By Yeo Bee Yin
The Edge Financial Daily reported that Nazir Razak had called for government scrutiny on China’s “One Belt, One Road” (Obor) initiatives, particularly the East Coast Rail Line (ECRL) project, at the roundtable on “China’s Belt and Road Initiative in Asean: Economic Opportunities and Asean Centrality”.
We have repeatedly raised concerns regarding the ECRL but all seem to have fallen on deaf ears. Now that even Nazir, who is a prominent banker, has raised concerns over the value proposition of the project as well as the debt implications, we hope that Putrajaya will heed his suggestion to thoroughly scrutinise the deal.
The ECRL project was awarded to China Communication Construction Co Ltd (CCCC) without open tender. At RM55 billion, it was deemed the most expensive railroad of its kind by The Edge Weekly after being benchmarked against other rail projects around the world.
The project is going to be financed by a loan from China via Export-Import (Exim) Bank of China. Putrajaya has repeatedly said that the loan is offered at a low interest rate, but how “low” is the “low interest rate”? What are the terms and conditions?
In short, it seems like with the ECRL deal, most of the money that comes from China via Exim bank will go back to China via CCCC. What’s left for Malaysians will be an overpriced infrastructure and huge debt, only to be paid by the people in the future.
There are risks that the reckless construction of mega infrastructure will land Malaysia in a deep debt trap. What happened to troubled Sri Lanka offers a good glimpse into how mega infrastructures, financed by debt without proper framework to benefit local economies through the construction and completion of the infrastructure, is not development but debt disaster in the making.
Instead of investing in education and healthcare, Sri Lanka spends most of its revenue now to pay off its debts to China that were used to finance the now under-utilised mega infrastructure, from its port to airport.
Sri Lanka has a new airport that is called the world’s emptiest airport – Mattala Rajapaksa International Airport, which only handles a few flights a day.
In fact, President Maithripala Sirisena, who unseated the former president Rajapaksa by riding on his unpopularity over incurring huge Chinese debts to build the under-utilised infrastructure, is now facing protests because he gave China a huge piece of industrial land with a 99-year lease in order to alleviate the country’s debt burden.
We must learn from Sri Lanka’s experience before it is too late. All mega projects must be awarded through open tender, and their project feasibility carefully studied.
So far, the ECRL deal has been shrouded in secrecy. The federal government must disclose the following documents to prove it has nothing to hide:
i. All the relevant studies on the ECRL, including the feasibility studies done by HSS;
ii. The framework financing agreement and engineering, procurement, construction and commissioning contract signed between Beijing and Putrajaya; and
iii. The estimated ridership and the future price for passengers’ train tickets and cargo transportation to make the project at this price tag economically viable.
With the information available from the documents above, the people can then judge if the project is fairly priced with proper financing procedures.
With that, we call for greater transparency from Putrajaya in dealing with mega projects. Once again, we urge Putrajaya to review the ECRL deal it made with China.
Yeo Bee Yin is the DAP assemblywoman for Damansara Utama.
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