Bye bye HSR?
HSR, Rapid likely to be delayed: Analyst
Posted on 30 August 2013 - 05:39am
Eva Yeong
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Jala at the ETP mid-year briefing yesterday
KUALA LUMPUR (Aug 30, 2013): The government, which has announced that it will review and sequence its planned public sector projects to avoid straining the budget, is likely to reschedule the high-speed rail (HSR) link between Malaysia and Singapore and the Refinery and Petrochemical Integrated Development (Rapid) project in Pengerang, Johor, said an analyst.
"The second and third lines of the mass rapid transit (MRT) are likely to proceed because most of the tunnel boring machines, which are big import cost items, have already been brought in. However, the HSR and Rapid projects remain a big question mark," Etiqa Insurance & Takaful head of research Chris Eng told SunBiz yesterday.
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We also don't need the HSR link as much as we need the MRT," he said, adding that the high cost of the MRT project is an indicator that it will continue as planned.
Petroliam Nasional Bhd had also announced last month that the Rapid refinery will be ready for start-up in the fourth quarter of 2017. The project has been delayed twice, from late 2016 to early 2017, and now to end 2017.
Eng said the government's main concerns are that contingent liabilities may rise and of the country's shrinking current account surplus.
Earlier, at the Economic Transformation Programme (ETP) mid-year briefing, Finance Ministry secretary-general to the Treasury, Tan Sri Dr Mohd Irwan Serigar Abdullah, said the government will sequence large public projects to address the current account balance, which has shrunk to almost RM2.6 billion in the second quarter of this year.
"Of course, the MRT project is not involved, it will go on. We are still analysing the projects that will be sequenced and a statement will be made by the prime minister. The fiscal policy committee (FPC) will meet again on Monday," said Irwan yesterday.
He said the government is identifying projects with low multiplier effects and high import content to be sequenced, not stopped completely, while projects with high multiplier effects and low import content will go on.
"These are all projects with heavy public sector involvement. Private sector projects will go ahead…it won't disrupt economic growth and we don't want to shock the economy," he added.
Irwan said the sequencing of some projects will not delay the government in achieving its target of becoming a high income nation by 2020 because projects with high multiplier effects will continue to be implemented.
He said with the various measures combined, including the introduction of the goods and services tax, subsidy rationalisation and other programmes to boost the economy, it could possibly achieve developed nation status earlier by 2018.
Performance Management and Delivery Unit (Pemandu) CEO Datuk Seri Idris Jala (pix) said the key to avoid a knee-jerk reaction towards the sequencing of large public projects is monitoring the situation, which is being done by the central bank.
"Bank Negara Malaysia (BNM) is monitoring the situation, they are looking at the issue with regards to the devaluation of the currency," he said.
He said the sequencing of public projects will also mitigate some of the problems related to the weakening ringgit while ensuring economic growth.
"We have to be very careful, make sure there is no knee-jerk reaction. We still need to grow. We have to take the growth component and be worried about capital flight but monitoring is key. How much do we intervene? BNM is good at this. The governor has clearly given us the confidence that they have the capability," he added.
On the HSR, Jala said both Malaysia and Singapore have agreed to the project and expressed desire to proceed.
On Malaysia's side, commercial evaluation has been completed while technical evaluation is almost done.
He said the details of the project such as equity stakes, whether it will be 100% government-owned or private sector-led are part of ongoing discussions.