Malaysian state ends China-backed $ 10.5 billion port project – Radio Free Asia

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Updated at 4:30 p.m. ET on 2020-11-18

The Malaysian state of Malacca has halted a $ 10.5 billion Chinese-backed port development project because the developer failed to complete the business, a statement from the office of the chief minister.

Malaysian company KAJ Development Sdn. Bhd., Which was backed by state-owned PowerChina, must immediately return the 609-acre site where it had agreed to build economic parks and tourist attractions on artificially built islands.

The statement from the chief minister’s office noted that the Melaka Gateway project agreement, which was signed on October 4, 2017, expired after three years on October 3.

“The company KAJ Development Sdn. Bhd., Turned out to have failed in completing the project. Therefore, a notice of termination of the agreement was filed with the company on November 16, ”the office said in a press release.

The chief minister’s office declined to comment when contacted later by BenarNews. In addition, officials at the KAJ and the Chinese Embassy did not immediately respond to email and text questions from BenarNews, an online news service affiliated with RFA.

A locally registered company, KAJ won a contract to revitalize Pulau Melaka, another man-made island on the Straits of Malacca in 2011, which was to be part of the Melaka Gateway project.

On May 13, 2017, KAJ signed a collaboration agreement with three Chinese companies – PowerChina International Group Ltd., Shenzhen Yantian Port Group and Rizhao Port Group – to develop three more islands to create the gateway.

Upon signing a development contract in October 2017, then Prime Minister Najib Razak announced his support for the gateway, noting that it was backed by PowerChina, which is owned by the Chinese state-owned company. State Power Investment Corp.

Then there was a change of government in Malaysia in May 2018.

On July 2 of the same year, Malacca State Executive Councilor Mohd Rafiq Naizamohideen told reporters that the project had been delayed due to problems with the deal with Chinese investors. He gave no further details except to note that the first of the project’s four islands was 60 percent complete.

Ten days later, then Transport Minister Anthony Loke acknowledged his concerns.

“We notice that there are some issues with the project. There has been no sign of development at all, ”he said at a press conference on July 12, 2018 in Klang, according to local media.

Slated to be the largest private marina in Southeast Asia containing facilities to moor four cruise ships at a time, a commercial and tourist park and a free trade zone, the Melaka Gateway project saw its license to operation of a port revoked on October 5, 2018, by the government of the then Prime Minister, Mahathir Mohamad. The reason for the dismissal has not been made public.

Mahathir’s government collapsed in February 2020.

In response, the developers filed an appeal on March 13, 2019, seeking a declaration that the revocation announcement was null and void as well as damages totaling 139 billion ringgit ($ 34 billion) due to the delays. caused by the decision.

Two months later, the Department of Transport cleared the license, prompting the KAJ to drop its appeal.

Not part of One Belt, One Road

Contradicting reports that the gateway was part of China’s One Belt, One Road (OBOR) project, Oh Ei Sun, a senior researcher at the Institute of International Affairs in Singapore, noted that it was a private company. outside the supervision of the Chinese government.

“Apparently from the start it was a private China-Malaysia project that struggled to find its way into one of these so-called OBOR affiliates, but was never recognized, “Oh told BenarNews on Wednesday. “So he took his natural course and withered.”

Oh said existing OBOR projects, including the East Coast Rail Link, will likely continue.

OBOR is Beijing’s ambitious program to build a global network of ports, highways, railways, bridges and power plants to connect China to overseas markets and countries that can provide the nation with resources. most populated in the world.

A 2019 report by Francis E. Hutchinson, principal researcher and coordinator of the Malaysia Studies Program at the Yusof Ishak Institute for Southeast Asian Studies (ISEAS) in Singapore, said the project bridge had raised economic concerns. He noted its proximity to other Malaysian ports.

“Right now there is overcapacity in Malaysia’s port sector and the growth of container traffic across the region has leveled off,” he said.

Hutchinson noted that Mahathir had said the country did not need another port.

China, along with the United States, is one of Malaysia’s main trading partners. In 2019, the Malaysian government approved investments worth $ 3.74 billion (15.28 billion ringgits) from China, according to data released following the visit of the Chinese Foreign Minister Wang Yi in October.

Reported by BenarNews, an online news service affiliated with RFA.

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