China’s One Belt One Road (OBOR) initiative and its ambitions tagged with it have taken yet another set back. Malaysian government on Tuesday said that they would only proceed with China-backed rail project if there is a sharp cut in the cost. The rail project is a part of China’s One Belt One Road Project and its estimated cost is $ 20 billion.
The railway project under China’s One Belt One Road initiative is 688km long. The railway project aims to connect the west coast of Malaysia to the rural areas in the east. The project will be largely funded by China and the tender was awarded to China Communication Construction Company in 2016. The then Prime Minister Najib Razak was voted out of power in May 2018. The finance minister said that the final costs of the project exceed the estimated costs by 50%.
The government of Malaysia has already given $2.5 billion to China Communication Construction Company as advances and $2.4 billion as progress payment. The government said that if the project is called off then in the worst case scenario the advance payment can be recovered. Before this, the Malaysian government which came to power in May quashed the high-speed rail link project to Singapore for it was too costly. The government is now reviewing the wide range of infrastructure projects funded by China which fall under the One Belt One Road initiative. The new government aims to keep the already surged national debt under control. The national debt of Malaysia escalated way too much under the previous regime.
Now the rail project funded by China has landed amid uncertainty as Malaysia looks determined about cost-cutting. If the project is called off then it would be yet another blow to China’s One Belt One Road initiative through which China aims to revive the traditional silk route.