ibusinesslines.com September 21, 2018

Malaysia tells Chinese firms to suspend projects

07 July 2018, 04:37 | Erica Roy

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The government has ordered Chinese state-owned companies to suspend work on the $20 billion East Coast Rail Link, a key venture under China's Belt and Road initiative, and two gas pipeline projects pending negotiations.

Barred after the election from leaving the country, Najib was arrested today as part of that probe, and is expected to be charged tomorrow.

Najib courted billions of dollars of Chinese investment and was one of Southeast Asia's most enthusiastic supporters of President Xi Jinping's signature Belt and Road Initiative. The rail line was to stretch 688 km (430 miles) and join the two coasts of Peninsular Malaysia at a cost of 55 billion ringgit ($13.5 billion).

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.

One project involves the construction of Malaysia's longest railway.

"The decisions are exclusively directed towards the related contractors relating to the provisions mentioned in the agreements, and not at any particular country", Lim said, in an apparent attempt to allay concerns that China was being singled out.

On May 29, Mahathir announced that his new government would renegotiate terms of the ECRL deal.

The new Malaysian government, led by Mahathir Mohamad, has disclosed in recent weeks how the Najib administration used federal agencies and government money to bail out debt-ridden 1MDB, which is being investigated in at least six countries.

He said that for the project to be financially viable, the cost would have to come down significantly, according to Malaysian media reports.

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

"During this period of suspension, you shall protect, store and secure the works against any deterioration, loss or damage".

"We are upset and concerned about the livelihood of our 2,250 local staff, as well as several hundred sub-contractors, suppliers and consultancy firms". "Under the situation we have no choice but to adhere to the suspension instruction", it said, adding that it hoped the suspension would be lifted as soon as possible.

The China Petroleum Co.is the firm contracted for the pipeline projects.

Lim has said the government has given China Communication 10 billion ringgit ($2.5 billion) in advance payment and 9.67 billion ringgit ($2.4 billion) as a progress payment.

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