In an interview with The New York Times in January, Malaysia’s finance minister, Lim Guan Eng, said the government was “looking for some cost rationalization” in regard to various projects the previous government had undertaken with China.
Under the original terms of the deal, Malaysian officials estimated that the country would have to make annual interest payments of $488 million. Once built and running, the rail was also expected to lose about $122 million a year.
“We want to reduce costs,” Mr. Lim said.
For months, the Malaysian Finance Ministry closely examined a document published by an online news outlet, The Sarawak Report, that appeared to be a term sheet for the East Coast Rail Link project. The document, whose authenticity was not confirmed by The Times, indicated that the price quoted by China Communications Construction Company had been intentionally inflated to allow for kickbacks.
Under Mr. Lim, the ministry tried to authenticate the document but could not find the original. “For us to be able to initiate any investigation, we need the documents, and until then there is not much we can do,” he said in the January interview.
The rail project, meant to connect ports on Malaysia’s east and west coasts, is now expected to cost $11 billion, roughly two-thirds of the most recent projected price tag of $16 billion.
“This reduction will surely benefit Malaysia and lighten the burden on the country’s financial position,” Mr. Mahathir’s office said in a statement on Friday.
At a news conference on Friday at the Malaysian Embassy in Beijing, Daim Zainuddin, a special envoy for the prime minister, said the savings from the new deal would be enough to build two more Petronas Twin Towers, a landmark in Kuala Lumpur.