KUALA LUMPUR: Malaysia will be "impoverished" if it continues with the East Coast Rail Link (ECRL), said Prime Minister Mahathir Mohamad on Tuesday (Jan 29).
Since winning power last May, Mahathir has repeatedly vowed to renegotiate or cancel what he calls "unfair" Chinese projects authorised by predecessor Najib Razak, whose near-decade long rule ended in electoral defeat amid a massive financial scandal.
The Cabinet has decided to cancel the contract with China Communications Construction Co Ltd (CCCC) for the East Coast Rail Link project, economic affairs minister Mohamed Azmin Ali said last week.
"We seek understanding from the parties concerned," Mahathir told reporters, adding that Malaysia was burdened with "heavy debt" and could not afford the project, one of the biggest signed in China's signature Belt and Road initiative.
"It is not because we don't want to honour our contracts, but we just cannot pay. This contract may cost us more than a RM100 billion (US$24 billion). It will impoverish us."
Mahathir said Malaysia will still have to pay a cancellation fee. "The huge compensation is not as huge as the amount of debt we will carry for the next 30 years."
The government is still determining how much to pay CCCC as cancellation fee, Azmin said last week. Government officials have previously said the project cost had been inflated.
However, the actual status of the project still remains unclear, with contradictory statements made by other officials on the issue.
In Beijing this week, Chinese foreign ministry spokesman Geng Shuang said he was unaware of the project being cancelled.
"I admit some mistakes were made, but we are going to correct (those mistakes)," said Mahathir in response to the contradictory statements that had been made.
He said on Monday that the status of the ECRL project will be announced only by the Minister of Finance Lim Guan Eng.
However, Lim said on Tuesday that he had been advised by Mahathir to hold back on making any statement on the ECRL project.
"I met PM this morning and he suggested that I do not make any statement (on the ECRL) for the time being. So please wait for the statement," he said.
On Sunday, Lim said an official statement will be issued on the status of the ECRL project this week.
He added that since the ECRL involved massive funds, it was only appropriate that the announcement be made through a written statement.
In August Mahathir had said the project would be cancelled "for now", but the government later said it was in talks with CCCC on the future of the rail line.
Mahathir has blamed Najib's administration for taking total government debt and liabilities to more than RM1 trillion, including that of scandal-plagued state fund 1MDB, which is being investigated for corruption in at least six countries.