Malaysia confirms scrapping of three Chinese projects

Malaysia, Slider 11 Sep 2018
Malaysia confirms scrapping of three Chinese projects

Malaysia has finally scrapped three China-backed pipeline projects after halting work on them following the shock elections in May that saw an opposition alliance assuming power for the first time in the country.

A Malaysian Ministry of Finance spokeswoman confirmed that the country has canceled three China-backed pipeline projects, which were suspended in July.

The Financial Times earlier cited Malaysian Minister of Finance Lim Guan Eng (林冠英) as saying that he had sent a letter to the “relevant parties” in Beijing to terminate the planned projects.

The plans comprise of two oil and gas pipelines that cost more than US$1 billion each, as well as a US$795 million pipeline that would link the state of Malacca to a refinery and petrochemical plant in the state of Johor, the newspaper reported.

The ministry has said that only about 13 percent of the pipelines’ construction has been completed, but almost 90 percent of the projects’ value has been paid to the contractor, China Petroleum Pipeline Bureau, a subsidiary of state-owned China National Petroleum Corp, the paper said.

Lim did not disclose the fees Malaysia would incur for canceling the pipeline projects, but said that the lawyers were handling the matter, the Financial Times said.

Since taking office, Malaysian Prime Minister Mahathir Mohamad has been reviewing infrastructure projects undertaken by the previous administration.

The cost-cutting efforts are aimed at tackling the country’s liabilities, which have surged above 1 trillion ringgit (US$240.95 billion) due to state guarantees on borrowing by state investment firm 1MDB, which is at the center of a multibillion-dollar scandal.

Lim also told the Financial Times that another China-backed project — the East Coast Rail Link — was under review.

That project, the flagship element of China’s Belt and Road Initiative in Malaysia, is being built by China Communications Construction Co.

The finance ministry has revised the rail project’s price tag to US$20 billion, US$3.5 billion more than the previous government’s estimates.


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