Malaysia restarted its East Coast Rail Link project with China on Thursday after downsizing construction costs by a third to lighten the government’s debt burden, said Caixin.
The rail project, led by China Communications Construction Co. and Malaysia Rail Link Sdn., was canceled a year ago by Prime Minister Mahathir Mohamad’s new government over concern of the 65.5 billion ringgit ($16 billion) price tag. The project was revived later after the Malaysian government stuck a deal with China to slash the cost to 44 billion ringgit.
The rail project is one of several infrastructure projects that Mahathir has sought to revive to help stoke economic growth after a wave of spending cuts and a corruption crackdown last year. Other Asian governments from Myanmar to the Maldives have also reassessed Belt and Road Initiative investments amid concerns over sovereignty and large borrowings, said Caixin.
Malaysia will sign a supplementary agreement soon with Export-Import Bank of China that will reduce the interest cost of its loan for the East Coast Rail Link project, said Malaysia’s Transport Minister Loke Siew. The Exim Bank loan is to finance 85% of the 44 billion ringgit project, he said.