Malaysian Prime Minister Mahathir Mohamad said Tuesday that proceeding with a multibillion dollar China-backed rail link project would impoverish the country, saddling the Government with excess debt for the next 30 years.
Since winning a historic vote last May, Mahathir’s Government has axed or reviewed large-scale infrastructure projects to rein in a surging national debt that it blames mostly on corruption in the previous Government.
But there is confusion over the status of the $20 billion East Coast Rail Link following recent conflicting statements by two Cabinet Ministers. Mahathir’s comments Tuesday suggested it might be called off but he later said a final decision hasn’t been reached.
Mahathir said the cost of the project could exceed 100 billion ringgit ($24.3 billion) upon completion.
“It is not that we do not want to honour our contracts, but we just cannot pay,” Mahathir said. “It will impoverish us so we seek understanding of the parties concerned, that it is not because we just want to frustrate or throw out a contract, but because we are really tied in terms of finance.”
Paying compensation won’t be as much as “the amount of debt we will carry for the next 30 years,” he added.
At another event late Tuesday, Mahathir said negotiations are still ongoing as both sides have different perspectives on the project and the Government hasn’t made a final decision.