Malaysia investigates China-backed project links with 1MDB

Malaysia investigates China-backed project links with 1MDB

Malaysia investigates China-backed project links with 1MDB

China Communications Construction Co Ltd said late yesterday it halted all work at the request of the project owner Malaysia Rail Link Sdn Bhd.

Mahathir, 92, has pledged to review Chinese deals seen as dubious, calling into question Malaysia's status as one of Beijing's most cooperative partners in its regional infrastructure push.

Finance Minister Lim Guan Eng earlier this week said there must be a "drastic" cut in costs for the 688-kilometer (430-mile) East Coast Rail Link, whose cost at 81 billion ringgit ($20 billion) is almost 50 percent higher than earlier estimated.

The ECRL project came under criticism in recent times following the change of the Malaysian government in May.

The projects to build two pipelines were signed in 2016 by the administration of former Malaysian premier Najib Razak, who courted Chinese investment but was ousted in an election in May amid allegations of corruption at the fund, 1Malaysia Development Berhad.

The company said the suspension would not have a significant impact on its operating performance in 2018.

Malaysian Prime Minister Mahathir Mohamad said on Friday the "unfairness" of contracts for Beijing-backed projects would be a key issue he would raise during a visit to China next month. Twenty-three stations were planned, starting at Port Klang on the west coast of peninsular Malaysia, near Kuala Lumpur, and ending at Kelantan in the northeast, near the Thai border.


"While the duration of the suspension has not been specified, we are concerned about incurring additional cost, losses and damages arising from the suspension".

"The terms are very damaging to our economy", he said at the time.

"We hope to reduce costs a lot, because of a lot of wrong things [are] being done", he said at a news conference in June, referring to the East Coast Rail Link and the billions Malaysia would have to borrow from China to finish it.

CCCC said in a statement it regretted the suspension and was "upset and concerned" over the livelihood of its more than 2,250 local staff and other indirect hires.

"We hope that both sides will be able to find a win-win solution through honest negotiation with good will". 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.

Malaysia's new government has axed a high-speed rail line to Singapore because it is too costly and is reviewing other large infrastructure projects financed by China.

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