Malaysia has suspended three of its largest China-backed projects worth in the region of $22bn and is probing whether part of a loan from a Chinese state-owned bank was used in a transaction that benefited 1MDB, the scandal-ridden state investment fund.

The projects in question are the East Coast Rail Link, which would connect Malaysia’s less-developed east coast to southern Thailand and Kuala Lumpur, and two pipelines that cost more than $1bn apiece.

Malaysia Rail Link, the government company administering the East Coast Rail Link, and Suria Strategic Energy Resources, a body run by the finance ministry that oversees the two pipelines, yesterday sent letters to their respective project contractors — state-owned China Communication Construction Company and China Petroleum Pipeline Bureau — instructing the suspension of the contracts because of excessive costs, according to a senior ministry of finance official.