"Belt and road" has stalled in Malaysia
Material posted: Publication date: 30-08-2018

The new government has announced that it is freezing Chinese projects.

In the Chinese infrastructure initiative "Belt and road" appeared first in five years, a large crack: the leader of Malaysia, Mahathir Mohamad announced yesterday during a visit to Beijing that Chinese projects in the country will be frozen. His predecessor Najib Razak, signed with China the agreements on the launch of these projects, he was accused of "stupidity". According to the current administration, Chinese loans went to the country's budget is unsustainable, and the terms of the transaction need to be revised.

"Do not blame the Chinese, blame the Malaysian government, said Mahathir at a press conference before departure from China.— They took a huge amount of money, and now we have a problem to pay what they borrowed. This cannot be called foreign direct investment." 92-year-old former leader of Malaysia, Mr. Mohamed returned to power after 15-year hiatus in may on a wave of public discontent, Prime Minister Najib Razak. His career was destroyed the corruption case in the major Malaysian development Fund 1MDB. Recall that, as revealed in 2015, the Fund has accumulated a debt of $11 billion, with about $4.5 billion was withdrawn in an unknown direction.

Once in power, Mahathir Mohamad one of his first decrees froze three Chinese construction project in the country high speed rail and two gas pipelines. Initially the railway was treated to Kuala Lumpur of $13.6 billion, but due to various additional agreements, the cost rose to $16.5 billion. moreover, given the interest that the country will have to pay the Chinese ExIm Bank (85% of project financing is its credit), the amount grows to $20 billion. all this became known only after the change of government, which also found that during the reign of Najib Razak, the total debt of the country rose to 1 trillion ringgit ($252 billion) with GDP of $364 billion.

Frozen "Railway line of the East coast" was the flagship project of the Chinese initiative "Belt and road" and was supposed to be part of a transcontinental route linking China and Singapore via the territory of South-East Asia. By the time of the stop it has already spent about $5 billion. the Cost of credit to the country amounted to 3.25% per annum, repayment period is 20 years. The construction started in 2017.

Stopping the project, Mahathir immediately declared that "it is not anti-Chinese leader" and intends to go to Beijing to renegotiate deals. In the course of his yesterday ended a five-day visit, he met with President of China XI Jinping, Prime Minister Li Keqiang and other officials, but, judging by his final statement to revise the terms of the loans have not yet succeeded. This, according to Mr. Mohamad, "need more time".

He, however, made it clear that he is ready to wait as long as necessary. "These projects will not be implemented,— said the Prime Minister of Malaysia.— If we have to pay the penalty we'll pay. But our task now is to reduce debt." He complained that the previous government "played with money, did no proper assessment of the effectiveness of investments or the feasibility study". Mr. Mohamed has assured the press that the Chinese partners "were sympathetic to the situation." He criticized his predecessor Najib Razak. "Subscribe for these projects was stupid— said Malaysian Prime Minister.— We'll get Najib out of the money".

The situation is compounded by the fact that, on suspicion of the authorities of Malaysia, Najib Razak used the Chinese banks not to build the railroad and two pipes, and on plugging holes in the balance of 1MDB. Against the former Prime Minister opened in July, three criminal cases of corruption and embezzlement of public funds.

Public freeze mahathera Mohamad Chinese projects was the largest in a five-year history of the initiative "Belt and road" incident of its kind. Before all the problems that arose between Beijing and third countries, resolved behind the scenes — and, as a rule, in favor of China. In particular, did not want to pay the debts of the previous government of China the leadership of Sri Lanka was forced to pass the end of 2017 under the control of the Chinese company, the Hambantota port and adjacent territory. In November 2017, the government of Nepal abolished the construction of a Chinese hydropower company, the Budhi Gandaki, the contract for which was signed on lost power in June 2017 Maoist government. There, however, the allocation of money at the time of cancellation of the transaction has not yet started.

Michael Korotkov

Source: https://www.kommersant.ru/doc/3719894

Tags: China