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Malaysia has decided to 'postpone indefinitely' the $1.5 billion railway project, initially promised to India's state-owned IRCON and Chinese Rail Company CRET, saying it was too expensive.
The Malaysian cabinet at its weekly meeting on Wednesday said the project involving laying and electrifying a 636 km of track straddling the length of the Malaysian peninsula, part of a trans-Asia link from Singapore to China, will be postponed indefinitely, media reports said on Thursday.
"After reviewing the matter, it was felt that going ahead with a project that will require such a large sum of money was not a priority at the moment," a government source was quoted by the Malaysian newspaper, Edge Daily, as saying.
"We want to focus on going ahead with other more needy development projects as approved under the eighth Malaysian plan," he said.
The daily quoted sources as saying, "We are not cancelling the project but postponing it indefinitely. When the project is revived in future in whatever shape and form, the consortium would be given the first right of refusal."
Former Prime Minister Mahathir Mohamad had announced shortly before he retired in October that the Malaysian government was breaking preliminary agreement with companies from India and China after three years of negotiations and had awarded the double-track project to a Malaysian Consortium Gamuda and Malaysia Mining Corporation.
The IRCON issue had prompted New Delhi to seek a clarification from Kuala Lumpur.
Analysts said with the postponement of the project, the controversy surrounding it would fade away.
"I think postponing it will give time to the government to take another look at how the whole thing should have been done if and when it is revived," the daily quoted an analyst as saying.
"The way it was handled earlier, the whole thing appeared to be a rush job done without much transparency and clarity in the process," he said.