Not the right time to resume Chinese-backed projects, Putrajaya told
PETALING JAYA: An economist has urged Putrajaya to seek a postponement of Chinese-backed mega projects until the economy has seen some recovery from the Covid-19 crisis.
Shankaran Nambiar of the Malaysian Institute of Economic Research said it was not likely that the multiplier effects of expensive Belt and Road Initiative (BRI) projects would be felt immediately and it would be ill-advised to go ahead with them now.
Construction work on the East Coast Rail Link (ECRL), the largest infrastructure project in the country, resumed on April 28 after it’s main contractor, China Communications Construction ECRL, received the government’s approval.
“Economies all over the world are going into a recession, which means our growth rates are going to be severely affected,” Nambiar told FMT.
“What needs to be taken care of is the confidence in the economy and that will not come from projects with huge foreign investment, a big component of foreign expertise and a long payback period.
“To focus on mega projects that depend on government funds would be irresponsible.”
He said the government should focus on short-term projects which depend on a lot of local labour and vendors over the next 12 months to benefit local companies and workers.
Technologies that could lead to a loss of jobs should be put on the back burner, he added.
But Lee Heng Guie disagrees, saying the continuation of the ECRL would help prevent domestic economic recession from further spiralling downwards.
“Both China and Malaysia have committed to ensuring that the ECRL is a viable joint-venture project in terms of the management, operation, and maintenance of the railway,” said Lee, who heads the Socio-Economic Research Centre.
“This, along with the creation of cluster industries and economic opportunities along the ECRL corridor, will help to spur economic and industrial linkages in surrounding states.”
He was referring to the seven Transit-Oriented Developments, which are integrated urban development projects surrounding transit stations, as well as two industrial estates and one logistics hub along the ECRL.
Lee noted that the previous administration had already reviewed major public infrastructure projects, resulting in a reduction of costs.
“In the interest of investors, the new government should make a clear stand on the list of outstanding projects related to the BRI to remove uncertainty pertaining to their status, especially when both Malaysia and China are experiencing deep economic downturns,” he said. - FMT
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