KUALA LUMPUR — April 18, 2019: Former finance minister Tun Daim Zainuddin is confident the cost for the East Coast Rail Link (ECRL), which was reduced by RM21.5 billion to RM44 billion after the first round of negotiations with China, is highly likely to be be reduced further.
This could be possible once rail construction experts from Malaysia Rail Link Sdn. Bhd. and China Communications Construction Company Ltd. sit down to work out the technical details.
Earlier this week, MRL and CCCC agreed to form a 50:50 joint-venture company to manage, operate and maintain the ECRL.
“The cost could also come down as we will request for a lower loan amount, as well as an expansion of the grace and repayment periods from China-Exim Bank now that the cost has been reduced,” Daim told Bernama News Channel and Bernama Economic Service in an interview today.
Daim was asked by Prime Minister Tun Dr. Mahathir Mohamad to lead a team to Beijing soon after the Pakatan Harapan government’s election victory last year to renegotiate the project.
“We will negotiate a very substantive sum (of reduction), at least a minimum of about RM30 billion.
“This will be the next phase of our negotiations as we did not want to tie it with the new engineering, procurement, construction and commissioning supplementary agreement.
“So the RM21.5 billion really is the minimum savings we are accruing by renegotiating the contract. We hope to be back next week with even more good news for the people,” he said.
Daim successfully managed to renegotiate a supplementary deal which brought down the cost by 32.8 per cent from the original RM65.5 billion entered into by the previous administration under former prime minister Datuk Seri Najib Razak.
He said CCCC also honoured its commitment to refund part of the RM3.1 billion advance payment under the original contract when it refunded RM500 million today, with another RM500 million within a month.
Daim also clarified that the supplementary agreement includes double tracking for the entire 640- kilometre rail line.
To some who are arguing that the ECRL will end up as a white elephant, with low ridership and cargo loads, Daim said public infrastructure projects have notoriously long gestation periods before they even break even and “we are well aware of that”.
“That is why in our negotiations with China, we also included an memorandum of understanding to manage, operate and maintain the ECRL. Under the original agreement, Malaysia had to bear this cost on its own from the onset.
“By getting CCCC to bear half of the costs for the first 20 years of operations, we expect to save some RM4 billion,” he said.