Published: Fri, July 06, 2018
Worldwide | By Myra Stephens

Malaysia Suspends Three China-Backed Infrastructure Projects

Malaysia Suspends Three China-Backed Infrastructure Projects

Work on the $20 billion East Coast Railway Link (ECRL), which would connect parts of Malaysia, was suspended on June 4.

The pipeline projects had been awarded to China Petroleum Pipeline Bureau, while the China Communications Construction Company served as the main contractor for the East Coast Rail Link.

Najib courted billions of dollars of Chinese investment and was one of Southeast Asia's most enthusiastic supporters of President Xi Jinping's signature Belt and Road Initiative.

Lim said a report on the pipeline scandal would be filed with the Malaysian Anti-Corruption Commission, adding that he would "seek the assistance of the China government to help trace the flow of funds in China, in order to investigate the possibility of money laundering".

"The decisions are exclusively directed towards the related contractors, relating to the provisions mentioned in the agreements, and not at any particular country", Malaysia's finance ministry said in a statement on Thursday.

The second-time prime minister said there was no proof to confirm or deny that the princely sum originated from and returned to the country, as previously alleged by Najib.

Prime Minister Mahathir Mohamad, who took office May 10 after his Pakatan Harapan coalition scored an election upset over Najib's Barisan Nasional coalition, has been an outspoken critic of Malaysia undertaking projects that require borrowing from China.

Mahathir's government has also axed a high-speed rail line to Singapore, deeming it too costly.

The "donation" was first reported over three years ago by U.S. daily Wall Street Journal which broke the 1MDB scandal and started a global investigation into the Malaysian investment fund. Weeks later, Mahathir said that his government would review the bullet-train project. "While the duration of the suspension has not been specified, we are concerned about incurring additional cost, losses and damages arising from the suspension".

Finance Minister Lim Guan Eng earlier this week said there must be a "drastic" cut in costs for the 688-kilometer (430-mile) East Coast Rail Link, whose cost at 81 billion ringgit ($20 billion) is almost 50 percent higher than earlier estimated.

CCCC said it hoped both sides can find a win-win solution through negotiations and that the suspension will be lifted soon.

Lim said the two gas pipeline projects were worth 11.1 billion ringgit ($2.7 billion), almost 20 percent more than an earlier estimate.

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