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The restart of the mega projects


Today marks a year since the Pakatan Harapan alliance swept to power, gaining a majority of seats to capture Putrajaya and dethrone Barisan Nasional after 60 years of a single party rule.

Many decisions had been made, ranging from social, to the rakyat’s welfare, to business and economy. Critics of the government had also found their footing, denouncing the former Opposition alliance for failed election promises.

But one of the promises which the current Opposition can’t deny is the comprehensive review of all mega projects that have been awarded to foreign countries.

The new government, saddled with ballooning debt and erratic revenue sources, has suspended, reviewed and reduced the cost of approved and ongoing mega projects.

Unnecessary mega projects had been deferred, suspended or cancelled altogether.

The country’s outstanding debt of over RM1 trillion, including contingent liabilities and government guarantees which had gone south, had forced the new administration to employ deeper cuts.

The Malaysian Reserve revisits some of the biggest mega projects and their affairs, as well as developments that have occured over the past year.

Bandar Malaysia

A mega project which recently had been given the green light to restart is Bandar Malaysia — a massive infrastructure project on a 197ha site of the former Sungai Besi military airport.

The Bandar Malaysia project, which was announced by Datuk Seri Mohd Najib Razak in 2011, is about 3km away from the Tun Razak Exchange project, also a massive development in the city centre.

The government had decided to reinstate the project worth RM140 billion in expected gross development value based on the agreement terminated in May 2017, with a few modifications.

The project will now consist of a people’s park, 10,000 units of affordable homes, higher participation of Bumiputera contractors and priority for local content in the construction process.

It was planned to house the main hub for the eight-station Kuala Lumpur- Singapore high-speed rail (HSR).

However, Tun Dr Mahathir Mohamad had deferred the HSR project due to its high development cost.

In December 2015, a consortium between Iskandar Waterfront Holdings Sdn Bhd and China Railway Engineering Corp Sdn Bhd (IWHCREC) had managed to obtain a 60% stake in the Bandar Malaysia project.

However, the deal was called off after claims that the consortium had failed to meet payment obligations.

The Pakatan Harapan government, however, had decided that the IWHCREC consortium would be maintained as the project’s master developer.

East Coast Rail Link

The government had also suspended and restarted the controversial East Coast Rail Link (ECRL).

The project has been restarted after project owner Malaysia Rail Link Sdn Bhd and China Communications Construction Co Ltd signed a supplementary agreement.

The new agreement will see the cost of the project dropped to RM44 billion, 32.8% lower than the initial RM65.5 billion estimate for the project.

Intervention of Tun Daim Zainuddin in the renegotiation process had helped to bring the hefty project to realisation. It is expected that Malaysia would have to bear a cost of RM20 billion if it decides to cancel the project, a financial woe that Putrajaya does not want to shoulder.

The initial 688km ECRL project, which was suspended in July last year, would cost an earth-shattering RM80.92 billion, forcing the new government to abandon all earlier arrangements.

There were also reports that alleged the original RM55 billion cost for the ECRL was inflated to help finance 1Malaysia Development Bhd’s debt obligations.

Mass Rapid Transit Line 3

First thought to be scrapped, but now pending a government review, is the Mass Rapid Transit Line 3 (MRT3) project which is aimed at facilitating improved connectivity in the busy and densely populated Klang Valley region.

Expected to cost almost RM50 billion to construct, the 40km public rail line will be part of the overall MRT structure, which consists of MRT1 from Sungai Buloh to Kajang and MRT2 from Sungai Buloh, to Serdang, to Putrajaya.

Dr Mahathir first announced on May 30 this year that the MRT3 project was to be cancelled, but it has now been deferred to determine the overall cost.

Transport Minister Anthony Loke during a parliamentary session last year said the project was deferred to accommodate an evaluation by the government.

Loke also said the decision to defer the infrastructure project was made by the Cabinet, after looking at the country’s financial position. He also acknowledged the potential benefits of the MRT3 project, but said the financial burden needs to be further evaluated.

Earlier this week, interest on MRT3 suddenly gained traction following speculations that the shelved project could be revived at half its original cost. This comes after a local business weekly magazine, quoting sources, said negotiations are ongoing towards it.



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