This article first appeared in The Edge Financial Daily on January 3, 2019

KUALA LUMPUR: Prime Minister Tun Dr Mahathir Mohamad said the East Coast Rail Link (ECRL) project may be downsized provided China agrees to do so.

In an interview with Sin Chew Daily published yesterday, Dr Mahathir said the government is still in talks with China on the project but has not found any solution, though both parties did not set any deadline to conclude the negotiations.

“What we are trying to do is ensure that China will not lose money, while we don’t need to spend too much money,” he said.

Dr Mahathir said the Malaysian government is facing a dilemma.

On one hand, it has to fork out a substantial amount as compensation if it decides to terminate the project and on the other, it has financial difficulty to execute the project.

Therefore, Dr Mahathir said, the government may amend the project, or seek alternatives to avoid incurring high costs.

“We are still negotiating with them (China), formally or informally. Of course, for them, this is a very good project because they can earn a lot of money. They do not wish to change that,” he said.

Dr Mahathir said before Pakatan Harapan took over, it found that former prime minister Datuk Seri Najib Razak was undertaking a huge project, but could not obtain good terms from financial institutions, so the coalition decided that it would terminate the project once it took over.

“But this is not easy because we are bound by the agreement’s terms. We cannot just terminate as we wish, we have no money to pay China. If we terminate, the government is required to make a substantial amount of compensation. Now we are already paying a lot of money just to postpone it,” he said.

If possible, Dr Mahathir said, the government would like to continue the ECRL project, though he thinks the project, which requires an investment of over RM60 billion, is a waste of money with zero return.

“Although this project may benefit those living in the east coast, but what is the cost? We need to do everything for the people, including the Kuala Lumpur-Singapore High-Speed Rail and ECRL, but what about the cost? The government must manage its finances, so that we are not wasting money.

“Do you know, the west coast rail project has never made money? That rail served more purposes — ferrying passengers and freight. But for the ECRL, the people there [on the east coast] are scarce and may not be able to afford the ECRL’s fee. They are not like those living in [the] west coast, doing big businesses, so you won’t be able to get back any money from the project,” he said.