It is due to the absence of key personnel in the Cabinet, particularly the transport and finance portfolios
by NUR HANANI AZMAN/ pic by TMR FILE
THE LOOMING political uncertainties in the country might result in administrative hurdles that could halt quite a number of important projects.
OCBC Bank economist Wellian Wiranto (picture) said some infrastructure projects might also be put on hold with the absence of key personnel in the Cabinet, particularly the transport and finance portfolios.
He said big projects such as the Kuala Lumpur (KL)-Singapore high-speed rail (HSR) project, which the previous administration has yet to decide on, would be among the casualties as everyone seems to be more focused on more pressing administrative issues.
“There is also the potential fiscal consideration to think about. Given the slower growth outlook, keeping the deficit at a controlled level as a proportion of GDP would be even harder now than before.
“Within the expenditure portion, there is probably going to be more pressure to spend precious resources on the immediate needs of relief measures for sectors hit by the virus, for instance, rather than to focus on the medium-term projects,” Wellian told The Malaysian Reserve (TMR).
As it is, there is no clear direction to where Malaysian politics are heading, prolonging the atmosphere of uncertainty in a nation of more than 30 million people. According to Fitch Solutions, the political situation in Malaysia is fluid and the current political turmoil will undermine short-term investors’ confidence, including participants in the Malaysian construction sector.
The projects that most likely be stalled are those that involved key policymakers including former Transport Minister Anthony Loke, former Economic Affairs Minister Datuk Seri Mohamed Azmin Ali and former Finance Minister Lim Guan Eng.
Each of them played an instrumental role in the shaping of Malaysia’s infrastructure policies throughout Tun Dr Mahathir Mohamad’s recent term as the prime minister.
Fitch Solution said the country’s infrastructure development plans could once again be impacted, depending on the political developments in the coming days and weeks.
“There is a possibility for the reappointment of some of these ministers in the next Cabinet, but we note that infrastructure policy could ultimately be altered, either for the better or the worse for the sector.
“The current situation, in our opinion, does not bode well for short-term growth prospects of the overall construction industry, as once again, investors, especially those of foreign origin, will likely put a hold to investment plans and wait out for more clarity on the political situation in the country,” a statement by Fitch Solution read.
Fitch Solution added that the fate of suspended infrastructure projects, such as the KL-Singapore HSR project and the Mass Rapid Transit (MRT) Line 3 Circle Line project, continue to hang in the balance, with fresh political uncertainty injected into the mix just as more clarity on these projects had begun to emerge.
Meanwhile, the Malaysian Institute of Economic Research ED Prof Emeritus Datuk Dr Zakariah Abdul Rashid said that if the conundrum is shortened, there is still hope for all the mega projects which are mainly long-term commitments.
“I suppose we just have to wait and see how the situation evolves. The new government may have a different stance on the projects which have long-term legal implications,” he told TMR.
An analyst who did not want to be named conceded that the current political situation will also affect confidence surrounding such projects, although the major ones like MRT, Light Rail Transit, highways and East Coast Rail Link would proceed as planned.
“Regardless of who the new ministers are, on top of the Covid-19 issue, the projects would be necessary as an indirect economic stimulus,” the analyst told TMR.
One such project that could be affected is the Pulau Carey port, which is currently being assessed by a third party.
MIDF Amanah Investment Bank Bhd analyst Adam Mohamed Rahim said as of now, no status updates have been provided regarding the feasibility study.
“Since this is a long-term project and currently in the preliminary studies stage, the Pulau Carey project may be put on hold to give way to other projects that are in the negotiation stage or at least in the finalisation process including environmental impact assessment,” he told TMR.