ECRL: Is it on or off?

The RM55bil East Coast Rail Link (ECRL) could have been cancelled as quickly as the HSR and MRT 3, but due to legal and loan drawdown issues, further talks with China are needed.

IT is an understatement to say that Malaysians are shocked, with many still trying to come to terms with the mind-boggling losses from the East Coast Rail Link (ECRL) project.

We read that Malaysia could lose as much as RM20bil if the ECRL is cancelled.

Prime Minister Tun Dr Mahathir Mohamad told Chinese officials that Malaysia cannot afford it and it's that simple – even if it means having to pay this colossal sum as compensation.

On paper, it looks like the deal is off and most media and officials have concluded as such after his recent China trip.

The retrenchment of workers has also started and many Chinese workers have been compensated and told to pack up to go home.

But there seems to be some confusion as to its real status – is the ECRL really off the table, or merely deferred?

Since his return from his official visit to China, Dr Mahathir offered some clarification.

Studies are still being done on whether to defer the China-backed multi-billion ringgit ECRL project or deal with it in some other way, Dr Mahathir said on Friday (Aug 24) after meeting about 150 Parti Pribumi Bersatu Malaysia (Pribumi) division chiefs.

"At the moment, they are studying whether to defer or to give it to another (party). But we have to also negotiate with them (China), if they agree, (then) we can do it," he said.

ECRL, an RM81bil project spanning 688km linking Port Klang and Kota Baru, was launched last year and slated for completion in 2024.

Today, things have changed. The new Pakatan Harapan government has, after conducting a probe, found the ECRL contract unfavourable to Malaysia as there is no "exit clause" and the compensation runs into billions of ringgit.

Hopefully, the officials can renegotiate the deal and reduce the compensation amount, or even bring down the cost, which is a great burden on Malaysia.

So, what are the options left to Malaysia to renegotiate the ECRL contract?

It will be a bigger liability to the Malaysian taxpayers to pay for the high cost of the contract and payment done for work not done.

There is now a definite need for both governments to fast track the process of renegotiation. Malaysia's top priority must be to minimise the burden on Malaysians.

China's One Belt, One Road policy must also be fair to Malaysia.

Here are some things for Malaysia to consider if it wants to succeed in renegotiating the deal.

1. The Malaysian Rail Link (MRL) has paid more than RM10bil to the main contractor, the China Communications and Constructions Company (CCCC) and there is a claim of RM9bil for work done. Now, if Malaysia stops the ECRL, RM19bil may go down the drain.

2. Can an option be considered for more bilateral counter trade with China to commit them into buying palm oil and liquefied natural gas (LNG) over the next 20 years? The announcement may trigger the increase in palm oil price and improve the balance of trade between both countries.

3. The ECRL contract was awarded to CCCC, a Chinese government-controlled company. Government-to-government negotiations should iron out the issues for a win-win solution.

There are also several domestic issues to be resolved to fix a "broken civil service" as Dr Mahathir called it. If the ECRL case is not used to improve the civil service, the same mistakes could be made and Malaysia will have to suffer greater losses in the future. To this end we should:

> Identify who were the legal officers (from the Attorney General's Chambers or the Prime Minister's Department) who drafted the one-sided contracts in favour of Chinese companies.

> Find out why exit and arbitration clauses were not clearly specified.

> The Chief Secretary to the Government must be queried as to why no proper due diligence was done to check and vet the contracts, and did the previous Cabinet approve the contract?

> An enquiry must be held and all officers related to the drafting and execution of the contract must answer and explain their actions. If found guilty, action must be taken them, and if they have retired, their pensions should be stopped.

> The former head of government, Datuk Seri Najib Tun Razak, must also be called to answer for his decisions in instructing officials to proceed with the contract.

> Treasury officials, including the Finance Ministry secretary-general, must answer how they approved payments or allowed drawdowns on loans if work was not done. Legal action must be instituted against all officials who abused their position.

It's time for the Government to fix a "broken" civil service. Dr Mahathir and the Cabinet have a massive task ahead to improve the civil service administration, delivery and execution of the new policies to benefit the nation.

M. Krishnamoorthy is an Associate Professor and freelance journalist. He is also the author of the book "People Power Saves Malaysia – Mahathir Leads The Way".