China’s Belt and Road Initiative has been served a major setback from Malaysia, as its newly elected Prime Minister, Mahathir Mohamad, delivered an order to suspend three China-backed projects in the country, according to Reuters.
- US$20 billion East Coast Railway Link (ECRL) and two pipeline projects worth US$2.3 billion
- A Chinese firm was told to suspend a $20 billion Malaysian rail project. Largely financed by China, a 688-kilometer (430-mile) East Coast Rail Link told to suspend work pending negotiations.
- Due to financial pressure, Malaysian Finance Minister Lim Guan Eng called for a sharp price reduction on the China-backed project. According to the Associated Press, Lim believed that the project’s final cost included land acquisition, interest, fees and other operational costs. This pushes the project’s actual cost is 81 billion ringgit ($20 billion), nearly 50 percent higher than that estimated by the previous government.
- “We will be friendly with China, but we do not want to be indebted to China,” Prime Minister Mahathir Mohamad has recently said. He is now planning to visit China in August to negotiate the terms of the rail link project.
- The former Malaysian Prime Minister Najib Razak, was who courted by the Chinese but ousted in an election in May, now finds himself deeply involved in the allegations of corruption at the scandal-ridden fund, 1MDB (1Malaysia Development Berhad), Reuters reports.
- “Other governments along…may get similar ideas” and “push to use more domestic contractors or seek better debt terms” making this “just one of many bumps to come,” Clara Ferreira Marques argues in Reuters Breakingviews.