IS THE East Coast Rail Link on or off? Malaysians are none the wiser on the future of the controversial China-backed US$20 billion rail project after days of contradictions on the matter by top officials, and on Wednesday the finance minister suggested a definitive answer is unlikely any time soon.
Speaking to reporters after a cabinet meeting, Lim Guan Eng revealed negotiations had entered a “G2G”, or government-to-government, phase and would be held “away from the public glare”.
This signals Beijing has entered direct talks on the project – previously they were between the Malaysian government and China Communications Construction Company (CCCC) – days after a Malaysian cabinet minister revealed a final decision to cancel the 688km rail link had already been made.
The administration has scrambled to walk back the comments made by Economic Affairs Minister Azmin Ali’s at the weekend with Prime Minister Mahathir Mohamad saying late on Tuesday that talks were ongoing. Hours earlier, however, he had implored the Chinese entities involved to “understand” that proceeding with the project would “impoverish” his country.
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Lim, the finance minister, also said on Wednesday that the cabinet had decided to “adopt the statement made by the prime minister”.
“The matter will still undergo negotiations. In view of the sensitivity of the contract discussions … the discussions which will now be G2G, [will] be held away from public glare,” he said, according to an audio recording of a brief doorstep interview with him.
Given the local media’s repeated attempts to collar officials – as the likes of Mahathir and Lim have refused to confirm whether the project is cancelled or not – the finance minister urged the press to wait for “official statements issued by the government”.
CCCC has not commented on the matter, but the Chinese foreign vice-minister Kong Xuanyou, who is visiting Malaysia, and the foreign ministry in Beijing both suggested on Tuesday that talks were ongoing.
Malaysian newspaper The Star, citing “industry sources”, said in a report on Wednesday that CCCC was “shocked” by Malaysian officials suggesting the project had been cancelled, after it had “conceded to a lot in terms of what the [Malaysian] government wanted”.
It said the company – awarded the project without tender in 2016 by former Malaysian Prime Minister Najib Razak – had agreed to bring the cost of the rail link down to about 40 billion ringgit (US$9.7 billion). It had also agreed to “share operational and financing risks” with the Malaysian government rather than act as the sole contractor responsible for building the rail link, according to the report.
“According to sources, considering that the CCCC has given up so much in the re-negotiations, it is not taking it [talk of termination] lightly,” the newspaper said.
Asked to corroborate the report, Lim tersely responded that journalists should “ask the MCA” – or Malaysian Chinese Association, the opposition political party which owns the newspaper.
The finance minister said “no other ministers are allowed to make any statements on the matter, but the prime minister”.
Still, comments on the issue did emerge on Wednesday from two people close to the administration.
Daim Zainuddin, a Mahathir confidante, said during a lunch speech that bilateral ties between China and Malaysia were “very complicated, and so this matter [ECRL] becomes very sensitive”.
Daim, leader of an advisory body to the government called the “Council of Eminent Persons”, suggested Azmin had been “pressured” by the media into saying the project was cancelled.
“Sometimes the media pressures the minister by asking about the [ECRL] … the minister does not want to answer but he has to because you asked,” Daim was quoted as saying.
KS Jomo, a prominent economist who also sits on the council, meanwhile suggested the ECRL “was designed to profit certain parties with a possible aim of covering up the lies and losses,” of the 1MDB financial scandal in which Najib has been implicated. He said he hoped the government would be given the time to find a solution “and maximise what can be saved”.
Soon after it took power from Najib in May, Mahathir’s government named the ECRL as being among the China-linked infrastructure projects it hoped to cancel because it viewed them as too expensive and unnecessary.
Officials have also previously said they believe Najib struck deals for the projects as a quid pro quo for Chinese state companies’ purchase of assets from 1MDB when its losses were first made public in 2015.
Najib, who has pleaded not guilty to all the criminal charges brought against him in relation to the scandal, has challenged Mahathir to make public the terms of the ECRL contract with CCCC, which he characterises as favourable.
Apart from CCCC, other major players involved in the ECRL include the Chinese Export Import Bank, which was to finance 85 per cent of the project. – South China Morning Post