Malaysia to award $18.3b KL-Kelantan rail project to China

Mr Najib at the launch of Huawei's Customer Solution Integration and Innovation Experience Centre in Kuala Lumpur last week. Huawei was recently appointed adviser to the Malaysian government on information and communication technology projects, said
Mr Najib at the launch of Huawei's Customer Solution Integration and Innovation Experience Centre in Kuala Lumpur last week. Huawei was recently appointed adviser to the Malaysian government on information and communication technology projects, said a report.PHOTO: THE STAR/ASIA NEWS NETWORK

BEIJING • Malaysia is awarding a RM55 billion (S$18.3 billion) rail project to China Communication Construction Company (CCCC), just two weeks after Prime Minister Najib Razak made public the plan to build the Kuala Lumpur-Kelantan line.

The 620km mega project will be the third involvement of China firms in major projects in Malaysia.

Datuk Seri Najib yesterday landed in Beijing for a week-long visit where he said bilateral ties would be taken to "new heights" and that he would be signing Malaysia's "first significant defence deal" with China, the Malaysian media reported.

The new railway line, called the East Coast Rail Link or ECRL, from Kuala Lumpur will pass through Pahang, Terengganu and Kelantan states before ending in Tumpat, north of the Kelantan capital of Kota Baru.

The Finance Ministry's secretary-general, Datuk Seri Mohd Irwan Serigar Abdullah, told reporters yesterday in Beijing that the engineering, procurement and construction (EPC) contract and a financing framework would be among the agreements to be signed during Mr Najib's visit.

The EPC contract will be awarded to CCCC, with funding from the Export-Import Bank of China, the New Straits Times (NST) reported yesterday.

Mr Mohd Irwan said the decision to seek financing from China was due to the favourable terms offered. "If you borrow in the international market, you will not get the low interest rate that we will get.

"We have not finalised (the details) but we will get very competitive (rates) and the repayment period, we expect to be 20 years," he was quoted by NST as saying.

The Najib administration has since late last year been turning to China to plug its financial gaps.

The government sold Edra Global Energy, a unit of debt-laden state fund 1Malaysia Development Berhad, to China General Nuclear Power Corp for RM17 billion in November last year.

A few weeks later, China Railway Engineering Corp bought a stake in a development called Bandar Malaysia on the outskirts of the capital for RM12.4 billion.

Malaysia is also looking to China companies to ramp up its digital economy.

Huawei Technologies was recently appointed adviser to the Malaysian government on information and communications technology (ICT) projects, the Nikkei Asian Review reported last week. Huawei is to train 300 Malaysian students in ICT each year.

During Mr Najib's visit this week, his third official visit to Beijing as prime minister, he is to meet Mr Jack Ma, executive chairman of e-commerce giant Alibaba.

Mr Mohd Irwan said yesterday that Mr Ma may be offered an advisory post to help Malaysia develop its digital economy.

Mr Najib will be signing 10 government-to-government memorandums of understanding.

One unconfirmed report last week said that, during the trip, Malaysia would announce its first purchase of Chinese patrol ships.

A version of this article appeared in the print edition of The Straits Times on November 01, 2016, with the headline 'Malaysia to award $18.3b KL-Kelantan rail project to China'. Print Edition | Subscribe