This article first appeared in The Edge Financial Daily on March 21, 2019

KUALA LUMPUR: The East Coast Rail Link (ECRL) project will proceed on a suitable scale if ongoing negotiations with China are fruitful, Prime Minister Tun Dr Mahathir Mohamad said yesterday.

Dr Mahathir said the government will announce the outcome upon conclusion of the negotiations which he indicated “will take a bit more time”.

“If the negotiations are fruitful, the government is confident that the ECRL project can continue at a suitable scale and contribute to the social wellbeing of the people, and save Malaysia from being burdened by huge debts,” he said in the Dewan Rakyat.

The prime minister was replying to Datuk Seri Dr Ismail Mohamed Said (BN-Kuala Krau) who asked about the status of the ECRL, and whether the government was willing to continue with the project to spur development in the East Coast.

He said the previous government should not have rushed into signing the engineering, procurement, construction and commissioning (EPCC) contract, and a huge loan agreement, in relation to the project before a comprehensive due diligence and cost-benefit analysis was carried out.

“The EPCC contract was drafted with a high lump sum price and the details of the scope and technical specifications were not properly stated.

“A new rail system to the East Coast can be built in a better way if the previous administration had taken into account the government’s financial aspects, socio-economic impact, commercial value, environmental impact and Malaysia-China bilateral relationship,” he added.

Dr Mahathir said the government is now caught in a dilemma as it will be burdened with high borrowings if the project continues as previously contracted, but face substantial financial implications if the project is cancelled.

Therefore, he said Putrajaya has to review the ECRL in detail and ensure that the country can implement the project with better returns without affecting future growth.

“The government has appointed Tun Daim Zainudin as the special envoy of the prime minister to lead the negotiations on the ECRL with China, for a ‘win-win’ solution,” he added.