Delaying mega projects to finance subsidies is bad policy, says economist

 

Geoffrey Williams says projects that are already under way should be continued. (Bernama pic)

PETALING JAYA: An economist has cautioned the government against delaying mega projects in favour of footing an estimated subsidy bill of RM77.3 billion.

Cutting long-term investments to finance short-term subsidies is bad policy, according to Geoffrey Williams of the Malaysia University of Science and Technology.

“Long-term investments and development spending are exactly what the economy needs because public and private investments have suffered badly in the last two years,” he told FMT.

Williams said projects that were already under way should be continued.

Geoffrey Williams.

“Continuing with the mega projects depends on their current status. If they are at the stage of paying consultancy companies and lawyers, then I agree with Mustapa Mohamed that they can be stopped,” he said.

Early this week, Mustapa, the economic affairs minister, said the country’s finances had been affected by the amount allocated for subsidies this year, the largest in the nation’s history.

He said a delay in undertaking mega projects could help ensure that Malaysia’s financial position remains secure as there was still a need to provide subsidies for the people due to the rising cost of living.

Williams also said citing the high cost of subsidies sounded like an excuse for the government to ditch mega projects before the general election.

He urged the government to cover the cost of the subsidies with profits gained from Petronas and utility companies instead of delaying mega projects.

“Cutting wastage and leakages in spending can also help cover the high subsidies,” he said.

Williams also spoke of the potential economic implications of delaying mega projects, such as insufficient revenue and limited job opportunities.

“First, they won’t raise enough from this to cover the subsidies bill,” he said.

“Second, long-term investments will be delayed. So growth and employment opportunities will be held back.

“Third, foreign investors or financiers involved in these projects will be affected and may eye Indonesia, where there are big opportunities in its new capital city development.” - FMT