Governance, transparency key in infrastructure development

Graphic By TMR

MALAYSIA needs to establish a more robust process in identifying and prioritising infrastructure projects, as well as improving its governance and transparency of infrastructure development, according to Institute for Democracy and Economic Affairs (IDEAS) research and development director Laurence Todd.

He said the country needs to establish an independent needs assessment for the multiple projects Malaysia is currently pursuing as this would improve confidence that the country’s needs are being met, while protecting the interests of taxpayers.

“Some countries have established independent infrastructure commissions which assess the country’s need and present non-political recommendations.

“Malaysia needs to improve through tightening public procurement and increasing transparency of public sector involvement, including (involvements) by government-linked companies and government agencies.

“I think infrastructure development, such as fibre optic and roads, is generally more welcome than these large scale property developments, as far as government involvement is concerned,” he told The Malaysian Reserve in a phone interview.

Last Friday, Finance Minister Lim Guan Eng announced that RM56 billion has been set aside for development expenditure (DE) from a total of RM297 billion allocated in Budget 2020.

Hong Leong Investment Bank Bhd (HLIB) noted that the pre-emptive spending will be directed primarily for transport, energy and public utilities, as well as agriculture and rural development subsectors.

Out of the RM56 billion, RM53.5 billion is in the form of direct allocation mainly for accelerating the implementation of projects like Mass Rapid Transit Line 2, Klang Valley Double Track, Pan Borneo Highway, and maintenance of roads, bridges and highways, it noted.

“The increase in DE is also allocated for the rationalisation plan of Felda (Federal Land Development Autho- rity), Lembaga Tabung Haji and debt servicing commitment for SRC International Sdn Bhd,” HLIB said.

Below are several infrastructure developments announced in Budget 2020.

Bandar Malaysia: Revival of Mega Project
Cost-benefit analysis should be made public for all mega infrastructure projects, said Todd.

He believes that the revival of mega projects such as Bandar Malaysia will be a boost to the construction sector in the short term.

“However, given the government is involved in the development, it is crucial to demonstrate the long-term value for money, especially if there is any public financial liability,” he said.

In the Budget 2020 speech, Lim told that Bandar Malaysia will now include a Taman Rakyat (People’s Park), an additional 5,000 units of affordable homes and greater Bumiputera participation throughout the project.

The government intends to use proceeds from the project to reduce 1Malaysia Development Bhd’s debts.

The multibillion project was abruptly shelved in May 2017 after the purchasing parties failed to fulfil their payment obligations for the 486-acre (196.7ha) parcel of land in Sungai Besi, Kuala Lumpur.

Toll Acquisition
IDEAS further said the government’s decision to approve the acquisition of four Klang Valley highways is sensible.

“From an economic and financial perspective, the case for the government’s acquisition of the tolls is not strong. However, it was a key manifesto pledge. So from a democratic perspective, it is the right thing to do,” Todd said.

The Cabinet has approved the purchase of the Shah Alam Expressway, Damansara-Puchong Expressway, Sprint Expressway and SMART Tunnel to be funded with government-guaranteed borrowings.

The government has also agreed to reduce average toll charges by 18% across all PLUS highways next year.

Rural Roads Development
Sabah and Sarawak will be largest recipients with allocated DE of RM5.2 billion and RM4.4 billion respectively.

In Budget 2020, RM1 billion has been earmarked for major developmental on rural roads across the nation, primarily targeted in Sabah and Sarawak.

Sabah will be receiving RM326 million, while RM224 million is allocated to Sarawak.

The government will allocate RM587 million for water supply projects (with RM470 million being allocated to Sabah and Sarawak).

Another RM500 million is allocated to enhance electricity supply in rural areas.

The government also has granted RM600 million for the construction of 165km Pan Borneo Highway connecting Sabah and Sarawak to East Kalimantan, Indonesia.

Port Klang, RTS and Development Corridors
World Bank Group lead economist Richard Record said the government’s focus on connectivity and logistics will likely yield positive returns in an uncertain trade environment.

The government will allocate RM50 million for the repair and maintenance of roads leading to Port Klang’s infrastructure development.

Malaysia intends to proceed with the Rapid Transit System (RTS) between Johor Baru and Singapore.

It will also invest RM85 million beginning 2020 to ease congestion at the Causeway and Malaysia-Singapore Second Link by enhancing vehicle and traffic flow through the Customs, Immigration and Quarantine Complex.

Some RM 1.1 billion has been set aside for the five development corridors — namely Northern Corridor Implementing Authority (northern peninsula), East Coast Economic Region Development Council (eastern peninsula), Iskandar Regional Development Authority (southern peninsula), Regional Corridor Development Authority (Sarawak) and SP Setia Bhd (Sabah).