Premier Abdullah Ahmad Badawi has made his first major decision in shelving a controversial rail deal awarded by his predecessor Dr Mahathir Mohamad but analysts today said it is premature to conclude that he is now striking out on his own.

Abdullah said late Wednesday that the RM14.50 billion project to build an electrified double-track rail line stretching the length of peninsular Malaysia, part of an ambitious 5,600-kilometre trans-Asia link, would be postponed in favour of more urgent development schemes.

The final decision was made by the cabinet in light of the need for prudence to ensure sustained economic development and a balanced budget, said Abdullah, who is also finance minister.

The project, one of Asia's biggest infrastructure contracts, was initially promised to a consortium of contractors from India and China.

However, just days before he retired on Oct 31, Mahathir awarded it to a politically well-connected local group without a competitive bidding process, raising fresh questions about transparency and the traditional linkage between business and politics.

Smaller projects

Analysts said the decision to reverse Mahathir's stand certainly suggests Abdullah may favour smaller projects rather than the multi-billion-ringgitr mega-deals favoured by his former mentor during his 22 years in office.

However, it does not necessarily mean that Abdullah is ready to strike out on his own political path and distance himself from his predecessor ahead of general elections. Indeed, he could be simply switching focus to grassroot projects to try win votes for his Umno.

Analysts also pointed out that the government is hamstrung by tight finances after seven years of pump-priming and delaying the project would seem only natural in the circumstances.

"It is his first major policy decision which indicates a different direction from what Mahathir was doing," said Robert Broadfoot from the Political and Economic Risk Consultancy in Hong Kong.

"But is he distancing himself from Mahathir? I doubt it.

"There is clearly a difference of opinion on the rail project and the two men may disagree on priority but I don't think this is an issue that reflects ideological differences," he said.

"Maybe ... with elections coming up next year, he is shifting focus from big-ticket projects to smaller development schemes that could help Umno in the elections. We have to watch how he follows up."

Bigger picture

The general election, which is due by late 2004 but widely tipped to be called early next year, will be the first test for Abdullah.

Another analyst said he believes Abdullah was merely "looking at the bigger picture" to ensure that relations with China and India would not be affected and that the two countries would not cut their purchases of Malaysian palm oil in retaliation.

Lim Kit Siang, chairman of the opposition DAP, said he was disappointed that Abdullah did not send a clear-cut signal on improving government transparency by revoking Mahathir's award of the contract to the Malaysia Mining Corp-Gamuda consortium.

The premier has stated that the cabinet recognised the original letter of award to the group and Lim said that this cast doubts as to whether there would be more transparency in how major contracts were awarded.

MMC is the flagship of prominent tycoon Syed Mokhtar Albukhary, a close ally of Mahathir who has amassed a wide array of businesses over the past few years. - AFP