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By Dave Yin / Jan 29, 2019 06:01 AM / Business & Tech

A deserted China Communications Construction Co, site in Pahang, Malaysia last year. Photo: Straits Times/Ariffin Jamar

A deserted China Communications Construction Co, site in Pahang, Malaysia last year. Photo: Straits Times/Ariffin Jamar

Malaysia will cancel a $20 billion rail project with contractor China Communications Construction Co. (CCCC) over debt concerns, the country’s Economics Affairs Minister Mohamed Azmin Ali said over the weekend.

The East Coast Rail Link project was "beyond the government’s financial capability," Azmin said at a press conference Saturday. He said the country’s finance ministry is working to determine the compensation to pay CCCC for canceling the project and did not want to jeopardize relations with China.

The Malaysian government is reportedly seeking a new contractor to build the rail line but at half the cost.

At a regular press conference Monday, China’s Foreign Ministry said the two countries are in communication.

Work on the 688-kilometer (428-mile) railway linking the east and west coasts of Peninsular Malaysia has been suspended since July as part of a review of large-scale infrastructure projects by the Pakatan Harapan administration. Malaysian Prime Minister Mahathir Mohamad said in August that the rail project would be cancelled “for now,” but the government later said it was still negotiating with CCCC.

Related: Malaysia Scraps Rail Deal With China Firm, Seeks Replacement

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