In 2017, then Malaysian Prime Minister Najib Razak hailed the ECRL to be built and funded by China as a “game changer” for the country’s underdeveloped east coast region. A year later, his government was swept away by the election victory of Mahathir Mohamad who announced that he was canceling the 680-km project.
However, since the main Chinese contractor, China Communications Construction Company (CCCC), had already spent a considerable sum setting up base stations, importing equipment and doing preliminary works, if the Malaysian government stuck to its guns and canceled the project, it would have to pay the contractor more than five billion U.S. dollars in compensation.
After months of negotiations, the two governments have agreed to a deal, slashing around one-third of the original cost of some 16 billion dollars while shaving just 40 km of the original route.
“It is our belief that the ECRL will serve as a stimulus to economic growth and development, especially in the east coast, and attract investments along the railway corridor as well as generate significant employment opportunities,” said Malaysian Prime Minister Mahathir Mohamad at a press conference on Monday.
The new deal also ensures that the CCCC will use local companies for 40 percent of the civil works, up from 30 percent previously.
“CCCC has agreed to participate in the operation and maintenance of the ECRL through a 50-50 joint venture company and will provide technical support and share the operational risk after the project’s completion,” added Mahathir.
Mahathir thanked the Chinese government for being willing to renegotiate the terms of the deal.