KUALA LUMPUR (June 26): The government will proceed with the East Coast Rail Link (ECRL) if it can obtain more favourable terms through renegotiation and the project’s cost is brought down, said Prime Minister Tun Dr Mahathir Mohamad.
“If it has to be built, if we cannot break the contract, then we have to reduce the costs,” the prime minister said at a press conference yesterday.
He said Putrajaya does not think that the project “should cost RM55 billion” as announced.
Noting that the terms of the contract are not favourable to Malaysia, he said: “So all these terms need to be renegotiated. And if we get better terms, then of course we will continue [with the project].”
Dr Mahathir said that under the existing arrangement, payments were made “without regard for the progress of the construction”.
He expressed confidence that the government could reduce the overall cost quite significantly, pointing to how “there were a lot of wrong things being done” by the previous government in relation to the project.
“They borrowed from China RM55 billion, we don’t think it should cost RM55 billion.
“Then there’s the issue that they give the contract to a Chinese company, and they bring in workers and everything from China, so what is there for Malaysia? We must gain something for Malaysia,” he said.
Finance Minister Lim Guan Eng was previously reported as saying that Malaysia has already paid RM20 billion in relation to the 688km rail project, but refused to share details of the contract and said negotiations need to be done “behind closed doors”.
In May, Council of Eminent Persons chairman Tun Daim Zainuddin said the RM55 billion was only for the first phase of ECRL, while the second phase would cost RM11 billion — all excluding the interest rates tied to the funding of the project.
It was reported that China-based Exim Bank will fork out 85% of the total project cost, with the project spearheaded by China Communications Construction Co.
In a related matter, Dr Mahathir denied that the government is considering proceeding with the ECRL because tycoon Tan Sri Vincent Tan had bought into T7 Global Bhd.
“I don’t know he was a shareholder … I don’t know about that,” he said.
T7 Global has inked a memorandum of understanding with Terengganu state-linked corporation Eastern Pacific Industrial Corp Bhd (Epic) and a bumiputera company, CMC Engineering Sdn Bhd, to form a consortium to undertake the construction of the ECRL project’s Terengganu parcel.
Tan bought a 5.04% stake in T7 Global soon after the May 9 general election. The Berjaya Corp Bhd founder was among entrepreneurs who had been very successful under Dr Mahathir’s previous 22-year tenure as prime minister before retiring in 2003.
This article first appeared in The Edge Financial Daily, on June 26, 2018.