China will build and finance the RM55 billion East Coast Rail Link (ECRL), said Treasury secretary-general Mohd Irwan Serigar Abdullah.

Construction will be handled by the China Communication Construction Company Ltd (CCCC) while the financing is to be provided by Export-Import Bank of China (Exim).

Both are state-owned companies.

Irwan said the government will borrow from China as it offered favourable financing rates, the New Straits Times reported from Beijing.

"If you borrow in the international market you will not get the low interest rate that we will get. We haven't finalised (the details) but we will get very competitive (rate) and the repayment period we expect to be 20 years," he said.

Controversy over deal

The 620km rail project which will connect townships such as Port Klang, ITT Gombak, Bentong, Mentakab, Kuantan, Kemaman, Kerteh, Kuala Terengganu and Kota Bharu before ending in Tumpat.

Irwan said the engineering, procurement, construction and commissioning (EPC) contract and a financing framework will be among agreements signed by Prime Minister Najib Abdul Razak, who is currently in China on official business.

The deal is expected to be finalised by year-end while construction is scheduled to begin next year.

In July, whistleblower website Sarawak Report accused the Najib-administration of colluding with CCCC to inflate the cost of the ECRL from RM30 billion to RM60 billion, as part of an elaborate scheme pay off 1MDB's debts.

The website cited a whistleblower who allegedly provided copies of internal CCCC documents detailing the scheme.

Growing ties with China

According to Sarawak Report, China's state-owned CCCC would purportedly help pay 1MDB's debt in advance and progressively, through several engineered transactions.

Malaysiakini could not independently verify the website's claims. The Prime Minister's Office and Transport Minister Liow Tiong Lai did not respond to requests for comment on this issue.

Both CCCC and Works Minister Fadillah Yusof, however, denied the allegations.

Last week, the China Railway Group said it is planning to build the world's largest underground city in Bandar Malaysia, which will serve as the centerpiece for its Pan-Asia rail network.

According to details disclosed by a China Railway official in an interview with Channel News Asia, the city will include a subterranean shopping mall, canals, indoor theme parks, cultural villages, indoor gardens, a financial centre, and a new RM8.3 billion regional headquarters for the company.

Cai Zemin, general manager for China Railway's Malaysia office told CNA: "Bandar Malaysia will be a glittering gem on China's rail corridor. China's rail corridor will link South-East Asia with East Asia, West Asia and South Asia".

Bandar Malaysia will be the nexus in the regionwide rail network in the grand Chinese plan to link up 65 nations in a kind of modern-day Silk Road.

Separately, Alibaba Group founder Jack Ma may be offered an advisory post to help Malaysia develop its digital economy, Irwan said.

"We will discuss with him about bringing (in) his ideas and there is also talk about appointing him to the digital councils in Malaysia, to get his ideas," he reportedly told Malaysian media in Beijing.