KUALA LUMPUR: There are plenty of infrastructure projects in the pipeline that will be introduced by the government in the near future, says Tony Pua (pic), the political secretary to the Finance Minister.
However, without giving further details, he said, those projects would only be announced after studies can prove they are technically feasible and economically justifiable.
“There will be plenty more infrastructure projects that the government is looking at currently,” Pua said during a panel discussion at the RAM-SIDC Bond Conference here yesterday.
Themed Fresh Perspectives: Engineering the Future of the Malaysian Bond & Sukuk Market, the one-day conference was joined by regulators, researchers, bankers and financiers.
Pua noted that the government’s position on infrastructure has always been “it needs to be built”.
“And the new government’s position is that it should be value for money so that it can generate the maximum possible returns for taxpayers’ funds, as well as maximum multiplier on the economy,” he stressed.
According to Pua, the freezing, suspension and even potential cancellation of major infrastructure projects over the past one year “had less to do with the (new) government not wanting to build infrastructure projects, but more to do with the overly inflated cost of infrastructure in Malaysia”.
And this was evidenced by the fact that through successful negotiations of many contracts, which resulted in very minor correction on the actual infrastructure itself, but major cost savings, such as the 47% cost reduction for the light rail transit 3; 23% savings for the mass rapid transit (MRT) 2; and about one-third reduction in the cost of building the East Coast Rail Link project.
“My understanding is that there are a lot of projects being analysed at this point in time,” Pua said.
He explained that one of the key reasons for the slight delay (if any) was that the government, now led by Pakatan Harapan, wanted to do it the right way by getting the feasibility sorted out before any announcement was made.
This, he noted, was in contrast to the past government’s way of first announcing a project and executing it, and then only dealing with the feasibility studies at a later stage.
“One good example would be the MRT project. In the past, when the government wanted to build the MRT, they would get someone to propose the project and then give the contract to the developers to manage it that was how it was before,” Pua said
“This time around, we want to get the consultants in, measure the most optimal alignment, where it would cost the least for the government, then only pass it out for developers to do the system. That’s the best way to get value for money for the government, and that’s how it’s done in countries like Singapore and Hong Kong,” he added.
Pua said the government would continue to leverage on private capital to help in financing infrastructure projects.
He pointed out that the government would revise the structure of the public private partnership (PPP) to ensure that risks are proportionately shared between the public and private sectors. This would be in contrast to the existing PPP model, which had been “cleverly structured” by some bankers, resulting in the government effectively bearing about 90% of all the risks.
On the proposed airport real estate investment trust (REIT), Pua said the instrument could only be implemented after a new operating agreement (OA) is signed, as otherwise, it would not be able to provide any certainty to investors of the REIT.
“The OA is also tied to the new regulated-asset base framework for which the final consultation paper was published last month only after these have been sorted out can we move forward with the REIT model (for Malaysian airports),” he explained.