Mahathir's alliance won a stunning victory in May 9 elections to end scandal-tainted former leader Najib Razak and his long-ruling coalition.
The government is scrapping the third mass rapid transit line (MRT3) project, which is estimated to cost up to RM40 billion to build, Prime Minister Tun Dr Mahathir Mohamad said today.
Najib said the decision to undertake the project was based on a detailed study, carried out for years, by both Malaysia and Singapore that proved to be advantageous to both countries socially and economically.
"We welcome their patriotic stand".
Malaysia launched a challenge to that ruling a year ago but Singapore's foreign ministry said Wednesday it had been withdrawn by Kuala Lumpur.
Dr Mahathir said the account number for the channelling of the donations would be announced soon.
"Due to the recent economic development and the growing concern among the rakyat [people] on the country's current debt position, there are signs of awareness from the rakyat to lend their support to the Government", the finance ministry said in a statement.
"As a long-term honest friend and important partner to Malaysia, China is looking forward to working with the new Malaysian government to advance China-Malaysia pragmatic cooperation in the spirit of equality and mutual trust, and to secure mutual benefits and win-win results".
"This time, we are doing it".
"We have entered into an agreement with Singapore".
Yesterday, in a bid to bring the country's debt under control, Mahathir confirmed plans to terminate the Kuala Lumpur-Singapore High-Speed Rail project initiated by the previous government.
Najib also expressed his disappointment at Dr Mahathir who he claimed had failed to see the benefits beyond ticket sales.
The huge debt is partly due to a massive corruption scandal at the 1MDB state investment fund set up by Najib that led voters to abandon him, and sparked investigations in the USA and several other countries.
The new government has said Najib - now being investigated over his role in the 1MDB financial scandal - had over leveraged the country by committing to too many infrastructure projects at the same time.
While Mr Mahathir's Government has made it a priority to get a handle on debts - pledging to axe some Government agencies and cut ministers' salaries - it is also withdrawing a goods and services tax this week which will hurt Government revenues.