Superpower China Will Not Allow ECRL To Be Scrapped, And There’s Nothing Malaysia Can Do

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Mar 09 2019
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ECRL (East Coast Rail Link) project is still being suspended, but not for long. After 10 months under the new government of Mahathir Mohamad, the RM81 billion mega-project, first approved by former Prime Minister Najib Razak on October 2016, has become the biggest headache for the 93-year-old premier, the world’s oldest leader.


The on-again, off-again ECRL has caused huge confusion in the financial market for the last 10 months. People were fed with news that the project has been cancelled, only to be deferred and then changed to re-negotiation before the cycle repeats itself again. Contradicting statements from Finance Minister Lim Guan Eng and Economic Affairs Minister Azmin Ali made the situation worse.


The biggest issue is the gigantic cost of the project. When Mr. Najib announced his pet project, it was announced that it would cost taxpayers RM55 billion for the entire 688-km line. However, when the Pakatan Harapan coalition took over the government, it discovered that the final cost of the ECRL project is actually a staggering US$20 billion (RM81.7 billion).

ECRL Project - PM Mahathir and President Xi Jinping 

As it turned out, Najib’s dirty secret deal with China contractors included – “special payments” – to cover the infamous 1MDB’s (1Malaysia Development Berhad) massive debts. This was achieved by jacking up the ECRL project cost by a whopping RM30 billion of taxpayers’ money to bail out the Ponzi scheme. After the downfall of Najib regime, the debts of 1MDB was revealed to be RM50 billion.


Two months ago, some meeting minutes found and published by the Wall Street Journal exposed not only about kickbacks in the hanky-panky deal, but also astonishing discovery that the disgraced ex-PM Najib had even allowed Chinese People’s Liberation Army Navy to dock and use Malaysian ports. Clearly, it was an act of treason – selling the country’s sovereignty for cash.


By now, it’s safe to presume that the ECRL project will continue simply because China will not allow the important infrastructure project to be scrapped under the Mahathir administration. The current negotiation is no longer about whether the project can be cancelled or postponed. It has passed that. The ongoing negotiation is about how much more discount China can offer.

ECRL - East Coast Rail Link - Train and Flag

ECRL - East Coast Rail Link - Map

Indeed, Malaysia is trapped in a debt hole so massive that if the ECRL was to proceed as initially agreed, it would cost the country RM500 million annually in interest payment alone. That’s about RM41.7 million every month or RM10.4 million every week, thanks to Najib the son of Razak. Hiding behind China, Najib had the cheek to warn Mahathir to be careful about “offending” the superpower.


Fortunately, both nations’ 45 years of diplomatic ties, not to mention influential billionaire Robert Kuok’s close relationship with Beijing, enables Mahathir administration the special privilege to re-negotiate the deal in a manner not other nations could enjoy. In January, Beijing’s Embassy in Kuala Lumpur released a song marking the lasting friendship between China and Malaysia.


Considering Mahathir had engaged anti-China election campaign last year, the Malaysian leader should consider himself lucky that Beijing has not retaliated against the country economically. Of course, Mahathir has to thank the Malaysian richest man, Robert Kuok, appointed as key adviser in bridging Beijing and Kuala Lumpur to prevent diplomatic disaster.

Billionaire Robert Kuok with China President Xi Jinping

Still, a business deal is a business deal. Last month, China offered a staggering 50% discount for the ECRL project. The unbelievable steep discount shows that not only crooked Najib had conspired with the CCCC (China Communications Construction Company) to rip-off the people of Malaysia, but also the importance of the project to the Chinese’s OBOR (One Belt, One Road) initiative.


However, based on Mahathir’s latest interview with the South China Morning Post, it appears even when the cost of the US$20 billion (RM81.9 billion) billion is halved, Malaysia is just too broke for the mega project. The premier wants more discounts. Last August, his government claimed it had received offers to undertake the East Coast Rail Link project for as low as RM10 billion.


