Malaysia cancels Singapore rail link as Mahathir looks to make savings

The newly-elected Malaysian Prime Minister, Mahathir Mohamad, has cancelled one of the nation’s biggest infrastructure projects – a high-speed rail link between Kuala Lumpur and Singapore.

According to Mahathir, the decision is final but will take some time to implement as the government seeks an agreement with Singapore regarding compensation, reports The Star Online.

The project, valued at approximately US$17 billion, was out for tender and was scheduled to be finished by 2026. Malaysia estimates they will have to pay Singapore approximately US$125 million in order to cancel the agreement, however they have not officially notified Singapore yet.

The cancellation is likely an attempt by Mahathir to save money on a project that he has described as “not beneficial, it’s going to cost us a huge sum of money. We will make no money at all from the operation,” quotes The Star Online. 

The Malaysian government is also renegotiating with Chinese partners over the terms of a US$14 billion rail deal which would connect the South China Sea at the Thai border with the strategic shipping routes of the Straits of Malacca, reports Reuters.

Mahathir has said that he could reduce approximately one fifth of Malaysia’s $250 billion national debt and liabilities by cancelling other big projects.