Malaysia says still in talks on China-backed rail project

Malaysia and China are still in talks about a multi-billion-dollar, Beijing-backed railway project, the finance minister said Wednesday, after a week of confusing and contradictory statements about the deal.

Since the shock defeat last year of a long-ruling, corruption-plagued regime in Malaysia, the new government has suspended a series of Chinese-financed infrastructure projects, including the rail line.

Critics said the projects lacked transparency, could saddle Malaysia with debt, and were in reality aimed at quickly funnelling cash to former leader Najib Razak to help him pay back cash looted from a sovereign wealth fund.

At the weekend, Economic Affairs Minister Azmin Ali said the government had made a final decision to cancel the 81 billion ringgit (USD 19.7 billion) rail link, which would have connected the eastern and western coasts of peninsular Malaysia.

But hours later, Finance Minister Lim Guan Eng expressed shock at the announcement.

On Tuesday, Prime Minister Mahathir Mohamad said the project could "impoverish" Malaysia and he was seeking China's "understanding" -- but also insisted no final decision had been made.

On Wednesday, Finance Minister Lim said that the cabinet had agreed at a meeting that negotiations about the project were indeed still ongoing -- and from now on only Mahathir would comment on the issue.

He said the discussions between the two countries would now be held "away from the public glare", official news agency Bernama reported.

"Of course there is a time frame, but let's discuss the matter in a confidential manner."