Malaysia suspends $ 22 billion projects supported by China

Malaysia has suspended three of its largest projects backed by China worth $ 22 billion and is looking into whether a part of a loan from the United States is worth $ 20 billion. a Chinese public bank was used in a transaction benefiting 1Malaysia Berhad, the public investment fund scandalously funded by the scandal

The projects in question are East Coast Rail Link, which would connect the east coast of Malaysia South of Thailand and Kuala Lumpur, and two pipeline projects costing more than a dollar. Malaysia Rail Link, the government-owned company that administers the East Coast Rail Link, and Suria Strategic Energy Resources, a body run by the Ministry of Finance that oversees both pipelines, sent letters to their respective contractors on Wednesday. China Communication Construction Company and China Petroleum Pipeline Bureau – ordering the suspension of projects due to excessive costs, according to a high

CCCC said in a statement that the duration of the suspension was not specified in the she added that she was concerned about the additional costs incurred and her 2,250 local employees. The CPPB, the arm of the China National Petroleum Corp., could not be accessed immediately

The suspension of the three projects is the most striking manifestation of the call of Prime Minister Mahathir Mohamad to reduce the Chinese influence in Malaysia. Under former leader Najib Razak, billions of dollars were transferred from Beijing to Malaysia, making it a success for President Xi Jinping's Belt and Road initiative, which saw skidding in the country. 39, other infrastructure in Southeast Asia.

Now, China is being pushed back by a new democratically elected Malaysian government that is committed to reducing excessive spending and reviewing all Chinese projects and "unequal treaties."

Pipeline projects also have direct links to 1MDB. of which an alleged $ 4.5bn has disappeared. The Ministry of Finance suspects that part of the funding obtained by the NESS of the Export-Import Bank of China has been diverted to purchase land in Penang belonging to 1MDB, to help the fund repay its debts inflated, according to two sources close to the transaction

"I do not confirm that because we do not have the track of money, but we suspect.The money trail is in renminbi, through the Chinese banking system, "said a senior official at the Ministry of Finance.

China EximBank has not responded to requests for comments in time for publication.

The land purchase survey is part of a 1MDB escalation investigation initiated by Mr. Mahathir, who led this week to the arrest of Mr. Najib En June, Lim Guan Eng, Finance Minister, said that the previous government led by Mr. Najib had agreed to make payments for oil and gas pipelines in mainland Malaysia and on the island of Borneo "based almost entirely" on calendar dates rather than project progress. Only an average of 13% of pipeline construction work has been completed, while nearly 90% of project value has been paid to the CPPB.

"What we are trying to do is to recover if possible the money we have paid for the unfinished work.It is easily Rm5bn [$754m] and above," said the manager, adding that It was likely that the pipelines would be canceled as the reassessment of the projects gave "no confidence that they are worthwhile".

100 worth of projects funded by China EximBank, which also provided funding for East Coast Rail Link.

"Both transactions were approved [in 2016] at the same time by the cabinet. . .

M. Lim said on Tuesday that "drastic" cost reduction would be needed before the country progresses on the railroad. The Department of Finance has calculated the actual cost of the project at $ 20 billion – $ 3.5 billion more than the estimates of the previous government.

But it would be difficult to abandon the railway because some of the funds have already been reduced and construction work has begun.

The project is also the most strategic for China. "Among all the projects in Malaysia, it is the one that is most closely associated with the Belt and Road Initiative [the] so it will be the most anxious project," said Peter Mumford. , Asia director of the Eurasia Group.

Mahathir's Advisory Board Refused to Comment on Suspension of Projects

James Kynge Additional Report in London