Belt and Road project starts in Malaysia

China and Malaysia broke ground on a US$13 billion rail project yesterday that will link peninsular Malaysia’s east and west, a major part of the Belt and Road infrastructure push.

The 688-kilometer East Coast Rail Link will connect the South China Sea at the Thai border in the east with the strategic shipping routes of the Straits of Malacca in the west.

It is among the most prominent projects in the Belt and Road initiative, which aims to build a modern-day “Silk Road” connecting the world’s second-largest economy by land corridors to Southeast Asia, Pakistan and Central Asia, and maritime routes opening up trade with the Middle East and Europe.

“The ECRL is indeed yet another game changer and a mindset changer for Malaysia as it will significantly cut travel time to and from the east coast of the peninsula,” Malaysian Prime Minister Najib Razak said at the ceremony halfway along the route in Kuantan.

“The Chinese government has attached great importance to China-Malaysia relations and has always considered Malaysia a dear neighbor and trustworthy partner who is committed to seeking mutually beneficial cooperation and common development in the country,” Chinese State Councilor Wang Yong said at the ceremony, heading up a 100-strong delegation in Kuantan.

Najib said the project would be financed with an 85 percent loan from China Exim Bank and the balance through an Islamic bond program managed by local investment banks.

The project is being built by China Communications Construction Co.

Najib has announced a number of infrastructure projects in the past few months, many funded by China, as he builds momentum for a general election he has to call by mid-2018.

A Nomura research report last month said foreign direct investment inflows from China into Malaysia surged by 119 percent in 2016 and continued to grow at 64 percent year on year in the first quarter of this year.

Last month, Thailand’s Cabinet approved construction of the first phase of a US$5.5 billion railway project to link the industrial eastern seaboard with south China through landlocked Laos.