Malaysia’s new government to rethink all foreign contracts

The country’s newly elected prime minister, Mahathir Mohamad, orders overseas projects, including the HSR and One Belt One Road schemes, to be scrutinised.

Malaysia’s newly elected prime minister, Mahathir Mohamad, has ordered a review of all foreign contracts and projects, including the Kuala Lumpur-Singapore High Speed Rail project, after winning last week’s election.

“With regard to all those contracts, we will review them to see how they favour us,” he said during a televised press conference in Manila on Saturday. “We want to benefit from those contracts; whatever decision we make, will be based on a study.”

The KL-Singapore HSR project, which is currently being procured under an availability-based PPP model, is one of the most strategic infrastructure projects in Southeast Asia. It is planned to commence services by December 2026, connecting the two capitals via a 350km high-speed railway. The deadline for bid submissions has been extended by six months following bidders’ requests.

It is unclear whether the development of the HSR project will be affected by the review. MyHSR, the company established by the government to develop the project, had not responded to queries by the time of publication.

A spokesman from Malaysia’s Ministry of Transport told Infrastructure Investor that more information will be available only after Mahathir announces his cabinet line-up and appoints a Minister of Transport.

In addition to the KL-Singapore HSR project, the review will also cover projects under the China-led One Belt, One Road initiative, such as the 55 billion-ringgit ($13.9 billion; €11.7 billion) East Coast Rail Line and the 30 billion-ringgit Malacca Gateway Port. According to Reuters, Mahathir has pledged to review all large-scale infrastructure projects approved by former prime minister Najib Razak, who has been accused of corruption.

On Saturday, Mahathir appointed a special team called the “Council of Eminent Persons” to advise the government on economic and financial matters for the first 100 days.

On Sunday, Tun Daim Zainuddin, head of the “Council of Eminent Persons”, met the chief executives of the country’s six largest government-linked investment firms for feedback on the economy, the market and the ringgit.

The Council will enlist the help of sovereign and state pension funds on issues related to the review of specific funds and companies, as well as projects and contracts where they have specific and relevant expertise and resources, according to a joint statement.

During the meeting, Tun Daim stressed it is important for the funds to separate professional management of the institutions and any undue interference from political and any other external parties. He said funds that had political representation on their respective board of directors, will be reviewed and changes will be made as required, according to the institutions’ joint statement.