KUALA LUMPUR, Nov 16 — The RM55 billion East Coast Railway (ECRL) project is not overpriced as claimed by former prime minister Tun Dr Mahathir Mohamad and will actually do more than return the investment made by Putrajaya, Minister in the Prime Minister’s Department Datuk Abdul Rahman Dahlan said today.

In a statement, Abdul Rahman claimed Dr Mahathir had made "numerous errors and misconceptions” in recent criticisms about Putrajaya’s deals with Chinese companies.

The ECRL’s main contractor is China’s largest construction company, but Abdul Rahman insisted that local companies will still carry out a significant portion of the work.

"The crux of Mahathir’s criticism seems to centre on the soft loan that Malaysia will take on to build the East Coast Railway project which he said will increase the Malaysia Government’s debts considerably and that the main contractor would be a Chinese company,” he said.

"The soft loan given by the Export-Import Bank of China is on very favourable terms with a low interest rate and has a 20 years tenure. It is also denominated in Ringgit Malaysia and not in USD or Yuan as alleged by Tun Mahathir,” he added.

Abdul Rahman said that due to the rapid development of rail link in China in recent years, there is "little doubt” that China is among the leaders in railways and rail technology.

"It is regrettable that Tun Mahathir also repeats the allegation that on a per kilometre basis, the ECRL is over-priced,” he said.

"To correct Tun Mahathir, the RM55 billion price also includes the cost of all rolling stock, signalling systems and supporting infrastructure,” he added.

"As with any greenfield infrastructure project with strategic importance, there is significant economic multiplier and spill-over effects that will boost economic economy,” he said.

"This will mean that we will more than recover its investment in the ECRL from additional tax gained, asset appreciation and other direct and or indirect revenues,” he added.

Abdul Rahman also stressed that 1Malaysia Development Berhad (1MDB) debt now stands at RM 31 billion and not RM 53 billion as alleged by Dr Mahathir in a recent blog post.