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A controversial RM 43 billion (S $ 14.1 billion) port project off the coast of Melaka that was touted as the largest in the region when it was ready, surpassing that of Singapore, has been scrapped by the state government.
The Melaka government said in a letter dated Monday that the Melaka Gateway project developer was unable to complete the reclamation works after three years as contracted.
The developer is calling the termination unfair and is considering taking legal action.
“We want to resolve this amicably. But if not, we are ready” for legal action, Melaka Gateway CEO Michelle Ong told the Sunday Times yesterday.
He said no reason was given for the “sudden termination.”
The project was initially a partnership between the little-known Malaysian company KAJ Development, of which Datuk Ong is the CEO, and PowerChina International of China. It involved the reclamation of three islands off Melaka, two of which would be artificial.
Since then, the Chinese partner has left the company.
In addition to the gigantic deepwater port, Melaka Gateway was to include an international cruise terminal, bungalows with a private marina, condominiums, hotels, and theme parks.
The state government terminated the sea reclamation agreement with KAJ Development, saying it had not completed development of 246ha, roughly half the size of Sentosa Island, three years after signing an agreement on October 4, 2017.
In a letter seen by The Sunday Times, the Chief Minister’s Office said: “The company must also return the project site, as of the notice of termination issued by the Melaka state government.”
“Therefore, all matters arising in relation to the Melaka Gateway project site should be communicated directly with the Melaka state government.”
Melaka Gateway was planned with the ambition to surpass Singapore as the largest port in the region. The project was first announced in 2014 by then-Prime Minister Najib Razak after a visit to Beijing.
After Najib was ousted in the 2018 general elections, the Pakatan Harapan (PH) government abandoned or renegotiated several Chinese-backed infrastructure mega-projects, including the East Coast Railway Line connecting Port Klang in Selangor with Kuantan in the East coast of Malaysia.
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About the project
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• Melaka Gateway was one of several mega-projects linked to Chinese investment deals signed by the government of former Prime Minister Najib Razak, including the RM44 billion (S $ 14.4 billion) east coast rail link that is ongoing .
• Questions were previously raised about the Melaka Gateway, the need for increased port capacity in Malaysia and whether China’s involvement (in the early stage) was related to its strategic interests in the Strait of Malacca.
• In 2017, Melaka Gateway was considered part of a broader port alliance between Kuala Lumpur and Beijing, to increase bilateral trade and boost shipping and logistics along the China Maritime Silk Road.
• A World Bank study commissioned by the government in 2016 showed that a new port was not necessary on Malaysia’s west coast as existing facilities had not yet reached full capacity.
The Melaka Gateway project was one of those that was scrapped, but the PH government allowed it to continue.
Two of Malaysia’s largest ports are located along the Straits of Malacca, but Melaka Gateway was seen as part of a broader port alliance between Kuala Lumpur and Beijing, to increase bilateral trade and boost shipping and logistics to along China’s much-acclaimed Maritime Silk Road.
Port Klang, the largest in Malaysia, is north of Melaka; and the port of Tanjung Pelepas, the second largest in Malaysia, is in Johor.
Ms Ong said that the company has requested to meet with the Melaka government, but to no avail.
He said that so far 700 million ringgit has been spent on the project.
“We have managed to attract tens of billions in FDI,” he said, referring to foreign direct investment.
“We have several investors,” he said yesterday at a press conference in Kuala Lumpur, adding that the agreements signed for one of the three islands generated US $ 3 billion (S $ 1.34 billion) a year, and the investments obtained for the deep water port totaled RM3.8 billion, while the cruise ship dock had contributed investments of RM1.4 billion.
Ongoing construction at the project site was halted in March due to the Covid-19 pandemic, but work resumed two weeks ago, Ms Ong told The Sunday Times.
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