Malaysia axes Chinese-backed pipeline projects worth $3-billion
The Malaysian government has finally decided to cancel three China-backed pipeline projects after halting work on them, The Financial Times wrote. The report said that Malaysia’s finance minister Lim Guan Eng had sent a letter to “relevant parties” in Beijing to terminate the planned projects.
The cancelled projects are two oil and gas pipelines in Peninsular Malaysia and in Sabah, respectively, which cost more than $1 billion each, as well as a $795-million pipeline that would have linked the state of Melaka to a refinery and petrochemical plant in the state of Johor, the paper noted, adding that Lim did not disclose the cancellation fees that Malaysia would incur for scrapping the projects, but said that lawyers were handling the matter.
Of the two large pipelines, an average of 13 per cent has been completed, while almost 90 per cent of the projects’ value has been paid to contractor China Petroleum Pipeline Bureau, according to the finance ministry.
Analysts expect the share prices of involved Malaysian firms, among them Gamuda, Malaysian Resources, IJM Corporation, Pantech Group and Ho Hup Construction, to drop when Bursa Malaysia reopens on September 11 after a holiday.
The end for the pipeline project comes as the newly elected government under Prime Minister Mahathir Mohamad is reviewing all large-scale project initiated by the former government as part of wider cost-cutting efforts. Those are aimed at tackling the country’s liabilities due to state guarantees on borrowing by state investment firm 1Malaysia Development Berhad, which remains at the center of a multibillion-dollar scandal. Mahathir also mentioned that “unequal contracts” would have been signed with the Chinese.
During a state visit to Beijing in August, Mahathir cautioned against new “colonialism” and called for free trade that was also “fair”. He further ordered that foreigners – in a case that affects mostly Chinese buyers – are now banned from purchasing property in a large Chinese-funded mixed-use development, “Forest City,” in the southern state of Johor.
Last week, Malaysia and Singapore also agreed to postpone the multibillion-dollar High-Speed Rail project between the two countries until the end of May 2020.
The Malaysian government has finally decided to cancel three China-backed pipeline projects after halting work on them, The Financial Times wrote. The report said that Malaysia’s finance minister Lim Guan Eng had sent a letter to “relevant parties” in Beijing to terminate the planned projects. The cancelled projects are two oil and gas pipelines in Peninsular Malaysia and in Sabah, respectively, which cost more than $1 billion each, as well as a $795-million pipeline that would have linked the state of Melaka to a refinery and petrochemical plant in the state of Johor, the paper noted, adding that Lim did...
The Malaysian government has finally decided to cancel three China-backed pipeline projects after halting work on them, The Financial Times wrote. The report said that Malaysia’s finance minister Lim Guan Eng had sent a letter to “relevant parties” in Beijing to terminate the planned projects.
The cancelled projects are two oil and gas pipelines in Peninsular Malaysia and in Sabah, respectively, which cost more than $1 billion each, as well as a $795-million pipeline that would have linked the state of Melaka to a refinery and petrochemical plant in the state of Johor, the paper noted, adding that Lim did not disclose the cancellation fees that Malaysia would incur for scrapping the projects, but said that lawyers were handling the matter.
Of the two large pipelines, an average of 13 per cent has been completed, while almost 90 per cent of the projects’ value has been paid to contractor China Petroleum Pipeline Bureau, according to the finance ministry.
Analysts expect the share prices of involved Malaysian firms, among them Gamuda, Malaysian Resources, IJM Corporation, Pantech Group and Ho Hup Construction, to drop when Bursa Malaysia reopens on September 11 after a holiday.
The end for the pipeline project comes as the newly elected government under Prime Minister Mahathir Mohamad is reviewing all large-scale project initiated by the former government as part of wider cost-cutting efforts. Those are aimed at tackling the country’s liabilities due to state guarantees on borrowing by state investment firm 1Malaysia Development Berhad, which remains at the center of a multibillion-dollar scandal. Mahathir also mentioned that “unequal contracts” would have been signed with the Chinese.
During a state visit to Beijing in August, Mahathir cautioned against new “colonialism” and called for free trade that was also “fair”. He further ordered that foreigners – in a case that affects mostly Chinese buyers – are now banned from purchasing property in a large Chinese-funded mixed-use development, “Forest City,” in the southern state of Johor.
Last week, Malaysia and Singapore also agreed to postpone the multibillion-dollar High-Speed Rail project between the two countries until the end of May 2020.
