The cancellation of East Coast Rail Link (ECRL) project was due to the high annual interest that the country would have incurred, according to Economic Affairs Minister Mohamed Azmin Ali.

Azmin told reporters this morning that the cabinet decided to scrap the project as RM500 million in interest would have had to be paid annually were it to continue.

The decision was made during a cabinet meeting on Thursday and is final, he stressed.

"The cabinet made the decision because the cost to develop ECRL is too high, and we do not have the financial capability (to see it through) at this moment.

"And if this project is not cancelled, the interest that the government would have to pay reaches to nearly half a billion ringgit. 

"This is something that we won't be able to do," he said after launching an event organised by the Silat Cekak Hanafi Association in Kuala Lumpur. 

Azmin added that the government had also looked into the option of reviewing the project to cut its costs, but it found that the amount was still high.

On Thursday, cabinet had decided to terminate the controversial RM81 billion ECRL project.

Hefty compensation

On compensation to the company, Azmin said today that it would be determined by the Finance Ministry.

"It is being looked into and being refined. The process had started before this.

"It will be determined by the Finance Ministry, which has carried out due diligence to ensure that the cost (compensation) would not further burden the country's financial situation today."

On claims that Putrajaya was looking for another contractor to take over ECRL project for half the cost, Azmin replied in the negative.

He said the matter had not been decided, but added that Malaysia welcomes all forms of new investment into the country.

"We always review all the new applications for new investments into Malaysia, not necessarily on ECRL alone.

"We want to maintain FDI coming into Malaysia, and we want to ensure that our FDI will be able to be sustained, so that we can create wealth for the country and job opportunities."