Is our national interest now subjected to foreign terms and conditions?

Last week, I had asked the Finance Minister to justify the award of the RM55 billion East Coast Rail Link project to China Communications and Construction Company (CCCC) and why Malaysian companies were not given the opportunity to tender for the project.

In the Finance Ministry’s reply, it said "to qualify for this financing offered by China Exim Bank, the project had to be executed by CCCC".

The Minister said that the Export Import Bank of China (China Exim Bank) offered a soft loan to Malaysia for the project at low interest rates.  He added that the loan, for a period of 20 years, also allows for a grace period of seven years where the government does not need to repay the principal.

In addition, "the government has, in principle, agreed at least 30 percent of the infrastructure work will involve local companies and contractors".

If studied carefully, the reply carried very sinister undertones.

Malaysia now appears so desperate for foreign financing for its so-called national interest projects that it is willing to subject itself to terms and conditions of foreign powers.

Just because somebody is willing to lend you the money at seemingly favourable terms does not mean that you should accept the condition to select the product that will cost nearly double the estimated price.

This is no different from unscrupulous retailers to duped Malaysian shoppers into “zero-interest” financing schemes on products costing significantly higher than if you have paid for it in cash.  Any financial consultant will educate you that the real cost of financing is already built into the jacked-up price of the product.

Worse, the real cost of funds for the project is now opaque because we do not know the real cost of the project as it was awarded without any open and competitive tender.  We do know however, that the Government’s own appointed consultants, HSS Integrated has estimated that the cost of the 600km railway project will cost less than RM30 billion.

Therefore, to pay for the project at RM55 billion just because China Exim Bank offered an “attractive financing package” is absolutely scandalous!

Worse, only 30% of the project will involve local companies and contractors, despite an abundance of experience and expertise which are already widely available in Malaysia.  We have now got many companies who have built double tracking railway projects, dug award-winning tunnels systems and constructed the MRT.  And yet, the Government is awarding a standard rail link project at substantially higher cost to a foreign company with minimal local participation.

The irony is, the Finance Ministry has advised or even instructed our Government-Link Companies to halt their investments abroad and repartriate its foreign funds from overseas to check the drastic decline of the ringgit.  Bank Negara even put in harsh measures to force private companies to convert their foreign currency receipts into ringgit.  However, the Government clearly doesn’t practise what it preaches because the overwhelming bulk of the inflated RM55 billion cost will be paid to China despite available local options.

There can be no better example of the English saying, “penny wise but pound foolish”.  What boggles the mind is, the Finance Ministry doesn’t comprise of idiots – they should know that we are paying well above what is a fair price for the project.  What is the ‘real’ reason why the project has been awarded to CCCC – is the real ‘quid pro quo’ the fact that CCCC will help launder part of the astronomical profits to pay off 1MDB debts as widely speculated?

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Transport Minister Datuk Seri Liow Tiong Lai’s attempts to justify increase in ECRL price from RM29 bil. to RM55 bil. raises many more questions than answers

Finally, after more than a week of denying that the proposed East Coast Rail Link (ECRL) would cost a whopping RM55 billion, the hapless Transport Minister, Datuk Seri Liow Tiong Lai finally conceded that the project would indeed cost RM55 billion or RM91.7 million per kilometer.

This admission came after slamming me on 8 November last week in The Star that I was making assumptions of the cost of the ECRL when it was still not finalised yet.  “We have to go into negotiation on every kilometre so where did he get the cost?” he had then asked.

The Transport Minister’s admission in Parliament yesterday came after the Pakatan Harapan law-makers exposed the existence of an extensive feasibility study by HSS Engineers Bhd which had estimated that the cost of the 545km project to be only RM29 billion or RM53.2 million per kilometer.

He then tried to defend the staggering increase in cost by arguing that:

The project has been extended from 545km to 600km to include the Gombak-Port Klang link – a fact which we have never disputed.

The HSS feasibility study is based on RM3.2 to the US Dollar in 2009-2010.
There is a new alignment resulting in an increase in tunnel length from 30km to 50km, which also results in additional viaducts.

Datuk Seri Liow Tiong Lai’s appears to be desperately making up responses to questions as they arise, as his answers raises far too many more questions on the highly questionable RM55 billion project.

The HSS feasibility study which cost the Government RM8.7 million was carried out over a 6-year period, starting in December 2009 and completing only in December 2015 before concluding on the cost of RM29 billion.

Is the Transport Minister telling us that HSS consultants, who have completed many mega-infrastructure projects in the country, are so stupid as to use the 2009-2010 exchange rates to calculate the cost of the project, even though they finalised the report only in December 2015 when the exchange rate was already RM4 to the Dollar by then?

