Malaysian Prime Minister Mahathir Mohamad is greeted by school children during a welcoming ceremony at the presidential palace in Bogor, south of Jakarta, Indonesia June 29, 2018. REUTERS/Darren Whiteside

KUALA LUMPUR (Reuters) - Malaysian Prime Minister Mahathir Mohamad said on Friday the "unfairness" of contracts for Beijing-backed projects were a key issue he would raise during a visit to China next month.

Mahathir, who came to power in May following a stunning election defeat for then prime minister Najib Razak, is reviewing major projects signed by the former government, saying many of them do not make financial sense for Malaysia.

His government suspended more than $20 billion in China-funded projects earlier this week.

"There are several issues to be brought up, among which is the unfairness of the terms of the contract and also the loan," Mahathir said at a news briefing.

"And the interest also is of concern to us, because the interest is much higher than when governments borrow."

Mahathir has been highly critical of the benefits of certain Chinese projects in Malaysia. Since taking office, he has vowed to renegotiate terms even as construction work continued.

The finance ministry this week called a halt to work on three projects: the $20 billion East Coast Railway Link (ECRL) and two pipeline projects worth $2.3 billion. Chinese state-owned firms are involved in all three projects.

"I want to go to China as early as possible, but the president of China is not available in July so I'll go in August," Mahathir, who turns 93 next week, said at the briefing.

Reuters reported on Thursday that his trip to Beijing had been provisionally agreed for mid-August.

China's Foreign Ministry, in a statement sent to Reuters, said Mahathir was a "politician familiar to the Chinese people" who had visited the country many times and made important contributions to the development of relations.

"We welcome him to visit China at a convenient time for him, and are willing to remain in touch with the Malaysian side on the timing," it added, without elaborating.

The premier's visit will likely be preceded by a trip to China this month by 80-year-old former finance minister Daim Zainuddin, two sources and media reports said.

Daim, an influential figure close to Mahathir, was appointed by the premier to a "Council of Eminent Persons" - a special team advising the government.

"I think he wants to talk with the Chinese about some contracts," Mahathir said when asked about Daim, adding that he reserved the right to reject his advice.





(Reporting by Rozanna Latiff and Philip Wen; Additional reporting by Ben Blanchard in Beijing; Editing by Michael Perry)