Not an austerity drive, just smarter spending: Guan Eng
KUALA LUMPUR: The government is not on an austerity drive, but it’s more of smarter spending amid the review of the MRT2 project, said Finance Minister Lim Guan Eng.
During a luncheon address at the Khazanah Megatrends Forum 2018 yesterday, he noted the government has adopted a wider application of open tender for government procurements and projects whereas previously, direct negotiations had led to overspending.
The MRT2 project will see a massive cut in cost of RM5.22 billion from the total cost of RM57 billion by rationalising the above ground portion of the project with no reduction in the number of stations for the underground segment.
“The RM5.22 billion savings represent 23% of the above ground portion of the cost. More savings will be gained when we re-tender out the underground segment soon and we will not be reducing the number of stations. Just from rationalising and implementing open tenders, we can expect more savings,” Lim explained.
The MRT2 project, also known as the Sungai Buloh-SerdangPutrajaya (SSP) line, has a total of 35 stations, comprising 24 elevated stations and 11 underground stations.
Although the government is more selective in making public investments, Lim stressed that it will still spend on key areas of priority that require spending, especially when it leads to long-term sustainable growth that will improve the well being of the rakyat.
“We are currently reviewing a large number of concessions and projects under the public private partnership scheme. At the moment, 44 of them have been approved to proceed on the condition that it goes through strict vetting procedures, among others, benchmarked against international practices,” he said.
“Whilst we are reviewing more PPP projects, we do not intend to cancel them but to change the format and the mechanism to implement them such as no more direct negotiations, which will be replaced by competitive open tenders,” he added.
On the economy, Lim expects the Malaysian current account to remain in surplus this year and is unlikely to suffer from twin deficit, despite concerns about the weak secondquarter current account surplus of RM3.9 billion and low August 2018 trade balance of RM1.6 billion.
He said the low surpluses were largely due to the tax holiday period after the abolition of the goods and services tax, which in turn, encouraged imports.
Meanwhile, he said the corporate sector has the capacity on its balance sheets to invest and pursue growth. Malaysian corporate debt, among the listed companies, is merely 20% of GDP.
“We need all of you to invest and strive for an earnings growth higher than the 6.8% achieved by FBMKLCI companies last year. I know there are headwinds but the corporate sector has a prominent role in helping to keep the economy going,” Lim said.