‘Govt to pay billions if ECRL project cancelled’

KUALA LUMPUR: Billions of ringgit in compensation would have to be paid to the East Coast Rail Link (ECRL) contractor if the project is cancelled.

Responding to Parti Pribumi Bersatu Malaysia chairman Tun Dr Mahathir Mohamad’s proposal to scrap the ECRL if the opposition pact wins the election, economic analyst Professor Dr Wan Mansor Wan Mahmood said it would be a risk borne by the Federal Government if it chose to end the project.

Dr Mahathir made the statement during a live video, Basic Talk: Administration and Economy, which was streamed on Facebook yesterday.

“If the project fails, the government will have to pay billions of ringgit in compensation to the contractor. The project has terms and agreements between two parties.

“If one party pulls out, there has to be compensation. The government will have to spend a lot of money. It depends on the clause in the agreement,” he said yesterday.

Wan Mansor. who is also a committee member of the Economic Cluster and National Professors Council (MPN) said, Dr Mahathir’s opinion that such a project was “non-viable and unprofitable” was vague.

He said prior to the execution of a mega project, the government would have carried out an in-depth study and evaluated the economic impact to the state and the areas serviced by ECRL.

On another proposal by the opposition party to abolish the Goods and Services (GST) by implementing the sales tax, Wan Mansor said it would cause an annual loss of RM15 billion to the government.

He said the loss of revenue due to the drop in oil prices would be covered by the GST collection.

“Through GST, the government can collect RM40 billion in revenue, but if we revert to sales tax, the government will only collect RM15 billion,” he said.