Revival of mega projects lacks clarity

An economist suggests delaying the resumption as priority changes with time according to circumstances


THE revival of a few mega projects in the country has raised some concerns on the cost it will incur the government’s coffer and its potential foreign influence.

Economist Tan Sri Dr Ramon Navaratnam (picture) believes now is not the right time for a high-cost project as the nation is still reeling from the pandemic effect.

“Perhaps, give it two more years. Don’t rush it. Priority changes with time according to circumstances. What’s more important now is to address serious problems, especially unemployment,” Ramon told The Malaysian Reserve (TMR) recently.

“We must have a good partnership between the government and the people. That’s what we are lacking,” he added, saying the government has once again failed to get public consultation and inform them before making such a big decision.

“The resumption of these projects lacks publicity and consultation. Many people don’t know much about this,” he said, referring to Mass Rapid Transit Line 3 (MRT3) and East Coast Rail Link (ECRL) projects.

Worse, Ramon said many would be mistaken that the revival of some projects, which has been linked to China, will translate to the republic’s dominance in Malaysia.

“I’m sure the government made the right decision, but they don’t explain the rationale, hence leading to confusion and reaction.

“The project must be mutually benefitting all the parties involved,” he said.

Meanwhile, another analyst Assoc Prof Dr Aimi Zulhazmi Abdul Rashid admitted that these projects will be a big booster to the construction industry, as well as the country’s economy that is in dire need for a catalyst for recovery.

“This positive sentiment is reflected in the rise of construction companies’ share prices across the board, especially those that are known to be involved in both mega projects.

However, he said it will be “interesting to look at the financing requirement of both projects, which have already started construction” with billions estimated.

While the ECRL financing will be from China as initially planned with revised terms, he opined that the MRT3 financing is unclear as the government may seek private finance initiative to cover the construction and development cost.

“The funding option may be explored by the government in view of the current high (fiscal) deficit to support the country’s predicament in the Covid-19-induced economic and health issues.

“This opens up a few possibilities for foreign funding to finance the MRT3 project,” he added.

Mass Rapid Transit Corp Sdn Bhd recently said it is considering a private funding option to finance some 10% to 30% of the total cost needed to develop the MRT3 project.

Its CEO Datuk Mohd Zarif Hashim said the initiative is a part of an effort to ease the government’s financial burden by leveraging a hybrid financing model with industry players.

He also noted that the tender offer for the MRT3 project is scheduled to be opened in August this year.

However, Sunway University Business School economist Prof Dr Yeah Kim Leng said contractors, vendors, suppliers and construction workers will benefit from increased activities associated with the project.

Since the ECRL project has already been signed and renegotiated with the Chinese firm, he believes greater focus and efforts need to be placed on attracting and spurring development projects along the rail corridor so that the spillover benefits can be maximised.

“Last year, the construction sector contracted by 19.4%, significantly greater than the 5.6% decline in the overall economy.

“So, the quicker the infrastructure projects are resumed, the stronger the impetus will be for the economic recovery, especially for the construction sector,” he told TMR.