Malaysia Rail Link (MRL) has instructed China Communications Construction (CCCC) to suspend the construction of its $20bn East Coast Railway Link project.
Financial news agency The Edge first reported the decision referring to a letter sent by MRL to the chief contractor of the project, CCCC, instructing the suspension of work with immediate effect. In the letter, MRL cited ‘national interest’ among other reasons to halt the project.
The 688km-long East Coast Railway Link, a part of China’s Belt and Road initiative, aimed at connecting the eastern coast of the Malaysia Peninsula with strategic shipping routes in the west.
According to Reuters, Malaysia is expected to re-negotiate the terms of the agreement with China in an attempt to reduce the associated costs of building this rail link.
The CCCC expressed its regret over the suspension in a statement on Thursday but stated that it would adhere to the instructions.
The company also raised concerns about the future of its 2,250 staff and other people associated with the construction of the link.
Malaysian Finance Minister Lim Guan Eng said that the East Coast Railway Link project can become economically feasible only when the price of the project is decreased significantly.
Minister Eng was quoted by Reuters as saying: “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.”
The Malaysian Government recently introduced multiple measures to reduce the national debt. These measures include a re-assessment of the viability of planned and ongoing major projects.
In May, the government decided to scrap the Kuala Lumpur-Singapore high-speed rail project.