KUALA LUMPUR (SIN CHEW DAILY/ASIA NEWS NETWORK) - Malaysian Prime Minister Mahathir Mohamad has been labelled as "pro-Japan, anti-China" after several mega projects with China were either cancelled or reviewed when Pakatan Harapan (PH) took over as the ruling government.

He has refuted such claims, saying that he has defended China on international platforms on many occasions and he is China's good friend.

He laughed when he heard that many people claimed he visited Japan many times and reviewed mega projects collaborating with China.

In an exclusive interview with Sin Chew Daily, Tun Dr Mahathir said he defended China in many countries, including Japan where he was attending a forum.

"They asked me, how do you feel about China? I told them Malaysia has been maintaining ties with China. We have bilateral trade and we have been friendly to China," he said.

Dr Mahathir added that when the Portuguese came to Malaysia from some 12,800km away, Malaysia became a colony of Portugal. China has had relations with Malaysia for a long time but never colonised the country.

"There are many Chinese in our country but China has never colonised us. Who should we be fearful of? China or Europe?" said Dr Mahathir.

"Many Chinese nationals know me. They see me as China's good friend. Just because the Malaysian government asked to review the East Coast Rail Link (ECRL) and cancel the Sabah and Melaka natural gas pipe project then I am seen as unfriendly?"

"The Chinese government is aware that we are facing serious financial issues. I told them that we can't afford (those projects). This is not whether we want it or not. These are bad projects in the first place and we can't afford them," he said.

Asked whether he would visit China again in 2019, Dr Mahathir replied without hesitation: "Yes, I will if there is a need."

Dr Mahathir also said pandas Xing Xing and Liang Liang are gifts from China to Malaysia and the government would not send them back to China before the earlier agreed date.

"The pandas belong to China, they are not sold here," he said in response to Minister of Water, Land and Natural Resources Xavier Jayakumar Arulanandam, who had said the two pandas may be sent back to China earlier due to funding issues.

Dr Mahathir said the Cabinet has never discussed the issue of sending the pandas back to China. He was unaware of the comments made by the minister.

The Prime Minister agreed that pandas have diplomatic significance to Malaysia-China ties, as the pandas were gifts from China to commemorate the 40th anniversary of Malaysia-China bilateral ties.

On the ECRL, Dr Mahathir said that if China agrees, the government may proceed with the project on a smaller scale. He said the government is still negotiating with China on the ECRL.

Up until now, a good solution has not been found. Both sides do not have any timeframe set for negotiations. "We try to ensure China would not incur losses and we do not need to spend too much money," he said.

Dr Mahathir stressed that the government of Malaysia is caught in a catch-22 situation. Once it cancels the project, the government would have to pay China a hefty compensation. On the other hand, the government is facing financial constraints to execute the project.

He said the government may amend the project or find an alternative so that the government would not incur huge expenses. "We are negotiating with them, whether in a formal or informal way. To China, this is a good contract. They can make a lot of money and they are not willing to adapt."

Dr Mahathir explained that prior to PH taking over the government, it realised that the Najib administration initiated a very huge project via bank loans and the contract terms were not favourable.

The PH had thought about terminating the project once it took over. "This is not easy, as there are conditions stated in the contract. We can't just stop. We have no money to pay China. If we terminate the project, we have to come up with huge compensation."

"Now, we defer the project, as we have paid a lot of money," he said.

Dr Mahathir said the money would not land in Malaysia, as it is paid to Chinese contractors. Hence, the Malaysian government would not be able to impose tax. If it were to make money in Malaysia, the Malaysian government could impose tax.

He said the government would continue the project if possible. But he noted that the ECRL is a development project which wastes money and is unable to generate returns.

"This project may benefit the people in the east coast but what is the cost? We are supposed to serve the people. This includes the Kuala Lumpur-Singapore High Speed Rail and ECRL. What about their costs? The government would have to manage them financially so that we do not waste funds," he said.

Citing an example, he said the cost of the ECRL exceeds RM60 billion (S$19.7 billion), adding: "Do you know that the rail projects which ferry passengers and cargo in the west coast have never made money? But for the ECRL, there are fewer passengers and they are poor. They do not have big businesses like people in the west coast. So you are not going to make any profit from the ECRL.

"The return of this project is almost zero and we need to pay the debt of RM55 billion. If we do not pay the debt, we will be fined. You have to pay when you have a mortgage from the bank."

Dr Mahathir also said that the PH government is generating more profit than the Najib administration. But the profit is still insufficient to fund all developments in the country. Hence, he said, the development is extremely slow at the moment.