China to pour in billions for Malaysia's east coast rail project

China will provide RM55 billion (S$1.6 billion) in soft loans to Malaysia for the construction of the planned East Coast Rail Line (ECRL) that is estimated to cost a similar amount, according to Transport Minister Datuk Seri Liow Tiong Lai.

In an exclusive interview in Beijing with The Star yesterday, Liow said this will be one of the 16 government-to-government memoranda of understanding to be signed when Prime Minister Datuk Seri Najib Tun Razak meets with Chinese Prime Minister Li Keqiang for bilateral talks today.

Apart from financing, the two countries will also sign an engineering-and-construction contract on the project.

This means China will carry out the detailed engineering and design of the ECRL, procure all materials and equipment, and deliver the facility to Malaysia.

"As far as I know, this is the biggest single deal Malaysia will be signing with China," said Liow, who has worked very hard to obtain China's investments in ports, aviation and railways since he took over the transport portfolio in June 2014.

On the terms of the soft loans to be given by China's EXIM Bank, Liow said rates are very competitive and repayment is over 20 years.

"And in the first seven years Malaysia will not have to pay anything - interest and repayment.

"But for the construction contract to be awarded to government-owned China Construction Communications Company, there are terms that state it has to work with local partners," he said.

Construction of the five-year project is scheduled to start next year.

The first phase of the 600km rail line will be from the Klang Valley to Kuantan, second from Kuantan to Kuala Terengganu, and third from Kuala Terengganu to Kota Baru and Tumpat.

Najib, in tabling Budget 2017 last month, had said the project would be launched in phases and would connect townships such as Port Klang, ITT (Integrated Transport Terminal) Gombak, Bentong, Mentakab, Kuantan, Kemaman, Kerteh, Kuala Terengganu and Kota Baru before ending in Tumpat.

"This rail project is going to bring a lot of economic development to the east coast (of the peninsula). It can unearth a lot of potential," said Liow who is part of the Malaysian delegation, including Cabinet ministers, accompanying Najib on his four-day official visit to China which kicks off today.

Liow added that China has also pledged to pass on its rail technology to Malaysia, and this will help Malaysia in developing its rail system as a means of public transportation.

On Najib's third official visit to China, Liow said: "The PM's visit will not only strengthen bilateral relations but also enhance our economic growth, thereby making Malaysia a centre of growth in ASEAN.

"This visit will see a lot of 'firsts' between Malaysia and China. We are going to sign 16 G-to-G MoUs and more than 15 business-to-business MoUs.

"There will be so much economic activity ... In fact, we are now enjoying the fruits of our close bilateral ties built up by former PM Tun Razak."

Liow commended the late Tun Abdul Razak Hussein - Malaysia's second prime minister and Najib's father - for "his vision in 1974 when he decided to be the first ASEAN country to establish bilateral relations with China".

"Now his son is taking the bilateral ties to new heights," he added.

Apart from this major MoU on the ECRL, another major bilateral deal will be on defence.

"We are a small country but China is giving us a lot of assistance and support. This is good for Malaysians.

"This visit by PM is going to be very fruitful and rewarding for Malaysia," he added.

China has often said it is grateful to Malaysia for being the first ASEAN country to extend its hands to China when the region was fearful of communism.

It has also expressed gratitude to Malaysian Chinese businesses, which invested in China and helped its economic development in the early 1980s when China just opened its doors to the world.