Editor’s note: Peng Nian is an assistant research fellow at the National Institute for South China Sea Studies (NISCSS), a top think tank based in Haikou, China. The article reflects the author’s opinion, and not necessarily the views of CGTN.
Recently, Daim Zainuddin, who has been appointed by the Malaysian government as the special envoy of the prime minister to head the East Coast Rail Link (ECRL) negotiation with China, said that the government is expected to finalize the ECRL project in early April, and the new agreement would be executed in the same week.
It was the first time that the Malaysian government gave a precise timeframe on reviving the project that was suspended by the country’s newly elected government last August.
In fact, Malaysian senior officials, mainly Finance Minister Lim Guan Eng, have released confusing messages on the controversial project since its suspension, resulting in prevailing rumors that the new Malaysian government had already decided to stop the project.
Even several days before Daim’s claim, Prime Minister Mahathir Mohamad said his government would not reach a deal with China before his China trip at the end of April when the International Cooperation Forum for the Belt and Road Initiative (BRI) is held in Beijing. In this context, Chinese investment in Malaysia and Sino-Malaysia relations, as well as the implementation of the BRI, have been adversely affected.
Nevertheless, it is not surprising that both sides would reach an agreement on restarting the ECRL since there has always been positive and continued engagement between China and Malaysia regarding the project.
Mahathir stopped the ECRL project as well as two other Chinese projects temporarily. However, in order to reduce China’s suspicions about Malaysia’s resistance toward the BRI, he also claimed to attend the second International Cooperation Forum for the BRI.
For Kuala Lumpur, the main obstacle to resuming the ECRL project is the debt burden rather than so-called sovereignty or security threats. Therefore, Malaysia would like to resolve this issue in a commercial way, which means that it seeks to negotiate with Chinese companies on narrowing down the project as well as mortgage financing.
The ECRL project was approved by former Prime Minister Datuk Seri Najib Razak in October 2016 at the cost of 55 billion Malaysian ringgit (13.5 billion U.S. dollars). The new ECRL deal, with cost savings of about 10 billion Malaysian ringgit (2.45 billion U.S. dollars), would have new commercial elements that would have a greater impact on Malaysian companies and people.
In addition, the Malaysian government would restart the project as it wants to reduce internal pressures from opposition parties and external pressures from the West. For instance, Prime Minister Mahathir threatened to import aircraft from China rather than the EU because of the recent dispute with the EU on environmental concerns of Malaysian palm oil products.
The Malaysian government, of course, would like to maintain close relations with China by removing the big barrier, the suspension of the ECRL, and thus to manipulate the balancing act between China and the West. Given this, restarting the ECRL with a declining input cost is a good choice for Malaysia to maximize economic interests and minimize diplomatic pressure.
For China, it has always stated that both sides should solve the ECRL project as early as possible so as to revive the confidence of the BRI. A new agreement on resuming the ECRL would be a big promotion for the coming International Cooperation Forum for the BRI held in Beijing.
Hence, China would like to make a compromise so that the ECRL would restart before the beginning of the BRI forum. Additionally, China had already agreed to reduce the strategically important Kyaukpyu deep-water port with Myanmar last year, so it is reasonable for China to make a similar deal with Malaysia on the ECRL.
To conclude, the coming new deal on resuming the ECRL project is beneficial to both Malaysia and China and would promote the win-win cooperation between the two countries.