Multibillion-dollar China-financed projects in Malaysia have been canceled because they aren’t needed and will saddle the country with an unsustainable amount of debt, Malaysian Prime Minister Mahathir Mohammad told reporters on the final day of a visit to Beijing on Tuesday, reports AP.
Mahathir told Malaysian reporters that both Chinese President Xi Jinping and Premier Li Keqiang understood the reasons behind the cancellations and “accepted them.”
China had earlier defended the investments as bringing tangible benefits to both sides.
The projects, comprising a $20 billion East Coast Rail Link and two energy pipelines worth $2.3 billion, had already been suspended pending renegotiation.
“It’s all about pouring in too much money which we cannot afford, we cannot repay and also because we don’t need these projects for Malaysia at this moment,” Mahathir said.
While the projects could be restarted in the future if considered necessary, Malaysia’s current focus is on reducing the national debt, Mahathir said.
“With that debt, if we are not careful we can become bankrupt,” he said, blaming the “stupidity” of the administration of his predecessor, Najib Razak, whom he ousted in elections earlier this year and now faces charges of massive corruption.
Malaysia will still have to pay “substantial” penalties to extract itself from the projects and also needs to “find out where money that has been paid for the projects have gone to,” Mahathir said.