The recent announcement that Indonesia has begun talks with China over the debt incurred from its high-speed rail project connecting Jakarta to Bandung is a wake-up call for Southeast Asia—and especially for Malaysia.

Indonesia’s first-ever high-speed rail venture, launched amid much fanfare as a symbol of modernization, is now grappling with ballooning liabilities and revenue shortfalls.

As Indonesia seeks to renegotiate loan terms with China, the realities of megaproject debt burdens and political fallout shine a glaring light on what could happen to Malaysia’s East Coast Rail Link (ECRL) if strategic missteps are not urgently addressed.

Lessons from Indonesia’s debt crisis

Indonesia’s Whoosh high-speed railway began commercial operations in October 2023 but soon faced teething problems including costly delays, pandemic disruptions, and unexpectedly low ridership demand.

By mid-2025, the project posted a staggering 1.63 trillion rupiah (RM415.55 million) loss in just six months, and liabilities had swelled to nearly 19 trillion rupiah, triggering talks with China to restructure the debt.

Significantly, Indonesia’s finance minister emphasized that state funds would not be used to pay off the debt, leaving the project’s future and the government’s fiscal health hanging in balance.

This scenario underscores a critical lesson, that is a large-scale infrastructure financed by foreign loans—even from close partners like China—can quickly turn into a debt trap if project viability, transparent governance, and fiscal safeguards are not rigorously enforced.

The political leadership changes often before the financial fallout is fully realized, and succeeding administrations are left responsible for massive repayment obligations amidst public discontent.

Malaysia’s ECRL and the looming debt risk

Malaysia’s ECRL, a 688 km megaproject chiefly funded by a Chinese loan from the Export-Import (China EXIM) Bank, faces analogous challenges.

While analysts currently view Malaysia as not immediately at risk of falling into a Chinese debt trap thanks to fiscal responsibility laws and prudent debt management, the long-term economic impact remains uncertain.

The key concern is whether the ECRL can generate sufficient economic activity and revenue to service the loan without burdening the future taxpayers.

Much like Indonesia, Malaysia risks a future where politicians and officials who originally championed the project may no longer be in power when debt problems surface, a government change and cabinet changes are too frequent or at least once in 4 years. Every time a new cabinet, new policies, deriding the old ones!

There is the danger they might deny accountability, blame predecessors, or plead ignorance, leaving the country’s financial stability vulnerable.

The debt repayment could thus become a legacy issue damaging Malaysia’s fiscal sovereignty unless preventative audits, transparent reporting, and robust project governance are established immediately.

Malaysia cannot afford to repeat the mistakes of the past with white elephant projects draining resources and compromising national progress.

Avoiding white elephant projects and fiscal leaks

History offers cautionary examples of Malaysian projects that turned into costly white elephants, draining public resources and tying the nation to onerous repayments. These include:

Putrajaya project: While symbolically cherished, criticisms have mounted over cost overruns and ongoing maintenance expenses burdening government coffers.

Mega Forest City development: Labeled a “ghost township,” with underutilized properties and stalled investments, raising concerns about financial sustainability and poor urban planning, which is now a free Special Financial Zone (SFZ) since September 2024.

1MDB debt scandal: Though not directly an infrastructure project, misappropriation of billions of ringgit fatally damaged Malaysia’s reputation and financial health, with ripple effects on government borrowing costs.

Such examples stress the critical need for thorough audits, transparent procurement, strict oversight, and public accountability mechanisms to halt leakages in project funds and ensure value for taxpayers.

Malaysia must learn from these experiences to ensure that ECRL does not become another white elephant.

Proactive measures for Malaysia

To safeguard Malaysia’s future, several immediate actions must be taken:

Comprehensive audit and public report: The government should order an independent audit of the ECRL project’s finances, contracts, and progress with findings publicly disclosed. This transparency will deter corrupt practices and reassure citizens.

Fiscal risk management: Strengthen debt sustainability frameworks and monitor the project’s financial health continuously using international best practices.

Project governance reform: Establish strong, independent oversight bodies with the power to intervene if deviations or irregularities are detected.

Engage public stakeholders: Foster wider understanding among Malaysian citizens about the project’s status and government measures in place, building societal support for prudent decisions.

Learn from regional experiences: Track developments in Indonesia’s high-speed rail project and other regional infrastructure ventures to anticipate risks and adapt mitigation strategies dynamically.

Indonesia’s high-speed rail debt crisis serves as a powerful warning for Malaysia.

While ECRL holds promise for boosting economic connectivity and regional development, the risk of debt distress and political evasion of accountability looms large.

Malaysia cannot afford to repeat the mistakes of the past with white elephant projects draining resources and compromising national progress.

Only through unwavering commitment to transparency, fiscal prudence, and proactive governance can Malaysia ensure that ECRL becomes a transformational success—not a financial burden for generations to come.

The time to act decisively is now, before the trains run late on financial discipline and our reputable national trust.

(Ravindran Raman Kutty is a senior communications and public relations professional with extensive experience across Malaysia, Fiji, the UK and Australia. Passionate about strategic communications, sustainability, and community engagement, Ravindran writes regularly to share insights and foster informed dialogue on important social and environmental issues. Through thoughtful analysis and storytelling, he aims to contribute meaningfully to public discourse and inspire positive change.)