Fri07202018

LAST_UPDATEFri, 20 Jul 2018 8pm

Will ECRL End Up Like China's Investment In Sri Lanka, Giving A Controlling Stake To The Chinese Company?

The groundbreaking ceremony for the ECRL in August last year officiated by former prime minister Datuk Seri Najib Razak.  Pic: YoutubeThe groundbreaking ceremony for the ECRL in August last year officiated by former prime minister Datuk Seri Najib Razak. Pic: Youtube

The main Chinese contractor of the East Coast Railway Link received instructions from the project owner yesterday that it is to suspend all works.

A letter was sent from Malaysia Rail Link Sdn Bhd (MRL) to China Communications Construction Co Ltd (CCCC) that cited grounds of "national interest" among other reasons, TheEdge reports.

However, CCCC has since issued statements to the media expressing concerns over the fate of thousands of its local workers and mounting additional costs from the suspension.

“While the duration of the suspension has not been specified, we are concerned about incurring additional cost, losses and damages arising from the suspension.

“We are upset and concerned about the livelihood of our 2,250 local staff, as well as several hundred subcontractors, suppliers and consultancy firms,” the statement read.

Yesterday, Finance Minister Lim Guan Eng had announced that the ECRL cost is actually RM81 billion and in order for the project to proceed, costs must be reduced first.

However, CCCC has reiterated that it had signed a legal contract with the previous Barisan Nasional government before construction started.

"The contract has been signed by CCCC and MRL via legal processes. We hope MRL will honour and respect the contract signed.

"We respect and comply with Malaysian laws. Under the situation, we have no choice but to adhere to the suspension instruction," the company said.

Earlier, concerns had arisen over the new Pakatan Harapan's government's ability to take charge of the project had drawn comparisons to CCCC's involvement in Sri Lanka’s Hambantota port.

Sri Lanka’s Hambantota port was officially handed over to the China-led company on a 99-year lease via a US$1.2 billion debt-equity swap in December last year. Pic: Colombo GazetteSri Lanka’s Hambantota port was officially handed over to the China-led company on a 99-year lease via a US$1.2 billion debt-equity swap in December last year. Pic: Colombo Gazette

The port project had been inked between Sri Lanka and CCCC less than a year before a change of government took place. The new government could not keep up debt payments and eventually surrending "over an 85% stake to the Chinese company on a 99-year lease via a US$1.2 billion debt-equity swap" TheEdge had highlighted in a report last week..

"In Malaysia, everyone is concerned about the ECRL project, very similar to [the port project in] Sri Lanka,” CCCC chairman Liu Qitao was quoted at a panel discussion at a Belt and Road Initiative summit in Hong Kong.

However, he insists that the debt-ridden port project in Sri Lanka will bring more benefits to the livelihood of Sri Lankans.

International media had likened CCCC's acquisition of the mega project from the Sri Lankn government as a 'debt trap' and part of China's plan to expand its global influence through the use of 'debt diplomacy', by offering lucrative loans for ambitious infrastructure projects to debt-ridden nations around the world who may not have the financial capacity to repay them.

Addressing the issue of the ECRL, the CCCC chairman expressed that he was not too concerned about the risks and pledging to review the 688km project spanning Port Klang, Selangor, and Pengkalan Kubur in Kelantan.

Filepic: TwitterFilepic: Twitter

“For such a project [that is] tied to livelihoods, I believe that the new government will definitely take that into consideration,” he added, “as long as it is a good project, everyone will be confident about it."

“We’re confident [that] first of all, this project is based on business principles — it is very open and transparent,” he said that in the case of the ECRL, the project was in response to internal demand with the aim towards creation of value.

Finance Minister Lim Guan Eng had previously expressed his intention to visit China soon to renegotiate the terms of several mega China deals in Malaysia, including the ECRL.

"We expect that the ECRL project will only become financially and economically feasible if there is a drastic price reduction of the project by the CCCC," Mr Lim said in a statement, Reuters reports.

- mD