ECRL? Renegotiation will incur fines, if it happens

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We already two huge announcements; the scrapping of the High-Speed Rail and the MRT Line 3. Here’s the article earlier: High-Speed Rail cancellation: versus flight tickets and experts’ views Next question, is the East Coast Rail Link (ECRL) going to be scrapped as well? Well, I personally think it will continue. Yes, I saw some charts showing the cost of the HSR which has to be paid over 100 years. Let’s not debate about whether the cost is too high or too low or whatever. That one let’s leave it to the government. The question we should ask is whether the project will have its benefits. The answer in brief is, yes. There are now news that the government will proceed with the ECRL but wants to renegotiate the terms of the contract. The article in TheStar here.  As per the article, the ECRL, for which China’s Exim Bank is forking out 85% of the funding, is about 13% complete. This is one major reason why this will not be easy to negotiate too.

According to senior lawyer Philip Koh,”Even if the project is not scrapped, there could be penalty charges as the other party would have incurred mobilisation costs.” Koh said further, “A contract under Malaysian law and international commercial law is binding and must be completed, otherwise there will a breach with consequences of liability in damages.” He also shared that if the parties involved have sovereign entities, or governmental shareholders, then government to government negotiations could be the starting point. Commercial Law and Public International Law practitioner Datuk S Murugesan, “However, we must remember that an agreement is already in place now. There is very little we can do if China refuses to re-negotiate.” He said that if this should happen, then the Malaysian government must fall back to the contract document to decide on its next move. “We must then look at the agreement to see what is the compensation payable in the event of early termination or if there are other mechanism in the agreement that allows for dispute resolution or mediation.” Do refer to full article in TheStar here. 

What are your thoughts about ECRL? Do you think it should be scrapped? According to an earlier report before the general election, when SPAD opened a public inspection setup at their headquarters for the ECRL, it received a whopping 95 percent approval from 15 east coast districts. Full article here.  Within the article, it quoted UUM’s Professor Amir who said that the ECRL project will also create employment opportunities for many Malaysians. He said, “There are reportedly 22 stations on the ECRL, when it is finished. So just imagine how many jobs can be created with these stations. The ECRL will also galvanize the smaller towns on the way, and these towns’ economy will be boosted by the ECRL.” It’s hard to calculate projects solely on the revenue that it may bring. This is because many public transportation projects will usually not be profitable. Happy following.

written on 31 May 2018

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