China’s reputation affected by the shenanigans in the ECRL

Dennis Ignatius, Free Malaysia Today

The East Coast Railway Link (ECRL), one of former prime minister Najib Razak’s toxic legacies, is an issue that just won’t seem to go away. Soon after he took office, Prime Minister Dr Mahathir Mohamad trudged off to Beijing to tell China’s leaders that we couldn’t afford to go ahead with it.

Since then, however, a series of conflicting statements have come forth from the government – that the project has been cancelled, that it’s being renegotiated, that no decision has been made. The recent spat between the finance minister and the economic affairs minister only adds to the confusion.

Of course, it also underlines the immense complexity of the whole issue; Najib gave away so much, on such unequal terms, and at such inflated costs, that we are damned if we do and damned if we don’t.

And let’s not forget that scoundrels and cronies from the previous administration still have a vested interest in the project and could stand to lose a great deal from its cancellation. We shouldn’t be surprised, therefore, that they continue to argue against cancelling the project and warn of the consequences of upsetting China.

Perhaps if they were more concerned with Malaysia’s interests than their own, or worse still, the interests of a foreign power, we might not even be in this mess in the first place.

ECRL bad in every way

By all counts, the ECRL project is an extraordinarily bad one. For one thing, it was grossly overpriced. The actual costs were so vague that we still don’t know what the final tally would be with estimates running between RM80 billion – RM110 billion. In fact, it was so grossly overpriced that the contractor (China Communications Construction Company Ltd) is now reportedly offering to cut the price tag by a staggering 50%. That’s how much fat there was in it!

And then there were the terms of the contract – all heavily slanted in China’s favour. China derived all the benefits while Malaysia shouldered all the risks. It was part of a grand scheme to massively defraud the people of Malaysia, the consequence of local greed finding common purpose with big power ambition.

What’s worse, the project was completely unviable and without merit. Like so many of the Najib-era projects, it was designed to skim money rather than serve a useful economic purpose. Even with a 50% reduction in price, it would still not make any sense to proceed with it. It’s a mammoth white elephant that will end up becoming a huge drain on the treasury for years to come.

That money, as economist KS Jomo rightly argued, could be put to better use developing the east coast and other parts of the country that are lagging behind in basic infrastructure.

The socio-economic development of the rural heartland is, in fact, a critical issue with enormous political implications. Unless the PH government can meet the socio-economic needs of the rural heartland, it’s very future and that of Malaysia Baru’s reform agenda could be in jeopardy. Surely, that is one of the takeaways from the recently concluded Cameron Highlands by-election.

A price to pay

Of course, there could be consequences. China having invested so much of its prestige in the ECRL as part of President Xi Jinping’s signature Belt and Road Initiative, is unlikely to take too kindly to its cancellation. We are already beginning to feel the chill in terms of lower palm oil exports and lower tourist arrivals, both serious matters for industries with a heavy dependence on China.

But China has more than just a contract at stake; behind all the speeches and nostalgic songs about old friendships, its relations with Malaysia are in tatters. Its reputation has also taken a hit given that the project could not have been so grossly inflated without China’s knowledge, even complicity.

It has, therefore, much reason to work with Malaysia to rebuild a strong and mutually beneficial relationship, something that both sides want and need. Cancelling the ECRL project will help remove the toxic legacy of the Najib era and allow both countries to move forward again.

Malaysia can become a showcase of China’s respect for the sovereignty and independence of smaller countries or it can become a case study of how a big power strong-armed a small country when it was most vulnerable. China has always been pragmatic; hopefully, it will see that its interests are better served by allowing the PH government an acceptable exit from an ill-conceived contract than in insisting on its pound of flesh.

Taking the bull by the horns

Whatever it is, it’s time for the PH leadership to take the bull by the horns and end this burdensome and dubious project. Terminating the ECRL project was one of the rallying cries of the PH coalition in the run-up to GE14; the government must now do the right thing and cancel it. It’s time to cut our losses and move on.