Since the comprehensive HSS report had to take 6 years to complete and was finalised only in December 2015, how did the Government decide to suddenly alter the alignment within 6 months or so?  Was a new engineering consultant actually appointed to carry out a new study which could be completed in such a time-frame?

I would agree with Dato’ Seri Liow that if there is an increase in tunnel length through the Titiwangsa range from 30km to 50km, it would certainly increase the cost of construction.  However, it begs the question, why take a 50km tunnel route across Titiwangsa range if indeed HSS recommended the much shorter 30km route?

The Transport Minister had told the Parliament that “we have nothing to hide. We are a responsible, accountable and transparent government.”

If he really has nothing to hide, Datuk Seri Liow should immediately order that both the HSS feasibility study and the subsequent study which changed the scope of the HSS study be released to the public.

That way, if what Datuk Seri Liow said is right, then the Pakatan Harapan critics would have no choice but to shut up immediately.  Otherwise, the Transport Minister, who is also the MCA President has no right to accuse us of trying to “gain political mileage” when what we clearly want to ensure is not another project where tens of billions of ringgit are embezzled by the powers that be.  Instead it would be Datuk Seri Liow who is playing politics to cover up for another multi-billion ringgit mega-scandal.

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We challenge EPU Minister, Datuk Seri Abdul Rahman Dahlan to make public the feasibility study conducted by HSS Engineering Group which was commissioned by the East Coast Economic Region Development Council (ECERDC)

In our research over the controversy surrounding the 600km East Coast Rail Link (ECRL), we have discovered that the East Coast Economic Region Development Council (ECERDC) has appointed HSS Integrated Sdn Bhd to conduct a feasibility study including engineering studies, ridership studies, systems and rail operation studies, environmental screning, land use and socio-economic impact studies and most importantly, a economic and financial evaluation.

HSS Integrated is part of HSS Engineers Bhd, an engineering company which is listed on Bursa Malaysia who have been involved in some of the biggest engineering projects in Malaysia.  Their rail experience would include the Electrified Double-Tracking from Ipoh to Padang Besar, the Sungai-Buloh to Kajang MRT I Line, the Ampang Line LRT Extension Project and the KLIA Express Rail Link.

They were appointed to carry out the ECRL feasibility study in December 2009 and completed their work in December 2015 and were paid RM8.7 million for their services.  As disclosed in the HSS Group’s Corporate Profile and Capability statement, the proposed route was approximately 545km in length from Kuala Lumpur to Tumpat, passing through Mentakab, Kuantan, Kuala Terengganu and Kota Bahru.

The full HSS Group profile and capability statement can be downloaded here: http://www.hssbim.com/docs/HSS_Company_Profile.pdf

Most importantly, HSS stated that the project value for the project was RM29 billion (pg 21), or approximately RM53.2 million per kilometer.  The study hence supports ECERDC CEO, Datuk Jebasingam Issac John who has previously been quoted by news reports in April 2014 that the ECRL will cost approximately RM30 billion.

Hence Pakatan Harapan elected representatives are absolutely right to heavily criticise the award of the East Coast Rail Link (ECRL) project to China-owned China Communications Construction Company as excessively expensive RM55 billion or RM91.7 million per kilometer.

The Edge Financial Weekly had labelled the project as “the world’s most expensive” when compared to similar railway projects in Bangladesh and Kenya which were also being constructed by CCCC for only RM68.1 million and RM61.4 million respectively.  Another project in Ethiopia of which 40% of the 375km project to be built by a Turkish contractor, Yapi Merkezi on challenging terrain cost only RM18.1 million per kilometer.

The EPU Minister in-charge of the project, Datuk Seri Abdul Rahman Dahlan tried to dismiss the “world’s most expensive” railway allegations by citing the Golthard rail project in Switzerland, the Madrid-Valladoid and the Barcelona lines in Spain costing significantly more per kilometer.

We have since debunked the EPU Minister’s comparison because those were nearly 100% rail tunnel projects and they were all High Speed Rail travelling up to 300km per hour, which we all know, cost substantially higher than conventional rail like the ECRL travelling up to 170km per hour.

In fact, the Golthard rail tunnel had to cut through the Swiss Alps and was as deep as 2.3 kilometers below surface.  As a comparison, even the most expensive tunnelling project in Malaysia to date, carried out for the MRT was only 45 meters at its deepest.

After being caught trying to sell ATP turboprops at Boeing 747 prices, the EPU Minister has changed his argument to insist that “all infrastructure projects cannot be compared directly”.  He is now trying to avoid the now-established claim that the ECRL at RM55 billion will indeed be the world’s most expensive in its class.

