Malaysia halts construction of Chinese company project

Malaysia Link Sdn Bhd (MRL) has ordered China Communications Construction Ltd (CCCC) to suspend all construction-related works of the East Coast Rail Link (ECRL) project with immediate effect.

In a letter, MRL CEO Datuk Sri Darwis Abd Razak citing "national interests", wrote, "Additionally, you shall not remove any equipment, materials or any part of the works from the site, without our prior written consent. This suspension shall take effect immediately and will be in force until further instruction from us."

The project between the Malaysian and Chinese railway companies was done under the engineering, procurement, construction and commissioning contract (EPCC), The Star Online reported.

The ECRL project came under criticism in recent times following the change of the Malaysian government in May.

Malaysian Finance Minister Lim Guan Eng pegged the total cost of the rail link project at nearly 81 billion Malaysian ringgits and called it as "highly inflated", after taking into account various factors such as land acquisition, land interest fees and operational costs.

He said that for the project to be financially viable, the cost would have to come down significantly, according to Malaysian media reports.

Apart from the cost, the rail project came under scrutiny for "unfavourable terms" in the agreement between CCCC and MRL, wherein the former is allowed a 15 percent upfront payment of the total project cost of 66.78 billion Malaysian ringgits as "mobilisation fee", as per the report.

The ECRL, which measures 620 km, is planned to connect Malaysia's eastern coast with Kuala Lumpur and Thailand, thereby establishing a trade route connecting South-East Asian countries with China.