BN: Mahathir’s KLIA yen loans cost us more in the end

Barisan Nasional says ECRL loan is protected from forex risks unlike the yen loans for KLIA.

PETALING JAYA: Barisan Nasional has countered opposition criticisms about the East Coast Rail Link project by pointing out that Kuala Lumpur International Airport, started in the 1990s, ended up costing more because of yen-denominated loans taken out by Dr Mahathir Mohamad’s government.

BN’s strategic communications unit said there were similarities between the two projects.

However, the soft loan provided by China for ECRL was protected from foreign exchange risks, while the Japanese loan for KLIA was fully denominated in Japanese yen.

In the next few years after the Japanese loan was disbursed, “the yen then more than doubled against our ringgit…meaning the amount we owed had also increased significantly,” said Eric See-To, deputy director of BNSC.

“Due to this loan and the many other Japanese loans that had increased due to the yen’s appreciation, Mahathir at that time then promised never to take another Japanese loan as he said that Japan refused to budge to give any discount.

“However just four years later, in 1998, a desperate Mahathir went back on his word and applied to borrow US$2 billion from Japan to help bail out Malaysia’s economy which was in crisis then.”

See-To said there were legitimate concerns about whether Malaysia can afford the RM55 billion ECRL project and the soft loan from China to fund its construction, but said ECRL was more affordable compared to KLIA.

He said KLIA’s costs were projected at RM10 billion, or 5.8% of Malaysia’s then gross domestic product (GDP) of RM172 billion. But ECRL’s projected RM55 billion cost was lower at 4.2% of our current GDP of RM1.3 trillion.

“ECRL is actually a more affordable project for Malaysia now compared to KLIA then,” he said.

He said the DAP had heavily criticised the KLIA project at the time, saying it was overpriced and unnecessary, and Lim Kit Siang had described it as “a white elephant” and “a flop”. But history had proven Kit Siang proven wrong, See-To said. - FMT