The recent Belt and Road Summit held in Beijing is considered China’s biggest diplomatic event since 1949. But holding a successful meeting is one thing, making it happen is another.
For example, the Bandar Malaysia project, led by China Railway Engineering Corp. (CREC) and once hailed by the infrastructure builder as the “shining pearl of China’s high-speed rail network”, was canceled by the Malaysian government last week.
In January last year, a consortium led by CREC reached a deal with the Malaysian government to take a 60 percent stake in the project, marking the first time for China to sell its high-speed railway equipment and technology to Malaysia.
The centerpiece of the Bandar Malaysia project is a terminal station for the high-speed railway from Kuala Lumpur to Singapore.
Once the bullet train service is up and running, it can drastically cut travel time between the two places to only 50 minutes from the current five hours, much to the benefit of the two countries’ economies.
The project would also mean a big step forward for China’s ambitious plan to build the Trans-Asian Railway that starts from China’s Kunming, runs through Thailand, Malaysia and Singapore and potentially extend to Indonesia at a later stage.
Located at the southern edge of downtown Kuala Lumpur, the Bandar Malaysia project will also be a huge property venture covering financial and commercial hubs, cultural and tourism facilities as well as high-end residential flats. The whole project is expected to cost over US$40 billion, and it will take 15 years to build.
But suddenly, Malaysia announced early this month that it is officially seeking a new master developer for the project, citing its Chinese counterpart’s failure to meet payment obligations as the reason.
Local media said the deal collapsed for a number of reasons.
First, the CREC-led consortium intends to export too much stuff, from raw materials to equipment, but Malaysia wants the project to use more local resources.
Second, the Chinese side wants both the majority ownership and operation rights of the project. The request has been rejected by the Malaysian government which does not want a foreign party to control such a strategic asset.
Still, it does not necessarily mean the project is dead. During a trip to the One Belt, One Road Summit, Malaysian Prime Minister Najib Razak took the time to meet Chinese property tycoon Wang Jianlin, founder of Dalian Wanda Group.
Wang revealed that Wanda is interested in developing cultural and tourism infrastructure projects. But he clarified that both parties have yet to sign any official agreement.
Meanwhile, Hong Kong’s Mass Transit Railway (MTR) rail operator is planning to join hands with China Railway Corp. to bid for a contract to build the 350-kilometer Kuala Lumpur-Singapore High Speed Rail (HSR) project, according to its chairman, Frederick Ma Si-hang.
Najib said the formula for equity stakes in the Bandar Malaysia project would be changed and the participants would not be just Dalian Wanda alone, but will take into account CREC, as well, according to reports.
This article appeared in the Hong Kong Economic Journal on May 17
Translation by Julie Zhu with additional reporting
[Chinese version 中文版]
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