Nearly 1,000 jobs lost as fallout from Malaysia's suspended East Coast Rail Link project digs in
22 July, 2018
The fallout from Malaysia's suspended East Coast Rail Link (ECRL) that is currently being renegotiated with China, together with two other pipeline projects, is being felt on the ground.
Three weeks after the project's main contractor, state-owned China Communications and Construction Company (CCCC), received a stop-work order from Malaysia’s finance ministry on the grounds of national interests on Jul 3, all work has come to a halt.
Nearly half of its 2,250 staff have been laid off, according to CCCC sources, because they have no idea when or if the suspension will be lifted.
Those who were retrenched were mainly locals. Only 30 per cent of the workforce are foreigners, the company claimed.
Some of the Chinese expatriates - including engineers, administrative staff and chefs - and their families have gone back home on long leave. Others, including several local employees, were still manning their posts when Channel NewsAsia visited the ECRL base camp in Bentong, Pahang.
It is one of the biggest of the eight base camps situated along the 688km rail line linking the South China Sea on the east to the Straits of Malacca, on the west of Peninsular Malaysia.
The preparatory work was completed in March, according to Malaysia Rail Link, a wholly owned subsidiary of Malaysia's finance ministry, who is partnering CCCC on the project.
Blasting work has started in seven of the 43 tunnels, with the longest stretch - the 16km Genting tunnel - awaiting the scheduled arrival of two twin-bore machines, known as TBM, in November.
China Communications and Construction Company staff. (Photo: Melissa Goh)
Safety officer Nadillah Arriffin and junior engineer Daniel Mohd Hasnan said they felt lucky to still have their jobs after seeing some of their team members laid off over the past few weeks.
“I was shocked by the suspension. I have worked here for almost a year and I hope to have my team back,” said Nadillah, who found out via social media that the project had been suspended indefinitely, pending review and renegotiations with China.
Her colleague, Daniel, who had three months of training in rail engineering under a skill training programme with Beijing University, only started work a month ago. He is pondering his future with the company after some of his friends were let go.
“It's quite sad actually. We’ve been meeting our targets and we have done well. I hope I don’t get the letter from HR," he said. The programme has now been suspended as well following the stop-work order .
It is a waiting game for the remaining staff at CCCC and hundreds of sub-contractors, suppliers and consultant companies.
CCCC management staff who declined to be named told Channel NewsAsia that they were not informed of the reasons behind the suspension.
They only found out from media reports that the current government, led by Prime Minister Mahathir Mohamad, had said that the project, estimated at RM81 billion (US$20 billion), was just too costly and needed to be renegotiated.
The final cost, according to Finance Minister Lim Guan Eng, is way higher than the original cost of RM55 billion. This is after adding the extension, the double tracking and the land acquisition cost including loan interest during construction.
The ECRL was signed with CCCC in November 2016.
To be operational by 2024, the project was 85 per cent financed by China's Exim Bank, and the remaining 15 per cent via Sukuk insurance or Islamic bonds.
So far, 15 per cent of the project has been completed, and nearly 20 per cent of the loan has been drawn down.
Industry sources told Channel NewsAsia that the entire project, which includes more than 100 viaducts and 43 tunnels, will have to be scaled down significantly.
The terms and amount of the loans with China will also have to be reworked as Dr Mahathir has said the government does not need such a big loan from China.
In parliament on Thursday, Mr Lim declined to comment on the retrenchment. The ECRL project will only be feasible if there is a significant reduction in cost, he said, without going into details.
Meanwhile, former finance minister Daim Zainuddin, who was in Beijing earlier this week, has returned to Malaysia. He was in China to discuss the suspended projects with China, among others. It is unclear what was achieved from the discussions.
China Foreign Minister Wang Yi is rumoured to visit Malaysia in the next two weeks to formally invite Dr Mahathir to visit Beijing, tentatively scheduled for the middle of August.