News: To Fulfil Election Promises, Govt Likely to Ease Infra Projects

May 17, 2018

Affin Hwang Investment Bank thinks the new Pakatan Harapan (PH) administration will defer or ease the implementation of major infrastructure projects to reduce government expenses so that it can fulfil its election promises to help the rakyat.

“We believe the new government will likely re-prioritise the implementation of projects to reduce the foreign borrowings and contingent liabilities from government-guaranteed bonds to be issued to finance infrastructure projects,” said the research house.

“Government revenue will be reduced from its plan to abolish goods and services tax (GST) while operating expenditure will increase to compensate concessionaires for its plan to abolish toll collection on highways gradually and introduce petrol subsidies to targeted groups.”

Among the infrastructure projects likely to be tweaked or staggered are the RM9 billion Gemas-Johor Bahru Electrified Double Tracking Rail (EDT), the RM45 billion Klang Valley Mass Rapid Transit Line 3 (MRT3), the RM55 billion East Coast Rail Link (ECRL), and RM60 billion Singapore-Kuala Lumpur High Speed Rail (HSR).

“Deferring the implementation of infrastructure projects to cap the federal government deficit during this period of adjustments in government policies,” noted Affin.

Nevertheless, ongoing projects like MRT2 that was awarded to a MMC Gamuda joint venture, LRT3 (MRCB-George Kent JV), and ECRL that was granted to China Communications Construction Co Ltd are likely to be unaffected as the new government needs to honour its contracts so that Malaysia’s global sovereign ratings won’t be downgraded.

“However, the implementation of the project could be staggered with reduced scope of works to reduce cost,” it said, adding that railway networks are expected to remain a priority for the new administration.

“The Port Klang-Kuantan Port stretch of ECRL and EDT will complete the East-West and North-South railway connectivity in Peninsular Malaysia, which we believe will proceed. The MRT3 Circle Line project will connect the lateral rail lines in Klang Valley, which is important to improve public transport ridership,” it added.
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