Malaysia said Thursday it has suspended three major China-backed projects worth billions of dollars, the latest big-ticket items to be axed by the new government as it reviews deals signed by ousted prime minister Najib Razak.
The deals were among several Beijing-backed projects signed by scandal-hit Najib, who was unseated by his former mentor Mahathir Mohamad in elections last May.
Finance minister Lim Guan Eng said he had ordered the suspension of two pipeline deals and a 688-kilometre rail link worth a combined 90.4 billion ringgit ($22.35 billion).
The pipeline projects had been awarded to China Petroleum Pipeline Bureau, while the China Communications Construction Company served as the main contractor for the East Coast Rail Link.
Lim said Mahathir had ordered the suspensions in a bid to target Malaysia’s estimated $250 billion national debt and other liabilities.
‘The decisions are solely directed towards the related contractors relating to the provisions mentioned in the agreements, and not at any particular country,’ Lim said, in an apparent attempt to allay concerns that Beijing was being singled out.
Malaysia’s previous government under Najib had warm ties with China and signed a string of deals for Beijing-funded projects.
But critics say many agreements lacked transparency, fuelling suspicions they were struck in exchange for help in paying off debts from the 1MDB financial scandal which ultimately helped bring down Najib’s regime.
Mahathir, 92, has pledged to review Chinese deals seen as dubious, calling into question Malaysia’s status as one of Beijing’s most cooperative partners in its regional infrastructure push.
In May he postponed plans to build a high-speed rail link between Singapore and Malaysia, which had been agreed on several years ago, saying it was too costly.
Song Seng Wun, a regional economist with CIMB Private Banking, said the latest suspensions could prompt some investors to hold back.
‘Anyone with any activities related to the previous administration itself will be lying low,’ he said.
‘They wouldn’t be starting any new projects because they might not be sure that their existing project or contracts might (not) come under review.’
Want stories like this in your inbox?
Sign up to exclusive daily email
More Stories from Asia