China-linked railway contruction restarts in Malaysia

Malaysia resumed construction of the East Coast Rail Link (ECRL) project in Peninsular Malaysia on July 25, with a few changes and some progress made during the realignment exercise, according to Transport Minister Anthony Loke.

At the re-launch, after a year-long suspension, the construction of the rail link is slated to cost Malaysia US$11 billion. It was originally cancelled by the Pakatan Harapan government after it brought down the government of Najib Razak in May last year.

This is the first of the mega-projects linked to China that was given the green-light with a ceremony held in the state of Terengganu.

In May, the Malaysian Industrial Development Finance (MIDF) research house said the total sum of the project will be RM81 billion and that it will boost economic growth by 2.7%.

MIDF said the project will improve economic interdependence, connectivity and that investing in a railway project will have a long-term positive spill-over effect on Malaysia’s economy.

The 640km line will connect Port Klang on the Straits of Malacca with the city of Kota Bharu in northeast peninsular Malaysia.

China Communications Construction is set to serve as the lead contractor. According to the Chinese ambassador to Malaysia, the restart of the project “immediately boosted confidence in Malaysia among foreign investors.”

Minister Loke says, “We think we made (the project) more viable and it will be more successful and it will ensure that once the project is completed, then there will be future developments as far as transit-oriented development is concerned and industrialisation along the corridor.

“It will benefit the states that are involved in the project in particularly Kelantan, Terengganu, Pahang, Negri Sembilan and Selangor,” he says.

He says there is no change in the financing structure coming from the EXIM Bank.

“But what has been changed and the new approach is once the project is completed, we will set up a new operating company or Op-Co between My Rail Link and China Communications construction company. 50-50 joint venture to operate train services during the entire term of the term loan,” he says.

He says the percentage completion of the whole alignment is now about 10.18%.

The tender process is ongoing and there is some pre-qualification process has been done and the bidding process is ongoing for the 40% of the component.

“The process is ongoing. Some of the projects will be awarded from time to time. It will not be all at one go. So it will be along the construction stages. Depends on the timeline. But as long as we are concerned, the timeline for the completion of the whole project is 2026 and there is no change for that,” he added.