Malaysia and China have agreed to re-activate a major railway project (ECRL) after a nearly one-year hiatus.
The railway project is one of three major infrastructure projects implemented by the previous government Barisan Nasional and suspended by the current government.
The new Malaysian government Pakatan Harapan stopped work on the project since it took power after the May 9 elections last year, saying the project would add more debts to Malaysia , and it would have no economic viability for Malaysia.
But the Malaysian opposition argued that the project – which passes through states ruled and approved by the previous government – facilitates the movement of people and goods, and will strengthen the country’s economy and domestic and international trade.
The two countries signed an additional annex to the East Coast Railway Agreement in Malaysia today.
A statement by the Malaysian Prime Minister’s Office said the new deal would save more than $ 5 billion.
At first, the project cost was more than 65 billion ringgit ($ 16 billion), after long negotiation the new deal fell to 44 billion ringgit ($ 11 billion).
Tun Daim Zainuddin said Malaysia has managed to reduce the costs for the East Coast Rail Link (ECRL) project by a whopping RM21.5bil.
The new price has been set at RM44bil, a 32.8% reduction from the previous RM66bil price tag.
“The new link is 648km, 40km shorter,” he told the media here on Friday (April 12).
The Prime Minister Mahathir Mohamad is said to announce details of the agreement at a news conference on Monday.
The three-phase project runs between Klang harbor on the western coast of the Malaysian peninsula and the cities of Kuala Lumpur, Kuantan and Kota Baru on the east coast and the port of Tampat overlooking the South China Sea.
The new train route will cut 688 kilometers west of the Malaysian peninsula to its east, with a focus on a central mountain range. The train route will shorten forty kilometers (the island)
According to the new agreement signed today in the Chinese capital of Beijing, the train route will shorten forty kilometers, and canceled some stops in it.
For China, the importance of the project is to reduce the maritime distance of commercial vessels between China and Africa and the Middle East, where they must travel around the Malaysian peninsula across the Malaga Straits to the South China Sea, according to a report by Aljazeera Arabic.
After the completion of the project, commercial vessels will unload their cargo in one of the two ports to transport goods by road via trains to the other port, thus shortening the time and cost, so observers believe that the first beneficiary of the project is China.
The new train line cuts 688 kilometers west of the Malaysian peninsula to its east (the island)
Regardless of the economic viability of the project for both parties, experts in the field of economics have linked the suspension of the project to China’s suspension of Malaysia’s palm oil import for months, and the alternatives for China may have convinced Malaysia to proceed with the East Coast Railway project.
One of the Chinese alternatives is the construction of a tunnel or a sea passage across Thai territory, which would marginalize Malaysia’s strategic location. China and Thailand have studied the feasibility of the offshore tunnel project but have been reluctant to implement it because of the high cost of more than $ 28 billion.