MALAYSIA: Construction of the East Coast Rail Link to open up the country’s eastern seaboard is set to resume next month, Prime Minister Mahathir Mohamad announced on April 15.
Contracts had been awarded in 2017 for China Communications Construction Corp to develop the 530 km ECRL linking Port Klang on the west coast with the Thai border via Kuantan and Kota Baru, together with 66 km of branches. The electrified double-track 1 435 mm gauge line was to be developed under China’s Belt & Road Initiative. However, following his election last year Mahathir halted work on the project as part of a cost-cutting drive.
According to the Prime Minister’s office, following ‘months of negotiation’, promoter Malaysia Rail Link Sdn has signed a supplemental agreement with CCCC reducing the total cost of phases 1 and 2 from the original 65·5bn ringgit to 44bn.
Explaining that ‘the interest payment will be far less’, the Prime Minister said the revised deal would avoid a so-called ‘debt trap’ which could have seen Malaysia paying 81bn ringgit in total over the life of the project.The ECRL was to be largely funded through a 56·7bn ringgit loan from China’s Exim Bank, but Mahathir said this would no longer all be needed. Reducing the size of the loan ‘will result in lessening the principal repayment amount, total interest costs and other fees’, he explained.
The domestic contribution to civil works has been increased from 30% to 40%, while the two countries have agreed to form a 50:50 joint venture to operate the line. Mahathir said the two organisations would share any operating losses, but ‘the profit will be 80:20 to us’. Malaysia has also committed to negotiating a contract for the supply of palm oil to China, he added.
He pointed out that Malaysia would have had to pay almost 22bn ringgit in compensation if the project were cancelled. A similar amount had been paid to a Chinese company as a lump sum by the previous regime ‘through a direct award’, but he could not confirm suggestions that this related to the activities of the 1MDB investment fund.
Revisions to the alignment have been agreed to divert the line away from the Klang Gates Quartz Ridge in Gombak, Selangor, which the government has put forward for consideration as a UNESCO world heritage site. A more southerly route via Negri Sembilan would reduce tunnelling and shorten the line by around 40 km, while facilitating closer integration to the existing rail networks. Eight stations have been cut out, although a new stop is envisaged at Shah Alam, the capital of Selangor province. Completion is now expected by the end of 2026, two years later than originally anticipated.