Malaysian Prime Minister Mahathir Mohamad will cancel two multi-billion dollar Chinese-backed projects agreed to by his predecessor, the disgraced Najib Razak, who is now in prison for allegedly embezzling billions of dollars from government coffers.
The target of Mahathir's ire is the Chinese funded $20 billion East Coast Railway Link (ECRL), and two Chinese-backed pipeline projects that each costs $1 billion. Mahathir has frozen Malaysia's participation in both projects, which now lay idle.
ECRL, the most expensive China-backed infrastructure project, plans to link Malaysia's east coast to Kuala Lumpur and Thailand. ECRL was also intended as a trade route connecting China with markets beyond Asia.
It was harshly criticized by Mahathir for terms totally unfavorable to Malaysia. Mahathir took exception to a stipulation that state-owned China Communications Construction Ltd (CCCC), the project's contractor, will receive a 15 percent upfront payment of the total project cost of $10 billion as a "mobilization fee."
Since coming to power in May, Mahathir has suspended four multi-billion dollar infrastructure projects in Malaysia to be funded and constructed by China citing exorbitant project costs imposed by the Chinese, among other irregularities.
Malaysian political analysts said scrapping ECRL sends a strong signal Mahathir is making good on his election promise to curb China's growing influence in Malaysian politics and business. The demise of ECRL comes a month after Mahathir scrapped another Chinese-backed project: the 350 kilometer-long, the high-speed railway between Kuala Lumpur and Singapore. The project would have cost some $17 billion and was targeted for completion by 2026.
Mahathir's tough stand against China threatens to sour relations between both countries, but the Malaysian PM isn't worried. Mahathir believes Malaysia doesn't need these two projects, which he also considers non-viable. So, Malaysia wants to drop both of them, he said.
Najib, a close ally of China, made his country part of China's ambitious One Belt, One Road (OBOR) initiative. He signed the deals for the controversial ECRL and the two gas pipelines in 2016.
Mahathir's Malaysia wants to recoup some of the money it's paid to the Chinese contractors, and this might prove impossible given the frosty relationship now existing with Beijing. Mahathir, however, offered China some consolation.
He said that if scrapping ECRL and the twin pipeline projects aren't doable, Malaysia will put them on hold until a later, future date.
Mahathir is for establishing good relations with China and welcomes Chinese investments as long as these benefit Malaysia. Mahathir will visit China on Aug. 17 for a five-day visit. He will meet with President Xi Jinping and premier Li Keqiang.
