ECONOMISTS SEEK MORE DETAILS ON ‘RM 10b’ ECRL PROJECT
Information on financial feasibility, technical capacity needed to justify contract proposals, say economists
THE supposedly RM10 billion quotation to Putrajaya to undertake the East Coast Rail Link (ECRL) project has raised eyebrows of some economists and market observers.
They said the government should disclose the details, including financial feasibility and technical capacity, to justify the contract proposals.
“It is difficult for us (rakyat) to define. We must see the facts and figures of the contract proposals,” Asian Strategy & Leadership Institute’s Centre of Public Policy Studies chairman Tan Sri Ramon V. Navaratnam told NST Business in a telephone interview recently.
He said the government should provide details from financially and technically competent consultants so that the public would be well-informed of project.
The government had initially said it could not afford to proceed with the ECRL, a RM81 billion project spanning 688km that was to link Port Klang and Kota Baru, which was launched last year and slated for completion in 2024.
However, Prime Minister Tun Dr Mahathir Mohamad recently said studies were still being carried out whether to defer the China-backed project or deal with it in some other way.
He said the government had received offers from local and Chinese companies to undertake the project for as low as RM10 billion.
Dr Mahathir said cheaper alternatives would be taken into account, adding that it would be foolish to ignore them.
Ramon said the Chinese authorities understood Malaysia’s situation, particularly the fiscal condition.
“If the proposal can be shown to them (Chinese authorities) that there is such a big difference of cost, I’m sure the Chinese may want to enter into a joint enterprise.
“They have to look after their own reputation and cannot leave the impression that they are over-charging.
“The ideal way is to have a jointventure between China and Malaysia, where the price is proven to be fair and reasonable as well as the technical quality is unquestionable,” he said.
Inter-Pacific Research head of research Pong Teng Siew said it was not viable for Malaysia to proceed with the initial plan for the ECRL.
“RM10 billion seems a more reasonable figure because it will require much lower cost to be viable. However, I think the figure does not include financing cost. Perhaps it may be from a few players who may want to offer this package,” he said.
Pong said Malaysia must carefully review the compensation for cancelling the original project agreement.
“ECRL can be financially viable and it could be a net benefit to the Malaysian economy and society as a whole.
“There are spillover effects and this goes beyond the realm of finance. Benefits flowing from this development can be sprung up along the railway lines,” he said, adding that the government normally looked at the social benefits and cost analysis.