PETALING JAYA: Relations between Malaysia and China would have been adversely affected if the East Coast Rail Link (ECRL) project had been called off, veteran newsman A Kadir Jasin said.
Writing in Sinar Harian, the media adviser to the prime minister said China was Malaysia’s second biggest trading partner after Singapore, surpassing even the United States and Japan.
On top of that, he said Malaysia could have been forced to pay compensation of up to RM20 billion if the case had gone to a court of arbitration.
“So the government decided to take the middle ground to renegotiate the agreement.”
On April 12, the Prime Minister’s Office announced that the construction cost for Phases 1 and 2 of the ECRL will resume with a reduced price tag of RM44 billion.
Kadir said the Pakatan Harapan government was faced with three choices after it won the May 2018 general election.
The first was to go ahead with the old agreement, signed between the previous Barisan Nasional government and Beijing, the second was to cancel the project, and the third was to renegotiate the deal.
To proceed with the agreement signed in 2016, the government would have had to pay a construction cost of RM66.7 billion for the 688km rail link, which worked out to RM95.5 million per km.
He said 85% of the project cost, or RM56.7 billion, would have to be borrowed from the Export and Import Bank of China (Exim), for which loans of RM39.1 billion had already been signed.
Kadir said the second option was to cancel the project.
He said the general view was that this was the easiest and most logical decision because during the election campaign, PH had said it would call off the project if it won.
“But if we took that path, we run the risk of being dragged to an international court of arbitration, and if we lose, we would have had to pay compensation of up to RM20 billion.
“We would gain nothing from it and instead burn RM20 billion.
“Not only that, if we cancel the project, relations with China will be damaged and that can adversely affect bilateral trade.”
Kadir said former finance minister Daim Zainuddin, who was appointed by the government to lead the talks with Beijing, had vast experience in international negotiations and had an excellent relationship with China.
He said Daim’s success was visible through the RM21.5 billion reduction in the ECRL’s total cost and the drop in construction cost from RM98 million per km to RM68 million per km.
He said that although the distance has been reduced to 640km, the rail network from Kota Bharu to Port Klang will go through more areas — Kelantan, Terengganu, Pahang, Negeri Sembilan, Selangor and Putrajaya.