UN Malaysia cancels China-backed projects - 'We can become bankrupt'

http://news.abs-cbn.com/focus/08/21/18/we-can-become-bankrupt-malaysia-cancels-china-backed-projects

Malaysian Prime Minister Mahathir Mohamad confirmed Tuesday the cancellation of two major Chinese government-backed infrastructure projects in his country worth over $20 billion, including a railway and two gas pipelines.

At a press conference in Beijing before ending his five-day visit, Mahathir said Malaysia, owing to its financial woes, cannot afford the projects, namely the $20 billion East Coast Rail Link for which construction already started, and the Trans-Sabah Gas Pipeline projects worth over $2 billion.

"At the moment, the priority is for us to reduce our debt. With that debt if we are not careful we can become bankrupt. That is the work of Najib," he said, referring to his predecessor Najib Razak.

The rail project, launched last year and slated for completion in 2024, was one of the showpiece infrastructure projects under China's Belt and Road Initiative.

It would have connected ports facing the South China Sea on the east coast of peninsular Malaysia to ports on the Straits of Malacca on the west coast over a distance of 688 kilometers.

Some 85 percent of the financing was being provided through a 20-year loan at 3.5 percent interest from the Export-Import Bank of China.

Mahathir had earlier taken issue with the loan condition that the contract be given to a Chinese company, using its own workers with everything brought from China.

On Tuesday, he said, "My job is to establish principles that investment in Malaysia is not about bringing in workers and all that. It is about bringing in capital and technology, not workers. We want our people to be employed."

In June, it was learned that the Malaysian government had already spent 20 billion ringgit ($4.8 billion) on the project. It was suspended in July after being 13 percent completed.

Mahathir said Chinese President Xi Jinping and Premier Li Keqiang accepted his reasons behind the cancellations.

"Initially, there were some misunderstandings, but now they understood why we do it. I don't think China wants us to be bankrupt," he said.

"It is all about borrowing too much money...which we cannot repay and also because we do not need those projects in Malaysia at this moment. Maybe later on, yes. But now we do not need it."

Mahathir lamented that Malaysia may have to pay "huge sums of money" in compensation, while he slammed Najib's "stupidity" for negotiating deals that lack "fair" exit clauses.

"Such stupidity has never been seen in the history of Malaysia," he said. "You cannot blame the Chinese for that."

Mahathir also reiterated Tuesday that he does not see the necessity of moving forward now with a high-speed rail project connecting Malaysia and Singapore, which was mooted by the previous administration.

The proposed 360-kilometer rail line that would stretch along the west coast of the Malay Peninsula, from Kuala Lumpur to Singapore, is among a number of big-ticket projects that came under review in the aftermath of his return to power in May.

Scrapping the high-speed rail project, however, would cost the Malaysian government a potential penalty of 500 million ringgit for breaking the agreement with Singapore.

Mahathir, who previously served as prime minister for 22 years until 2003, has focused on cutting down government expenditure in his second turn in office in order to trim the national debt of almost 1 trillion ringgit, or about 65 percent of the gross domestic product.

https://www.scmp.com/news/china/dip...aden-malaysia-wants-fair-and-free-trade-china

Malaysia big part of Beijing’s belt and road vision for future, says Xi Jinping

Amid doubts over China-backed projects in Southeast Asian nation, Chinese president tells Mahathir Mohamad they need more ‘strategic communication’

President Xi Jinping made the remarks during a meeting with Malaysian Prime Minister Mahathir Mohamad, whose call for a review of Chinese projects has cast a shadow on relations between Beijing and Kuala Lumpur.

Mahathir, who is on a five-day visit to China, also met Premier Li Keqiang earlier in the day, when he asked for Beijing’s help to tackle the financial problems facing the Southeast Asian nation and warned against “colonialism” over less affluent countries.

‘It is not about the Chinese’: Malaysia’s Mahathir blames previous government for debt to Beijing and project woes
Xi and Mahathir both put on a positive front, with Xi saying the relationship between China and Malaysia had potential to grow in a new era.

The Chinese president also said Beijing hoped to strengthen cooperation with Kuala Lumpur, in particular on the “Belt and Road Initiative” – a vast trade and infrastructure strategy spanning Asia, Europe and Africa. He said the two sides should explore cooperation in other countries involved in the initiative, according to state broadcaster CCTV.

