BEIJING: Malaysia has reopened a closed Chinese rail construction project after slashing 30% from the original cost. Under the reworked deal, the 648-km rail link will now cost $10.6 billion.

China appears to have agreed to the hugely lowered price because it is desperate to present a strong global infrastructure programme at the Belt and Road Forum between April 25 and 27. India has indicated it will stay away from the event.

Malaysian President Mahathir Mohamad shocked China when he shelved the project last July soon after returning to power. Mahathir said the project, contracted by the previous government, was “unfair” and imposed a major financial burden on the country.

The decision to slash the price might result in a chain effect with several countries implementing the Belt and Road Initiative (BRI), like Pakistan, demanding a price cut. It remains to be seen how China deals with the situation.

“This reduction will surely benefit Malaysia and lighten the burden of the country’s financial position,” a statement from the Prime Minister’s office in Kuala Lumpur said.

The East Coast Rail Link will connect Malaysia's east coast on the South China Sea with the busy waterway of the Malacca Strait on the west.

The decision to restructure the project showed China’s willingness to modify its projects to satisfy customers.

“I do think modifications will be undertaken. Chinese regulators realise they need to be pragmatic if these projects are to be successful, especially where there is local pushback on political and societal levels,” said Andrew Polk, a partner in the consultancy Trivium China.

Speaking at the foreign ministry in Beijing, official spokesman Lu Kang said, “We also hope that both sides can resume project construction at an early date, manage well this good situation, and expand areas of mutual benefit.”

The new deal includes a reduction in the rail route by 40 km, which works out to about 6% shorter than the original one.

