Malaysia finally scraps three China-backed pipelines

Malaysia has finally scrapped three China-backed pipeline projects after halting work on them following the shock election in May that saw an opposition alliance assuming power for the first time in the country.

A Finance Ministry spokesman confirmed that the country has cancelled the three projects.

The Financial Times earlier cited Malaysian Finance Minister Lim Guan Eng saying he had sent a letter to "relevant parties" in Beijing to terminate the planned projects.

The plans comprise two oil and gas pipelines that cost more than US$1 billion (S$1.4 billion) each, as well as a US$795 million pipeline that would link the state of Melaka to a refinery and petrochemical plant in the state of Johor, the paper reported.

Mr Lim did not disclose the cancellation fees Malaysia would incur for cancelling the pipeline projects but said that lawyers were handling the matter, the report said.

Since taking office, Prime Minister Mahathir Mohamad has been reviewing infrastructure projects undertaken by the former administration.

The cost-cutting efforts are aimed at tackling the country's liabilities, which have surged above RM1 trillion (S$333 billion) due to state guarantees on borrowing by state investment firm 1Malaysia Development Berhad, which is at the centre of a multibillion-dollar scandal.

Mr Lim also told the Financial Times that another China-backed project - the East Coast Rail Line - was under review.

In a visit to Beijing last month, Tun Dr Mahathir warned against new "colonialism" and called for free trade that was also "fair".

Last week, Malaysia and Singapore agreed to postpone a multibillion-dollar high-speed rail project between the two countries until the end of May 2020.

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A version of this article appeared in the print edition of The Straits Times on September 11, 2018, with the headline 'Malaysia finally scraps three China-backed pipelines'. Print Edition | Subscribe