Malaysia's Mahathir says will raise "unfair" contracts in visit to China

Cheryl Sanders
July 7, 2018

By GCR Staff0 CommentsCiting "national interest", Malaysia this week suspended work on a major railway, and two pipeline projects, both being financed and built by Chinese entities.

Contractor China Communications Construction Co.

Billed as a flagship scheme under China's Belt and Road Initiative, the 688km ECRL is meant to connect Malaysia's west coast to rural northeastern states.

"The decisions are exclusively directed toward the related contractors, relating to the provisions mentioned in the agreements, and not at any particular country", the finance ministry said in a statement on Thursday.

Prime Minister Tun Dr Mahathir Mohamad expressed disappointment that Saudi Arabia did not comment on Datuk Seri Najib Razak's claim that the RM2.6 billion deposited in his account was a "donation" from one of the kingdom's royalty.

Completing Malaysia's biggest rail project as previously planned would cost $20 billion, Lim said on Tuesday, almost 50 percent higher than estimates under the previous government.

The ministry official, who declined to be identified, said Malaysia was seeking Chinese government cooperation with the investigation into the loan and exploring whether funds invested in the pipeline projects could be recouped.

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

Representational image of a Belt and Road Forum in Beijing.

The 688-km (428-mile) ECRL will connect the South China Sea off the east coast of peninsular Malaysia with the strategic shipping routes of the Straits of Malacca to the west.

Prime Minister Mahathir Mohamad, who took office May 10 after his Pakatan Harapan coalition scored an election upset over Najib's Barisan Nasional coalition, has been an outspoken critic of Malaysia undertaking projects that require borrowing from China. It has urged Mahathir's government to "honor and respect" the contract signed by Najib's administration. "While the duration of the suspension has not been specified, we are concerned about incurring additional cost, losses and damages arising from the suspension".

"So we can't accuse Saudi Arabia, unless of course, there is proof that Saudi Arabia has tried to interfere in Malaysian politics", Dr Mahathir was quoted saying.

The announcement by the foreign ministry came a day after Najib was criminally charged in a Kuala Lumpur court following his arrest on suspicion of corruption linked to 1MDB, a state investment fund he started in 2009. He said the government has paid 8.3 billion ringgit ($2.1 billion) to the China Petroleum Pipeline Bureau but it has completed only 13 percent of the work.

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