Malaysian Prime Minister Dr Mahathir Mohamad has announced the cancellation of China-backed mega-projects signed under Najib Razak's Barisan Nasional administration, notably the US$20bil East Coast Rail Link (ECRL), today (21 Aug).
Speaking to reporters at the end of his five-day official visit to China, Dr Mahathir said that Chinese authorities as well as the firms involved in the projects will discuss matters regarding compensation as a result of the cancellation.
He declared that the primary purpose of his recent visit to China was to resolve the problem arising from the "billions of Ringgit" worth of "Najib’s debts from projects which have no benefit to us”.
In bilateral talks with China’s President Xi Jinping and Premier Li Keqiang yesterday (Aug 20), Dr Mahathir highlighted the extent of Malaysia's current debt, citing the massive debt as a reason for the cancellation of the projects.
He said: “I explained to them we cannot have the ECRL at this moment. We have to solve our financial difficulties. They agreed.”
Malaysian Finance Minister Mr Lim Guan Eng touched on the issue of the ECRL in Parliament last week, declaring that the rail's annual maintenance costs could rack up to RM1 billion.
According to Dr Mahathir, the China firms that were awarded the mega-projects were instructed to allocate a 30 per cent stake in the local ventures to certain individuals. This allegation was denied by Najib.
At the end of his visit, the prime minister remarked that such projects "will be deferred" until the Malaysian government is able to afford to finance them in the future, adding that it will only be done if costs can be reduced in developing the projects.
“If we have to pay compensation, we have to pay. This is the stupidity of the negotiations before. We must find a way to exit these projects … This is our own people’s stupidity,” he said.
Previously on 13 Aug, Dr Mahathir said in an interview with the Associated Press that he will negotiate a cancellation of the Chinese-backed mega-projects signed under Najib's administration in a bid to alleviate Malaysia's astronomical billion-Ringgit debt accrued under Najib's government.