Najib clarifies 5 misunderstandings about ECRL, calls for RCI

Former prime minister Najib Razak says the assertion by Pakatan Harapan that the ECRL project only cost RM30 billion was inaccurate.

GEORGE TOWN: Former Prime Minister Najib Razak today clarified five misconceptions on the East Coast Rail Link (ECRL) and Sabah gas pipeline projects worth RM85 billion while urging a royal commission of inquiry (RCI) be set up to detect any wrongdoings.

He said the first misconception arose from the RM55 billion cost of the project, which he said was justified, taking into account adjustments to the rail alignment, inflation and the weak ringgit.

The finance ministry had said in July that the final cost of the ECRL is RM81 billion, taking into account double tracking costs, land acquisition, interest, fees and operational costs.

Najib said the assertion by Pakatan Harapan that the project only cost RM30 billion was inaccurate and in fact, it was a price quoted in 2009, when the railway line spanned just 545km.

Najib said after expanding the line to 688km, adjusting the alignment to avoid land acquisition, a 50km tunnel through the Titiwangsa Range and extending the final station from Gombak, initially, to Port Klang had effectively increased the cost of the project.

“If the ECRL is built seven years from now, it will cost even more. For example, the Penang Transport Master Plan’s (PTMP) estimated cost has shot up from RM27 billion to nearly RM50 billion now,” he said in a statement posted on his Facebook page today.

As for the second misconception of the apparent high interest on loans, Najib said the loan from the Chinese government was a good deal as it had a fixed interest rate of 3.25% and was pegged to an agreed currency exchange rate for the entire repayment period.

He said this was unlike the bad yen loan deals by Prime Minister Dr Mahathir Mohamad in past projects, when Malaysia had to pay more as it was based on market yen rates.

Moving to the third misconception on claims that Malaysia would not be able to repay such a huge loan, Najib said the country was more than able to pay off the loan.

He said the country need not start paying in the first seven years and would only have to start paying RM4.5 billion a year for 20 years after the seven-year period which it would have been able to do with the additional RM23 billion in GST revenue over the SST.

Najib also cleared another misconception where multi-level payments were considered unfair and lopsided, saying such payment modes were normal for such a large infrastructure project.

In the case of the ECRL, he said most of the money had been invested in fabrication plants, operations centre and purchase of a tunnel-boring machine.

As for the Sabah pipeline projects, the initial cost is high due to the difficult design cost. Laying the pipelines later was a simpler task.

“The three projects (ECRL and two pipelines) are awarded to Chinese government-owned companies, which are also some of the biggest companies in the world.

“The payments for the projects are also made directly from the Exim Bank (a Chinese government bank).

“With such an arrangement, it is highly unlikely that the companies involved would not complete the project, let alone funnel the money elsewhere — unless you are accusing the Chinese government of money laundering,” Najib said.

For the fifth and last misconception that the projects would not have sufficient returns through passenger and cargo loads, he said critics ought to see beyond just the numbers.

Najib said the spillover effect on the economy along the alignment of the ECRL alone was testament to why the project was good for the country.

Concurring with Ayer Hitam MP Wee Ka Siong, Najib said the return on investment (ROI) for the ECRL could not be quantified in cargo movements or passenger numbers alone as industries were expected to come up on along the rail line.

Najib said both the state and federal governments stood to benefit as they would be able to collect more tax from companies sprouting along the rail line and through land transactions there.

“Feasibility studies show the ECRL will contribute 4.6% to domestic growth and create 80,000 job opportunities directly and indirectly, especially in east coast states.

“It would also close the income gap between west coast states and the less developed east coast states.”

Najib said ECRL would also slow down migration of people in the east coast to larger cities like Kuala Lumpur, reduce the carbon footprint and reduce fatalities during balik kampung trips.

Najib said ECRL’s alignment was akin to a “land bridge” cutting across the peninsula, giving Malaysia a competitive edge with neighbouring countries as ships would prefer to use Port Klang to ship their goods to the east, without spending a day-and-a-half navigating through the waters near Singapore.

“All these cannot be measured in terms of economy and costs. The benefits are permanent and are not a one-off thing.”

Najib said the cancellation of the ECRL, in particular, meant east coast states in the peninsula were the biggest losers and would continue to be left behind compared with the prosperous and industrialised west coast states.

The ECRL is a 688km rail link connecting Port Klang to Kota Bharu, now said to cost RM81 billion (compared to the previous estimate of RM55 billion), while the 662km Trans Sabah Gas Pipeline project, going through Kimanis-Sandakan-Tawau, is worth RM4 billion.

Work on both projects was halted in July as part of the government’s austerity measures and have since been cancelled by Prime Minister Dr Mahathir Mohamad.

Najib said a RCI into the ECRL and pipeline projects should be held to ascertain if there was any wrongdoing and to also vindicate the previous government which had been slammed for alleged improprieties in the projects.

“The rakyat deserve to know if the cancellation was made on solid grounds and not just because of their anger towards the previous BN government or towards the Chinese government, which did not want to concede to Pakatan Harapan’s demands,” he said.