Of course it is a given that every rail project will be different.  However, the EPU Minister cannot claim that the ECRL has to pass through the Titiwangsa range which will require numerous tunnels and viaducts – as if it is the only such project in the world facing such “challenges”.

Hence, to end the “world’s most expensive” railway debate once and for all, we call upon Dato’ Seri Rahman Dahlan to make public the feasibility study carried out by HSS which would already have included the cost of having to cut through the Titiwangsa range with tunnels and viaducts.

The EPU Minister will then have to justify to Malaysians why did the Prime Minister award the contract to CCCC at RM91.7 million per kilometer which is 72.4% more expensive than the HSS study of RM53.2 million.

The failure to do so will only confirm Malaysians’ worst fears, that the RM55 billion ECRL over-priced project is an attempt to siphon up to RM25 billion to pay off 1MDB’s debts, to cover up for the tens of billions of ringgit which have been stolen and laundered overseas.

Rafizi Ramli
MP Pandan

Tony Pua
MP Petaling Jaya Utara

Dr Hatta Ramli
MP Kuala Krai

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Minister in Prime Minister’s Department, Dato’ Seri Abdul Rahman Dahlan tried to pull a fast one by comparing the exorbitant cost of the East Coast Rail Link with complex High Speed Rail in Europe

Three days ago, Dato’ Seri Abdul Rahman Dahlan, the Minister in-charge of Economic Planning Unit (EPU) responsible for the East Coast Rail Link (ECRL) tried to deflect the allegations that the cost of ECRL was the most expensive in the world.

Unlike his fellow Cabinet Minister, Datuk Seri Liow Tiong Lai who denied that the ECRL was to cost RM55 billion or approximately RM91.7 million per kilometer, the EPU Minister pretty much confirmed the cost of the project.  Instead he argued that it was not the most expensive in the world.

Dato’ Seri Rahman Dahlan gave the examples of a 57km rail project in Switzerland costing US$11.9 billion (RM50bn) or US$209 million (RM860 mil) per km to build; a 177km rail line in Madrid-Valladolid, Spain, costing US$5.48 billion (RM22.46bn) or about US$30 million (RM123 mil) a km; and a 48km rail project in Barcelona costing about US$8.12 billion (RM33.3bn) or US$170 million (RM697 mil) per km.

It is disastrous for Malaysia that the EPU Minister actually cited these projects as comparison to our own proposed ECRL.

Dato’ Seri Rahman Dahlan perhaps didn’t realise that the 57km Swiss Golthard rail project costing a whopping RM50 billion actually involved the building of the world’s longest tunnel as deep as 2.3km below the surface!  The neighbouring 56km Brenner rail project which is currently under construction costing just a shade less than Golthard, will be the second longest tunnel in the world when it’s completed in 2025.

Is the Minister telling us that the 600km ECRL link from Port Klang to Kota Bahru via Kuantan will be, if not completely, substantially underground to compare with the Swiss rail lines underneath the Alps?

Similarly, the Barcelona line costing US$8.12 billion has a length of 47.8 km, of which 43.71 km is underground and 4.9 km is on viaducts.

At the same time, the 177km Madrid-Valladoid line was only the first phase of the two-phase Madrid-Leon 342km rail line costing a total of US$6.34 billion.  That actually works out to only US$18.54 million (RM76 mil) per kilometer which is cheaper than the ECRL’s RM91.7 million per kilometer!

Most of all, all of the examples cited by Dato’ Seri Rahman Dahlan are not only tunnel-intensive, they are all High Speed Rail (HSR) projects which, as we know cost significantly more than conventional rail projects like ECRL.  These European HSRs travels up to a top speed of 300km per hour compared to the ECRL project proposed at 170km per hour.

Hence what the ignorant Dato’ Seri Rahman Dahlan attempted to do, intentionally or otherwise, is to try to sell Malaysians a ATP turboprop at the price of a Boeing 747.  Unfortunately for him, Malaysians are not that stupid.

The EPU Minister shouldn’t have to go around to world to try justifying the exorbitant cost of the ECRL project.  After all, this isn’t our first and only rail project.  He should very well know that the 329km Ipoh-Padang Besar and 179km Gemas-Johor Bahru double-tracking link cost RM44.0 million and RM39.8 million per kilometre respectively.  Amazingly, these projects such as the Ipoh-Padang Besar and Rawang-Ipoh links were all completed by local engineering and construction companies!

We challenge Dato’ Seri Rahman Dahlan to show proof that a conventional railway project would cost anything more than the above or that there are no local companies with the necessary expertise who are able to complete the ECRL project for far less than the RM55 billion awarded to China Communications Construction Company.


Rafizi Ramli
MP Pandan

Tony Pua
MP Petaling Jaya Utara

Dr Hatta Ramli
MP Kuala Krai

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