Several Penang assemblypersons have raised concerns over a law which authorises the state government to borrow money from any bank to fund the Penang Transport Master Plan.
The law, dubbed the Loan (Bank and Other Financial Source) Enactment 2017, was passed by the state legislative assembly today.
But state reps questioned if the all compassing nature of the law would result in the state executive council “encroaching” on the power of the legislature.
Cheah Kah Peng (PKR-Kebun Bunga), Lee Khai Loon (PKR-Machang Bubok), Norlela Ariffin (PKR-Penanti), Teh Yee Cheu (DAP-Tanjung Bungah) and Lydia Ong (DAP-Berapit) questioned Section 3(2) of the Enactment which states “Any loan made by the state shall as soon as possible, be notified to the state legislative assembly”.
Cheah said any decision by the executive council to borrow money should be made at the state legislative assembly, instead of merely notifying the assemblypersons when the money has been loaned.
“How much money are we planning to borrow? Is it one sum or various sums? And for what purpose are we borrowing the money?” Cheah asked.
“An all-encompassing, open bill, allows a bad government - not this government - like Greece, to collapse due to too much borrowing; eventually, the people have to pay for it,” he added.
‘What is the point of state exco?’
Deputy Chief Minister II P Ramasamy (DAP-Prai) rebutted, saying that the question of the executive encroaching into the legislative does not arise as the assemblypersons will be notified of the exco’s decisions.
“What is the point of the state executive council if we cannot make decisions such as this? We will do that (bring to legislative) when we need to pass or amend the law,” he added.
State executive councillor Chow Kon Yeow (DAP-Padang Kota Lama) said that there are several restrictions imposed on the loan facility, for example, requiring the state to repay the loan in five years.
“The other limitation is that the federal government need to be the guarantor, we have to persuade and convince them to be the guarantor.
“If we borrow trillions of ringgit, would the federal government agree?
“The bank will ask us if we have our national government blessing before loaning us the money.” asked Chow, who is DAP state chief.
In tabling the bill, Chief Minister Lim Guan Eng (DAP-Air Putih) said the Enactment is to allow the state to borrow money from the Export Import Bank of China (China Exim) to develop the RM27 billion Penang Transport Master Plan (PTMP).
This follows a memorandum of understanding (MOU) signed between the Penang government and China Exim on Dec 16, 2014, to loans from the bank for the purpose, he noted.
The Enactment was necessary based on recommendations by Prime Minister Najib Abdul Razak, who stated in a letter dated May 31 last year, that if Penang wanted to take a loan from China Exim, several requirements in the Federal Constitution have to be complied with.
Penang triple-A rating
“This is not a frivolous loan, it is to develop the PTMP,” said the DAP secretary-general.
“We should feel honoured that Exim is interested in loaning us the money as it showed that the state government’s financial standing was good,” added the DAP lawmaker.
He added that China Exim’s interest in Penang is a kind of recognition as the bank sees the state as having a triple-A rating performance.
Borrowing from a national financial institution, Lim stressed, would incur lower interest costs compared to borrowing from commercial banks, saying the move would save “Millions even if the interest is just one percent”.
At this point, state opposition leader Jahara Hamid (BN-Telok Ayer Tawar) said the rating does not mean Penang has the capacity to repay the loan. Other than Jahara, other BN reps did not participate in the debate.
Under the Enactment, the money borrowed together with all the interest and other expenses shall be charged on the State Consolidated Fund.
Lim said the loan made under the Enactment shall not exceed five years.
Lim also reported that up to March 31, 2017, Penang’s loan status from the federal government stands at RM64.49 million.
Compared to Pahang, which has the highest loan of RM3.1 billion, Sabah RM2.8 billion, Sarawak RM2.5 billion, and Kedah RM2.7 billion, Penang is “in a good position”, Lim added.- Mkini
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