Malaysian Prime Minister Mahathir Mohamad said on Monday that he will drop the Kuala Lumpur-Singapore High Speed Rail (KL-SG HSR) project, as part of his efforts after winning the election to restore the financial health of the country.

Mahathir made the remarks at a press conference, saying it is "a final decision" to cancel the project, but Malaysia still has to talk to Singapore over a penalty concerning the withdrawal.

Mahathir said the penalty is around 500 million ringgit (126 million U.S. dollars).

In an interview with the Financial Times earlier, Mahathir said KL-SG HSR is one of the "unnecessary projects."

To control public spending, he also introduced a 10 percent pay cut to his cabinet ministers, abolished some organizations and vowed to terminate the contracts of some 17,000 public employees.

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