Reopen question on ECRL project

The ECRL project would be underutilised and heavily subsidised, which will force future generations to bear the cost


THE government has the opportunity to revisit its decision on the East Coast Rail Link (ECRL) project and ensure that the money raised via second Samurai bond issuance is put to good use, said economist Prof Dr Jomo Kwame Sundaram (picture; left).

“I think we now have a huge opportunity to reopen the whole question. I do believe this is the time when we should not commit (by) ourselves. It is not a trivial amount.

“I am sure China’s President Xi Jinping will not want to be associated with any type of corruption, which indirectly will tarnish the reputation of Belt Road Initiatives,” he said after a public forum held by the Institute for Democracy and Economic Affairs (IDEAS) in Kuala Lumpur yesterday.

“All of my position (against ECRL) in the past is based on public information,” he said, stressing the testimony of 1Malaysia Development Bhd’s key witness, Datuk Amhari Efendi Nazaruddin on ECRL, should initiate for more reviews on the matter.

The economist also claimed that the ECRL project would be underutilised and heavily subsidised, which will force future generations to bear the cost.

“I am optimistic that Malaysia will approach the Chinese government with this new information which is now publicly available,” he added.

The multibillion ECRL project is now estimated to be at RM44 billion, much lower than the previous RM66 billion price tag after a series of negotiations with China.

Meanwhile, on the issuance of second Samurai bond, Jomo highlighted that Japan historically is well known for offering low interest-rate loans.

“Borrowing from Japan may be the best choice now, but we need to ask ourselves — what are we borrowing for? We should also be very pragmatic on other alternative (funding) resources and choose wisely,” he said.

Malaysia issued the first Samurai bond in March this year, worth ¥200 billion (RM7.77 billion) with an interest rate of 0.63% and 10-year maturity period.

Early this month, Prime Minister Tun Dr Mahathir Mohamad said Japan has offered an interest rate of 0.5% for the second bond issuance and the amount raised would be higher than the first issuance.

Separately, Jomo believes Malaysia has a vast potential and opportunity to promote renewable energy (RE) such as photovoltaic solar panels and palm oil-based biodiesel.

He added that a strong political will is needed to indicate the government’s seriousness in utilising RE production.

“Currently, Malaysia is the single- largest source of imported solar panels to the US. “In Europe, cars are running on biodiesel, and here in Malaysia, we are debating about whether or not we can go further. The political will has to be there. We have to make a determined switch to promoting palm oil-based biodiesel,” he said.

Early this month, Energy, Science, Technology, Environment and Climate Change Minister Yeo Bee Yin highlighted that Malaysia needs a total investment of RM33 billion in order to achieve its target of 20% electricity generation from RE sources by 2025.

To date, the government has launched several initiatives to incentivise the growth of RE via Green Technology Financing Scheme, Green Investment Tax Allowance and Green Income Tax Exemption.

On the upcoming budget, IDEAS has proposed several wish lists for the upcoming Budget 2020, including the introduction of capital gain tax and gradual government-linked companies’ stake divestment by the government.

“This high government presence creates concerns over competition and the lack of liquidity in Malaysia’s capital markets,” said IDEAS research and development director Laurence Todd.

Other suggestions include employee equity scheme and new living wage tax incentives, under which employers are incentivised — but not required — to increase wages up to a new monthly living wage of RM2,500 per employee.