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Allocation for rail projects will have multiplier effect on M'sia's economy
Publication Date : 12-09-2013
While analysts expressed surprise at the additional 160 billion ringgit (US$49 billion) that the government had announced to be spent on rail-related projects until 2020, construction players have described it as a boost of confidence for the continuation of the workflow in the sector.
IJM Corp Bhd managing director Teh Kean Ming told StarBiz: "Infrastructure projects that are able to generate
immediate socio-economic benefits and substantially private sector-driven warrant immediate implementation. From an execution point of view, coordinated sequencing of mega projects implementation will assist in the proper allocations of resources and capacities, thereby reducing cost pressures.”
He noted that rail projects were high impact and essential infrastructure projects that the government could not ignore but pointed out that it had to take on a balanced approach to achieve sustainable growth while keeping the fiscal deficit at an acceptable level.
“As for IJM, we are constantly on the lookout for opportunities and will seize any viable project,” he added.
Master Builders Association Malaysia president Matthew Tee said the association was pleased that the government would proceed with the 160 billion ringgit worth of rail related projects as they will have a multiplier effect on more than 140 sub-sectors.
On the high-speed rail (HSR) project, he said: “As it will probably involve foreign direct investments and domestic investors, we hope that there will be timely issuance of construction permits to boost the confidence of investors involved in the project.”
Sunway Group construction division managing director Kwan Foh-Kwai said: “As we are currently undertaking Light Rail Transit (LRT) and Mass Rapid Transit (MRT) projects, we hope to participate in all future projects including HSR.”
Analysts, on the other hand, were surprised over the “huge” amount of allocation considering the government’s decision to review some of the mega projects in the country.
They also regarded the timeline indicated for the HSR project as “ambitious” due to the many government-to-government issues that needed to be ironed out.
Said one analyst: “Even if the Land Transport Commission calls for tenders, it does not mean that work for the HSR project will start soon. It merely means that it will start reviewing the bids by contractors.” In terms of progress, the technical feasibility study for the HSR has not been completed, hence, it would be too early to determine if it could be rolled out soon.
“The government would also have to consider the HSR project structure if it would be carried out as a concession or private investment. If it is a private investment, the fare have to be priced carefully so that the business model is viable,” he said, adding that even with government subsidy, some of the existing rail systems operators are running losses.
He noted that the MRT project was more important and that the government should focus on it before pursuing the HSR, which has higher import content.
He expected the timeline for the HSR to be carried out at least after the MRT Line 2 had started, which was anticipated in 2015.
Another analyst concurred and pointed out that there was “nothing concrete” from the development of the HSR and that the authorities had to consider the limited resources available in the country for works on both MRT and HSR to be conducted concurrently.