But even if China is willing to go as low as RM10 billion, which would be a cheap version without bells and whistles, the project will still be a white elephant. In his interview, Mahathir argued that despite the existing railway servicing the west coast (where the business and people are concentrated) for more than 100 years; it has yet to turn profitable, let alone the limited economic activity along ECRL.

Najib Razak with President Xi Jinping - You Help Me, I Help You

The decision-making gets extremely tricky, largely because RM20 billion has already been paid by Najib regime, being the payment for 20% of the phase one of the project. So, it doesn’t really make sense to just scrap the project, not that China will allow it. The government reportedly will have to fork out a staggering RM22 billion in compensation and penalty charges if the project cancellation is triggered.


If it makes financial sense to cancel the project, the government would have done so 10 months ago. On March 4, Mahathir said the government has paid RM200 million in interests to the main contractor of the East Coast Rail Link (ECRL). He moaned, whined and bitched – “In six months, we paying RM200 million just as interest for the RM55 billion debts committed by the previous government.”


The penalty for scrapping the ECRL is simply too huge, leaving the only option of going ahead with the useless project. But before resuming the project, the Malaysian government has to haggle over the price as if buying a fish at the local wet market. But PM Mahathir can only annoy the fishmonger for so long. The longer the project is being dragged, the more interests the country needs to pay.

Mahathir Mohamad - Delivering Speech in China - August 2018

“Chinese by nature are very good business people,” – said Mahathir during the interview. In that sense, he should also know that there is no way Beijing is going to throw ECRL into the dustbin just because Kuala Lumpur has very little money for the project. Of course, the Malaysian leader was actually trying his very best to suck up to the Chinese, hoping for a better deal.


Unlike his first visit to Beijing last August where Mahathir lectured the Chinese about fair trade and warned about a new version of colonialism, the Malaysian premier has only song of praises for the world’s second largest economy in his interview. While supporting China’s policy of Belt and Road, Mahathir said it’s a natural reaction that a wealthy China expand its influence worldwide.


In the interview, Mahathir said he would side with China over the U.S., primarily because the country is very wealthy and the Chinese market is very huge. He also cleverly side with China over Huawei’s war with the U.S., claiming that Malaysia would not be influenced by Western suspicions that the Chinese telecommunications company could be spying for the Chinese Communist Party.

Malaysia Prime Minister Mahathir Mohamad Meets Chinese President Xi Jinping and Wives

Mr. Mahathir also said China is not a nation to be afraid of because despite being its neighbour for the last 2,000 years, Malaysia was never conquered by the Chinese, unlike the European countries that conquered the country just two years after arriving in 1509. The prime minister’s positive review of China means Kuala Lumpur desperately needs Beijing’s help to lessen the government’s financial burden.


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Hey, dude. Your opinion are all wrong, don’t be a smart alec.

Singapore, Phillipines, HK have allowed US aircraft carriers to dock, and so, what is so treasonous about letting Chinese warships harbouring in Malaysia? Many other Asean countries have done the same for Chinese ships. Unless of course, you will label it as treason if you are only siding with the americans, and which from your past articles, says quite rightly you are an american stooge. .

Mahathir’s praising of China in the South China Morning Post’s interview reflects his genuine views on China as a successful nation. His past comments for the last 20 years already proven this so.

It is you, as an american stooge, who just can’t stomach his compliments on China, and so come up with this frivolous reasoning that Mahathir is just trying to ‘suck up’ to the Chinese to get more discounts on ECRL

That’s your take and a very weak one at that. Did you ask Mahathir or is this just your 2 cents personal opinion? You bet, we know the answer.

the columnist of this article must be a chinese. and a biased one

In law, no one can sign against himself.

Putrajaya should stop paying interest on the ECRL and just ignore the project

Let China go to court.

The court is likely to rule the contract null and void, invalid in law.

No court in the world will demand compliance with a contract.

If the contract is valid, it can only offer compensation to the claimant.

The claimant has to quantify the claim.

Yes that’s right further the agreement was made by the previous prime minister by himself..

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