Malaysian exporters should leverage in US-China trade war

Malaysian exporters should leverage in US-China trade war

The suspension came just a day after Malaysia Finance Minister Lim Guan Eng called for a sharp price reduction to the 428-mile East Coast Rail Link, after discovering that the project's actual cost is $20 billion (81 billion ringgit), almost 50 percent higher than what was estimated by the previous government.

Malaysian and Chinese officials are in talks for Prime Minister Tun Mahathir Mohamad to visit Beijing soon, two sources with knowledge of the discussions told Reuters.

The groundbreaking ceremony for the ECRL in August past year officiated by former prime minister Datuk Seri Najib Razak.

Najib was charged Wednesday for criminal breach of trust and corruption arising from investigations into alleged graft at the 1MDB state investment fund.

The project is a key part of China's regional Belt and Road infrastructure initiative connecting Malaysia's west coast to rural eastern states.

The multibillion-dollar rail line was supposed to connect Malaysia's east coast to the capital, Kuala Lumpur, and Thailand.

Mahathir wants to renegotiate the terms of those deals with Beijing.

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Since taking office, Mahathir has pledged to review major projects agreed by the scandal-plagued Najib administration, saying they did not benefit the country economically.

The Financial Times reported that Malaysia has also suspended two China-backed pipeline projects this week, citing a senior Malaysian Finance Ministry official.

"We hope to reduce costs a lot, because of a lot of wrong things [are] being done", he said at a news conference in June, referring to the East Coast Rail Link and the billions Malaysia would have to borrow from China to finish it.

Lim said the Chinese contractor, state-owned China Communications Construction Company (CCCC), would have to make a "drastic price reduction" for the scheme to go ahead. The indefinite suspension could cause additional costs, losses and damages, the company said.

"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".

"This suspension shall take effect immediately and will be in force until further instruction from us", said the letter signed by MRL chief executive officer Datuk Sri Darwis Abd Razak. He said the government has paid 8.3 billion ringgit ($2.1 billion) to the China Petroleum Pipeline Bureau but it has completed only 13 percent of the work. The Malaysian authority is also reviewing other large infrastructure projects financed by China, according to the Associated Press.

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