Mahathir scraps $22 bn China-backed projects
Beijing: Malaysian Prime Minister Mahathir Mohamad confirmed during a visit to Beijing on Tuesday that three China-backed projects totalling USD 22 billion will be cancelled until his country can find a way to pay its debts.
The projects include a railway connecting Malaysia's east coast to southern Thailand and Kuala Lumpur, and two gas pipelines.
"I explained to (the Chinese leaders) why we can't have the ECRL (East Coast Rail Link)," Mahathir told Malaysian reporters at the end of his five-day visit. "It's about borrowing too much money, which we cannot afford, we cannot repay, and also because we don't need those projects for Malaysia at this moment... our problem now is how to solve our financial deficit."
Mahathir is trying to reduce Malaysia's national debt, which has ballooned to some USD 250 billion.
After meeting Premier Li Keqiang on Monday, Mahathir said he believed China would help Malaysia resolve its fiscal problems.
The Malaysian leader also warned against "a new version of colonialism happening because poor countries are unable to compete with rich countries just in terms of open free trade".
The USD 20 billion rail project was contracted with China's largest engineering firm, China Communications Construction Company, and mostly financed by a loan from the Export-Import Bank of China.
Malaysia's finance ministry said in July that 88 percent of the cost of two gas pipeline projects costing 9.4 billion ringgit ( 2.32 billion) had been paid to the Chinese contractor despite only 13 per cent of the work being completed.
One pipeline is in Malaysia's Sabah state on Borneo island and the other runs from Malacca in peninsular Malaysia to the northern state of
Kedah.
In May Mahathir shelved separate plans to build a high-speed railway between Singapore and Malaysia which had been agreed several years ago, saying it was too costly.