PETALING JAYA: The termination of the East Coast Rail Link (ECRL) project was due to the high annual interest payment that the country would have incurred, says Economic Affairs Minister Datuk Seri Azmin Ali.
He said the Cabinet decided to cancel the project as the country could not afford the RM500mil annual interest on the project.
"The Cabinet made the decision because the cost to develop ECRL is too high, and we do not have the financial capability at this moment.
"And if this project is not terminated, the interest that the government would have to pay reaches to nearly half a billion ringgit.
"This is something that we will not be able to do," he said after launching an event organised by the Silat Cekak Hanafi Association in Kuala Lumpur on Saturday (Jan 26).
It was reported that the Cabinet decided to terminate the ECRL project a month after Pakatan Harapan came into power and not during its Thursday (Jan 24) meeting as reported by certain media.
The project is under the purview of the Finance Ministry. It was approved by the Barisan Nasional government in Oct 2016 while the engineering, procurement, construction and commissioning agreement was signed with China Communications and Construction Company (CCC) the following month.
The 688km project was expected to be completed in 2024 at a final cost of RM81bil.
Azmin said that the government had also looked into the option of reviewing the project to cut its costs, but found that the amount was still too high.
On compensation to the company, Azmin said that it would be determined by the Finance Ministry.
"It is being looked into and refined. The process had started before this.
"It will be determined by the Finance Ministry, which has carried out due diligence to ensure that the cost (compensation) would not further burden the country's financial situation today," he said.
Azmin added that the federal government had yet to decide whether to appoint a new contractor to take over the project to build the ECRL at half the estimated project cost but would welcome all forms of new investment into the country.
"We always review all the new applications for new investments into Malaysia, not necessarily on ECRL alone.
"We want to maintain FDI coming into Malaysia, and we want to ensure that our FDI will be able to be sustained, so that we can create wealth for the country and job opportunities," he said.