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Malaysia rejected a $20m loan from China in September, saying it had not met conditions and did not have sufficient information to consider it.

Key points:Malaysia’s finance ministry said the loan was withdrawn on account of the lack of informationChina’s Foreign Ministry said it did not agree with the decisionThe Malaysian government said it had no knowledge of the loan being withdrawnThe $20-million loan was to finance the construction of a new highway linking Singapore and Kuala Lumpur.

The loan was given to China in August to pay for a $4bn road project linking the Malaysian capital to Singapore.

“We did not meet all of the conditions for this loan, including the implementation of the project,” Malaysia’s finance minister, Datuk Seri Dr Abdullah Abu Bakar, said on Wednesday.

“The finance ministry has informed us that the loan is withdrawn on this account due to the lack in information, which we are aware of.”

Malaysian Finance Minister Datuk Ahmad Zahid Hamidi told the AFP news agency on Thursday that the government was unable to answer whether the $20million was withdrawn due to an information breach.

He said he had received the loan and had no information about the details of the contract.

“I cannot give you any more details,” Mr Zahid said.

“There is no need to speculate about what is going on.”

Malay officials have previously said that they were unaware of the new loan until it was announced.

Malaysians were not aware that they would receive a loan for building a road connecting Singapore to Kuala Lumpur until a few weeks ago, said a senior official in the finance ministry, who did not want to be named because he was not authorised to speak to the media.

He did not elaborate.

The new highway project is being funded by the sale of land in Singapore to build the highway.

The Malaysia Infrastructure Investment Corporation, the body that manages the loan, said it was not clear why the finance minister had withdrawn the loan.

“Our understanding is that the finance department has no knowledge on the nature of the agreement,” the official said.

Malay authorities have already paid $18m in fines to China, which is responsible for building parts of the road, and China has also fined Malaysia about $5m for not complying with environmental and safety standards.

“Malaysis should not be misled into believing that the proposed project is free from environmental, safety and economic impacts,” said Datuk Suhail Abdul Rahman, deputy director of the Centre for the Study of International Relations, a think-tank.

Malayan authorities also need to resolve a dispute with China over the amount of funds China has promised to spend on infrastructure projects in Malaysia, he said.

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