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THE government is negotiating with China on how to resolve issues pertaining to the MultiProduct Pipeline (MPP) and Trans-Sabah Gas Pipeline (TSGP) projects.
Finance Minister Lim Guan Eng said experts from both countries were negotiating the matter. However, he said he could not disclose details due to the sensitive nature of the issue.
The projects saw contractors being paid RM8.3 billion, or 88 per cent of the total contract value of RM9.3 billion, although only 13 per cent of the projects had been completed.
“The RM8.3 billion (payment) is not only in terms of direct cash, but is also (in terms of borrowings) a guarantee (by the previous government through a 20-year loan) from Export-Import Bank of China. The whole contract is completely out of control.
“Where in the world do you have a contract paid based on a timeline basis?
“When I asked (former prime minister Datuk Seri) Najib (Razak) or Umno, they did not explain (the rationale of the payment method),” he said after officiating the insigHT2019 Medical Travel Market Intelligence Conference here yesterday.
On economist and former Council of Eminent Persons member Dr Jomo Kwame Sundaram’s suggestion that the East Coast Rail Link (ECRL) project be reviewed, Lim said he “did not disagree” with Jomo.
Jomo last week called for Putrajaya to consider cancelling the project after a witness in the 1Malaysia Development Bhd trial testified in court that the project was a possible bailout for the state-owned fund.
Prime Minister Tun Dr Mahathir Mohamad responded by saying that he was willing to follow Jomo’s suggestion only if the company involved with the construction renegotiate the deal and suspend the project.
Lim said the matter had to be handled tactfully given that it involved relations with China, which is Malaysia’s largest trading partner.
The Chinese government, he said, had agreed to scale down the ECRL project.
On April 12, Malaysia Rail Link Sdn Bhd and China Communications Construction Company Ltd signed a Supplementary Agreement to reduce the cost of the ECRL.
Under the new agreement, construction under Phases 1 and 2 of the ECRL will be resumed at RM44 billion, a reduction of RM21.5 billion from the original projection of RM65.5 billion.
“We renegotiated the project so that the price would be reduced and we don’t have to go court to talk about compensation. I think this is a win-win solution,” Lim said.
Meanwhile, Lim said the government would consider including Khazanah Research Institute’s (KRI) proposal for a more refined measure of income in the 12th Malaysia Plan, but not the 2020 Budget.
“It’s too late to include it in the 2020 Budget, which will be tabled on Oct 11, but we can consider it in the 12th Malaysia Plan.
“To change the B40 (income group) to B20 is quite a sensitive matter because some may feel neglected and such.
“But as the government has mentioned before, we are serious about reducing the people’s burden through the shared prosperity concept,” he said, adding that the proposal would have to be further scrutinised.
On Monday, KRI, in its latest discussion paper, “Demarcating Household: An Integrated Income and Consumption Analysis”, had espoused the need for a more refined measure of income as the B40 demarcation was a relative measure designed to monitor progress in addressing inequality and distributional concerns.
The report suggested that the government take into account income disparities in different locations and factor in household sizes to better compare living standards.