Xi said China and Malaysia should increase their “strategic communication” and that Beijing wanted to cooperate more with Kuala Lumpur and other Asean members, and take a strong stance against unilateralism and protectionism.


Oh Ei Sun, a political analyst and former Malaysian official, said “China cannot afford not to be understanding” because the large trading volume between the two sides and Malaysia’s strategic position means the country is “crucial for the viability of the Belt and Road Initiative”.

“Malaysia is one of the more important open economies in the world. In this increasingly protectionist world, it is important for China to ally itself with more such economies,” he said.

During his meeting with Mahathir, Li said Beijing would not change its “friendly approach” towards Kuala Lumpur despite the change in administration, and stressed that China and Asean shared “a common interest in global free trade”.

“I believe Prime Minister Mahathir wants to express our common position on free trade,” he said. “No matter what changes have happened in our two countries, China-Malaysia ties have been solid, stable and upwards.”

Mahathir also said he would work to improve ties with China despite “ups and downs” and that Malaysia did not “believe in confrontation with any country”.

“Malaysia has a policy of being friendly to every country in the world irrespective of their ideologies,” he said.

The Malaysian leader will wrap up his China trip on Tuesday.

http://www.freemalaysiatoday.com/ca...na-trip-a-disaster-nonsense-say-ex-diplomats/

Dr M’s China trip a disaster? Nonsense, say ex-diplomats


Two former diplomats say the prime minister's visit to China was never going to be easy as he had to discuss the cancellation or postponement of huge Chinese-led projects.

PETALING JAYA: Two former diplomats have dismissed the claim that the prime minister’s trip to China was a “diplomatic disaster”, saying the circumstances of the visit meant it was never going to be easy.

Dennis Ignatius.

Dennis Ignatius and Redzuan Kushairi told FMT this was because Dr Mahathir Mohamad had gone to Beijing to personally raise the issue of having to cancel or postpone Chinese-led infrastructure projects involving billions as Malaysia could not afford them.

They were responding to an opinion piece carried in Malaysiakini that the trip was a “disaster” as no major deals had been signed. The article also noted a press conference in which Mahathir had said that richer nations shouldn’t colonise others.

In addition, it cited Mahathir’s remark that Chinese companies were forced to give 30% of shares to Barisan Nasional for projects in Malaysia, and his statement that controversial businessman Low Taek Jho was believed to be in China although he provided no proof for either claim.

Ignatius, a former high commissioner to Canada, said Mahathir’s visit sent the message that he valued good relations with China and wished to assure Beijing of his commitment to improving ties.

“It’s part of what’s going to be a long and arduous diplomatic, political and legal process of extricating ourselves from the disastrous agreements that the former regime signed.

“Nobody is expecting quick fixes,” he said, adding that it was unrealistic for anyone to expect major deals to be worked out with China given the new government’s short time in office.

He also said it was unlikely that Mahathir had been referring to China when talking about rich nations colonising others, given that trade between the two countries was heavily in Malaysia’s favour.

On diplomatic relations, Ignatius acknowledged popular opinion that ties with China had been good under the Najib Razak administration. However, he said this came at the cost of lopsided contracts using borrowed money for infrastructure that Malaysia couldn’t afford.

“That’s not the kind of good relations we want.”

Redzuan Kushairi.

Redzuan, a former ambassador to Uzbekistan, praised Mahathir for going to Beijing himself to explain Malaysia’s situation to the Chinese leadership.

He said Malaysia’s present circumstances called for honesty, sincerity and openness as the best approach.

“It is better than continuing with the projects and having to live with a debt burden to China that we can’t bear,” he said. “Beijing ought to respect and appreciate such an approach.”

Redzuan, who is part of the G25 group of former civil servants, also noted Malaysia’s role in China’s One Belt One Road (Obor) initiative, saying it would fail if Obor projects in Malaysia failed.

“Mahathir’s decisions on the Chinese projects give them a good reason to assess how they should now drive the Obor, which clearly requires good governance, transparency, and accountability.”

Yesterday, MCA deputy president Wee Ka Siong warned that Putrajaya’s decision to cancel three Chinese-led projects could affect ties with the country as the projects were part of Obor.

The initiative has seen Beijing undertake up to US$926 billion worth of projects along strategic land and sea routes, spanning over 15,000km.

The three projects which were cancelled are the East Coast Rail Link (ECRL), Multi-Product Pipeline (MPP) and Trans-Sabah Gas Pipeline (TSGP).