This article first appeared in The Edge Financial Daily on January 25, 2019 - January 31, 2019

PUTRAJAYA: The cabinet has decided to terminate China contractor China Communications Construction Co Ltd’s (CCCC) contract to build the RM81 billion East Coast Rail Link (ECRL) project, according to Sin Chew Daily in its evening edition yesterday.

The Chinese daily, quoting a source, said the decision was made by the Cabinet at its weekly meeting yesterday. However, the compensation was not discussed as it is understood that the government is still in discussion with CCCC on the matter.

Earlier at a separate event yesterday, Prime Minister Tun Dr Mahathir Mohamad said he was “not sure” whether the ECRL contract has been terminated.

“I am not sure whether the contract has been ended or not. I am not aware [whether it has been terminated]. I just came back from overseas,” he told reporters after launching the B40 health protection scheme mySalam here.

Dr Mahathir noted that terminating the ECRL contract involving CCCC will come at a price. “One way for us to resolve this problem [of lopsided contract terms] is by terminating the contract. But when we terminate the contract, we have to pay compensation. [It will be] plenty of billions [of ringgit],” he added.

On Friday (Jan 18), theedgemarkets.com, quoting a source, had reported that the government had terminated the engineering, procurement, construction and commissioning contract awarded to CCCC for the ECRL project.

On July 3 last year, Finance Minister Lim Guan Eng instructed CCCC to stop all construction works and services for the ECRL project until further notice, pending a review of the project.

More recently on Tuesday, The Straits Times reported that Malaysia is seeking a new contractor to build the ECRL project. The Singapore daily said the Malaysian government was seeking to halve the estimated project cost to RM40 billion.