Govt working to ensure repayment of borrowings, reduction of spending
By ALIFAH ZAINUDDIN / Pic By BERNAMA
Prime Minister (PM) Tun Dr Mahathir Mohamad said the government may take another look at several large projects that are being shelved to reduce the country’s financial burden of the country.
Dr Mahathir, who had put the national debt higher than stated by the previous administration, said the government will reconsider some of these projects when the country achieves better financial position.
“What we are doing now is to ensure that these borrowings can be handled, government spending is reduced and we will achieve a budget that will not show a very big deficit,” he said in Putrajaya yesterday.
The government cancelled the first mega project initiated under the previous administration on Tuesday — the high-speed rail (HSR) connecting Kuala Lumpur and Singapore — a RM110 billion joint project with the city-state.
The present government is trying to cut down its obligations after announcing that the national debt was RM1 trillion, considerably higher than the previous government’s figure of RM686.7 billion.
Other multibillion ringgit projects still under review include the East Coast Rail Link (ECRL) and the Bandar Malaysia project. In March, it was estimated that the RM55 billion ECRL had reached a progress rate of 13% and is expected to be completed in June 2024.
“Definitely,” Dr Mahathir said in response to a question on whether the government will reconsider mega projects. The HSR deal, agreed by the previous federal administration in December 2016, was designed to speed passengers between the two cities in 90 minutes when it is completed in 2026.
The train route was meant to host eight stations — seven in Malaysia and one in Jurong East, Singapore — with 335km of the line located in Malaysia and another 15km in Singapore. It was estimated that 22 million people will ride the line by 2036.
Dr Mahathir said despite the government’s withdrawal from the project, discussions between Malaysia and Singapore will be held to provide greater clarity on the matter.
“We will listen to them. They are our good partners.” The PM had previously said that Malaysia may have to pay a penalty of 500 million for cancelling the project, but he was unsure if the amount was in ringgit or Singapore dollars.
“I have yet to verify the denomination, but I suppose it will be in ringgit,” he said earlier this week.
Apart from the HSR cancellation, Dr Mahathir also said the government has agreed to cancel another railway initiative, the third mass rapid transit (MRT3) project.
In a tender notice released in November, MRT Corp said MRT3 is expected to span 40km, st retching 30km underground with a total of 26 stations. CIMB Equities Research had in September forecast the project would cost between RM35 billion and RM40 billion.
“The MRT3 project will be discontinued,” Dr Mahathir said.
The country’s mega projects, along with the 1Malaysia Development Bhd (1MDB) scandal, have been cited as one of the main contributors to its staggering RM1 trillion debt.
Dr Mahathir said the overall debt figure was higher than what was disclosed under the previous administration because the state had given credit guarantees to companies such as 1MDB.
Malaysians have since rallied to set up a fundraising campaign towards reducing the nation’s debt.
In response to the initiative, Dr Mahathir said the government, via the Ministry of Finance (MoF), will establish a special trust fund called Tabung Harapan Malaysia to collect all donations.
“Due to the fiscal position of the country, many of the rakyat have come out to declare their willingness to donate to the government.
“We welcome their patriotic spirit and we thank them for their determination. This fund will ensure that the donations will reach the responsible authorities,” he said.
In a separate statement by the MoF, Minister Lim Guan Eng said all donations and contributions are restricted to cash denomination in the local currency.
All contributions shall be deposited into Malayan Banking Bhd, account number 5660 1062 6452.
Dr Mahathir also announced the reintroduction of the Sales and Services Tax (SST) effective September 2018. The SST will replace the zero-rated Goods and Services Tax that will take place beginning tomorrow, to make up for the shortfall in government revenue.
The PM said retail fuel prices for diesel and RON95 will remain at their respective current rates of RM2.18 and RM2.20. The price of RON97 will be floated and subjected to global oil price fluctuation.