Unnecessary budget allocations for HSR and MRT3

 

When 73% of the budget goes to operating expenditure (including 12.1% for paying debt) and the rest to support government apparatus, it simply means that last year’s templates are very much relevant and can be copied. There is no financial creativity required here.

The only financial challenge is on how to allocate the remaining 27%, termed as development expenditure. Meant to drive the economy forward and address the financial difficulties faced by many Malaysians especially the B40 group, this is where the government makes it or breaks it.

There are many items within this 27% development expenditure. Some are quite relevant to boost our fledgling economy and some are not. Among the items are several transport projects such as the High Speed Rail (HSR) and MRT3 mass transit projects.

It is far-fetched and a luxury to include HSR and MRT3 in this deficit budget as the two projects may not have the necessary prerequisites to reverse the nation’s negative economic climate and trend.

In fact, both projects will have the opposite effect as they are very expensive for a deficit budget to bear for many years to come.

HSR, for instance, has become utterly superfluous and unnecessary and was wrongly conceived at a time when travel demand between KL and Singapore is at its lowest because of the Covid-19 pandemic.

Many transport companies such as express coaches, airlines and train operators are facing financial difficulties with the likely eventuality of closing shop.

Government budget should only be allocated once the economic benefits can clearly be defined, quantified and stated.

How could we be so naive to allocate a budget for a new transport system when issues and problems faced by the existing operators, who are in dire financial straits, have not been addressed and resolved satisfactorily?

Why are we allocating our hard earned taxes and limited income to projects that we do not really need right now? Worse still, our tax collection and other government revenues represent only about 73.5% of the total budget for 2021.

Deficit budget

When combined with development expenditure, it means that we are presenting another deficit budget yet again. For more than 10 years now, precisely since 2010, we have had a budget deficit every year and this trend will likely continue for many years to come.

That means, all these years, we have been covering the shortfalls through borrowings which now stands at 60.7% of our gross domestic product. In fact, in next year’s budget, 12.1% of the expenditure is to pay for the previous borrowings.

For 2021, the shortfall in the budget, about 26.5% will be funded through yet more borrowings.

The finance ministry should not pretend that these high ticket projects are necessary to spearhead our battered economy. This is not true at all.

In fact, it does not make any sense financially for the high-speed train technology, from its tracks, locomotives, train coaches, electrical components and signalling systems to be fully imported.

Paying billions of dollars to foreign companies and suppliers will definitely not help the local economy.

Local content

Just take a look at the East Coast Rail Link (ECRL) contracts. How much of the RM40 billion price tag, the contract of which had been awarded to foreign companies, actually trickled down to Malaysian companies?

How many local consultants are involved in this mammoth project? How many local equipment suppliers have benefited financially? How many jobs were created for the locals?

So, where is the local content that the government has been harping about that has helped to rejuvenate the country’s economy and resolve the high unemployment issue?

Perhaps the finance ministry, transport ministry or the MR Link, the agency that is supposed to manage the ECRL project, should come clean and publish all these data and information on a regular basis.

Let the public decide whether the argument for economic benefits and job creation holds any water at all. Make these data as your standard key performance indicators.

Apart from HSR and MRT3, there are several other high cost projects that are also included in the budget.

These include the Klang Valley Double Tracking Phase 2 rehabilitation project (KVDT2), Gemas-JB double tracking, Pan Borneo Highway and the Rapid Transit System between JB-Woodlands.

For the sake of transparency, publish data and information on these projects and show us the local contents as well as the number of local employees involved.

Whilst KVDT2 was previously awarded to a Malaysian company with high local contents, this contract however, has been cancelled by the transport ministry. Why?

Going by the same reasons and principles, the ministry ought to be consistent and cancel other big contracts too. Why the double standard?

I hope that our MPs are sufficiently literate to read deeper into the numbers, especially the 27% allocation.

Hopefully, they can and are willing to take appropriate actions such as debating and reviewing the budget proposal accordingly so that this budget will live up to its name, as a one off unity budget. - FMT

The views expressed are those of the author and do not necessarily reflect those of MMKtT.