengkalan Kubor in northeast Peninsular Malaysia – which he had earlier halted because of its hefty price.
His condition for restarting the ECRL was that the Chinese Export Import Bank and state-run China Communications Construction Company, which are both eager to make the railway a reality under Beijing’s Belt and Road Initiative, agree to slash the project’s previously proposed cost.
The ECRL’s original investment was estimated at 55 billion ringgit (US$13 billion) when Xi Jinping and then Prime Minister Najib Razak first announced the project in 2016. But that hefty price tag caused Mahathir to put the project on ice after he won power in a surprise election result in May 2018.
Malaysian officials previously suggested the project’s price should fall by half or even two-thirds to be affordable. All Malaysian officials except Mahathir have been barred from publicly commenting on the rail project while talks with China are ongoing, according to the South China Morning Post.
Mahathir told the newspaper that talks between the two sides were still in the slow lane and that reaching a resolution was “going to be very difficult.” He added that the price must be affordable to proceed, without elaborating on an exact figure.
Earlier this week, the Malaysian leader told local media the government had so far paid 200 million ringgit ($48.9 million) in interest payments for the project, despite being put on hold since last July.
Even if the project gets the go-ahead, analysts say it may later run into financial and operation troubles given the sparse population of the areas it would serve. They note that even the heavily used east coast railways now in operation are not profitable.
Najib has been accused of using the project as a quid pro quo for Chinese state companies to purchase assets from the scandal-hit 1Malaysia Development Berhad (1MDB) state fund, from which he and others stand accused of pilfering billions of dollars.