Friday 29 Mar 2024
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This article first appeared in The Edge Financial Daily on May 31, 2018

KUALA LUMPUR: The Pakatan Harapan government is scrapping the third mass rapid transit line (MRT3) project, estimated to cost up to RM40 billion, in a bid to control the country’s debt load in excess of RM1 trillion, according to Prime Minister Tun Dr Mahathir Mohamad.

“The MRT3 project will be discontinued,” Dr Mahathir, 92, told reporters after chairing the second weekly cabinet meeting yesterday.

This follows the decision to abort the RM110 billion, 350km Kuala Lumpur-Singapore high-speed rail (HSR) project last week, which Dr Mahathir said was “unnecessary and will not earn the country a single sen”.

“We are not only looking at the HSR but also other megaprojects which will cost billions of ringgit. If this country is to avoid bankruptcy, we must learn to manage our big debts and one way is to do away with projects that are not beneficial to the country,” the prime minister added.

MRT3 is the final alignment of the MRT series of urban rail networks, intended to link with the completed MRT1, running from Sungai Buloh to Kajang, and the ongoing construction of MRT2, from Sungai Buloh to Putrajaya.

Under Budget 2018, the construction of the MRT3 had been moved forward to 2025, two years ahead of the original 2027 schedule.

The project was said to span a total of 40km and will cover hotspots in the city centre including Ampang Jaya, Kuala Lumpur City Centre, Bukit Bintang, Tun Razak Exchange, Bandar Malaysia, Bangsar, Pusat Bandar Damansara, Mont Kiara and Sentul.

On the 600km-long East Coast Rail Link, another mega infrastructure train network project involving RM55 billion that will be built by China Railway Construction Corp and financed via a loan from The Export–Import Bank of China Ltd, Dr Mahathir said: “The project has not been cancelled as yet. We are still studying this matter.”

“We need to ensure the country’s financial position is carefully managed. The government has to ensure it reduces the administration cost, and wastages,” he added.

On whether the government will scrap the Bandar Malaysia development project owned by 1Malaysia Development Bhd, which had been taken over by the finance ministry, Dr Mahathir said, “We did not discuss it during the cabinet meeting, but the finance ministry will provide an update and status of that project.”

Separately, Dr Mahathir said civil servants on pay grade 41 and below can look forward to a cash bonus of RM400 in conjunction with the upcoming Hari Raya Aidilfitri celebrations.

He added that retired civil servants will receive a cash bonus of RM200.

The cash handout or special assistance programme is an annual bonus payment that the government declares to the civil servants, ahead of the festive season to mark the end of Ramadan.

“We have strengthened the government’s financial footing and we will be paying special assistance [bonus] of RM400 to civil servants on grade 41 and below, and RM200 for retired civil servants,” the nonagenarian prime minister said.

However, this year’s cash bonus is less than what the Congress of Unions of Employees in the Public and Civil Services had requested for, which was at least RM500 and above.

Last year, the government, under former prime minister Datuk Seri Najib Razak, declared a bonus payment of RM1,500, which will be paid in two instalments.

Meanwhile, Dr Mahathir said the government will introduce a special assistance programme known as “Bantuan Sara Hidup” to help the rakyat cope with the rising cost of living.

Asked if the new assistance programme replaces Bantuan Rakyat 1Malaysia (BR1M), a cash handout initiative by the previous Barisan Nasional government, he said: “I don’t know what is BR1M.”

Dr Mahathir also said the government is expected to appoint several more ministers before it can fix the date for the next parliament session.

On Pakatan Harapan’s timeline to implement its election manifesto, Dr Mahathir said it may need more than 100 days as “things are worse than what the government had expected”.

“The 100-day promises will be delivered. But we must also consider the country’s finances so it will not affect the government administration,” he added.

For Bursa Malaysia, shares in construction-related counters such as Malaysian Resources Corp Bhd (MRCB), Gamuda Bhd, HSS Engineers Bhd and YTL Corp Bhd dropped between 8% and 34% yesterday, shortly after the government announced the abolishment of MRT3 and HSR.

MRCB and Gamuda are both one of the two consortia appointed as project delivery partners for the HSR project. Another consortium is a joint venture between YTL, via Syarikat Pembenaan Yeoh Tiong Lay Sdn Bhd, and TH Properties Sdn Bhd.

YTL shares fell 8.82% yesterday, while MRCB and Gamuda lost 16.79% and 23% respectively. With the declines, these companies lost RM2.87 billion in market value.

Gamuda had been widely speculated to be the best proxy for the MRT3 project, as it has a proven track record in providing tunnelling and boring services. Most of the MRT3 projects are expected to be underground and thus require drilling jobs.

Meanwhile, HSS, which secured an RM18 million HSR consultancy job in April 2017, recorded a steep 30 sen or 34% decline yesterday. HSS, specialising in railway engineering, was also said to be keen in eyeing for MRT3 job.

 

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