Did a Belt and Road project in Malaysia just crash and burn?
- Termination of agreement to build Melaka Gateway could mean the end for US$10.5 billion development
- Project’s suspension comes after years of neglect by administrations of Najib Razak and Mahathir Mohamad
The Melaka Chief Minister’s Office said in a statement that the agreement with KAJ Development on the Melaka Gateway mixed development had been ended after the developer failed to complete the 246.45-hectare maritime initiative, which it signed on to in October 2017 and was meant to include port facilities, economic parks and tourist attractions on three artificially constructed islands.
“The company is also required to return the project site, effective upon the termination notice issued by the state government,” said the statement on the 43 billion ringgit (US$10.5 billion) project, which saw KAJ Development working with three Chinese companies, including state-owned Chinese energy firm PowerChina – the main financial backer.
Originally proposed in 2014, the project had long been seen as a white elephant, particularly because it included the building of yet another port in a nation already well served by existing facilities. There was little sign that any work on the project had been completed, amid rumours that the Chinese investors had pulled out.
Even now, say observers, it remains unclear if the project can or will continue.
“The project was very ambitious and not very well grounded in an economic or political sense,” said Francis Hutchinson, senior fellow and coordinator of the Regional Economic Studies Programme at the ISEAS-Yusof Ishak Institute in Singapore.
“Economically, due to its location and the current overcapacity in the port sector, it was not very feasible. Politically, it did not check the boxes as it would have competed with existing facilities owned and run by corporations, and it did not have buy-in from large conglomerates or government-linked companies.”
“The main local player pushing the project was KAJ Development, which is not an established name at the national level. It had some buy-in from the Melaka state government through one of its subsidiaries, but this is not enough in the Malaysian context to get things going.”