PETALING JAYA: MCA president Wee Ka Siong said today cancelling the East Coast Rail Link (ECRL) project will have a detrimental effect on the economy and harm bilateral relations with China.
“Take a moment to consider factors such as the friendship between the people of both countries, jobs and economy, diplomatic ties and the reputation of Malaysia,” he said in an open letter to the prime minister and Cabinet ministers today.
Wee’s letter comes in the wake of remarks by Prime Minister Dr Mahathir Mohamad earlier today that Malaysia would cancel the RM81 billion project.
“It is not that we do not want to honour our contracts. We just cannot pay. These contracts will cost us more than RM100 billion. It will impoverish us, so we seek the understanding of the parties concerned. We are really tied in terms of finances,” Mahathir said.
Wee said axing the ECRL project would harm diplomatic ties between Malaysia and China.
“If we put ourselves in China’s shoes, we will surely respond negatively if our overseas investment is treated as such. Let’s not forget that the price of commodities in our country has been on the decline. A nightmare looms should China take any retaliatory action, such as reduce or even halt the import of commodities (palm oil in particular) from us.
“If that happens, Felda, Sime Darby and other big corporations will be the first to feel the heat. The livelihood of some 650,000 smallholders and their families will be directly affected.”
Wee said, from the economic perspective, the ECRL project was likely to boost the gross domestic product growth of three east coast states by 1.5%, spur the development of the east coast, enhance connectivity between the east and west coast, and close the economic divide between the two coasts.
“The rail link is 20% completed, with several tens of billions paid to the contractor. On top of that, Malaysia will be penalised for cancelling the RM30 billion loan from the Exim Bank of China. We will have to repay the loan and compensation within a short period of time.
“From my experience in administering engineering projects, any breach of contract will result in a hefty penalty.”
The compensation for cancelling ECRL, he said, could reach RM20 billion.
“Judging from my past experience dealing with China and its officials, as well as the friendly gestures displayed by China so far, I can conclude that China is willing to achieve a win-win solution instead of a situation where both sides lose out. The Malaysian government can consider restructuring the project timeline or reducing the project scale, which are alternatives that work in Malaysia’s favour while maintaining the amicable ties between Malaysia and China.”
He claimed owners of 150 related industries, including “tens of thousands of contractors” who had taken a loan to purchase equipment, would suffer greatly should ECRL be cancelled.
Wee added: “Prioritise economy and the livelihood of the people and put an end to the political game to discredit your opponents. For the sake of the people in the east coast as well as the whole of Malaysia, the government should not cancel the ECRL project.”