Malaysia and China have signed a revised agreement to resume construction of the suspended East Coast Rail Link (ECRL).

The new agreement, which reduces the scope and cost of the original project, was signed following months of negotiations between the two countries.

According to a statement from the Malaysian Prime Minister’s office, the ECRL project will now be built with an investment of MYR44bn ($10.7bn), nearly two-thirds of the original cost.

“This reduction will surely benefit Malaysia and lighten the burden on the country’s financial position,” the statement added.

Last year, Malaysia halted construction of the rail link owing to its high costs and said it would re-negotiate with the Chinese authorities to reduce the scale of the project.

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By GlobalData
“The ECRL project will now be built with an investment of MYR44bn ($10.7bn), nearly two-thirds of the original cost.”

Malaysian official Daim Zainuddin, who negotiated with China, said that the original 688km project will be reduced by 40km to 648km.

Additionally, the cost of building each kilometre of the line will be reduced significantly from MYR98m ($23.82m) to MYR68m ($16.53m).

Further revised details on financing and interest payments will be released this week.

As part of China’s Belt and Road initiative, the East Coast Rail Link project will connect Port Klang on the Straits of Malacca to Pengkalan Kubor in north-east peninsular Malaysia.

In January, Malaysia terminated the original contractor agreement with China Communications Construction Company.

The current Malaysian Government has been reviewing all major national infrastructure projects, which may increase the national debt.

Last year, it suspended the construction of the high-speed rail project between its capital Kuala Lumpur and Singapore.