Some negative effects of suspending mega projects

First, congratulations to the newly elected government which has shown itself to be progressive in its indiscrimination in bringing about a new and better Malaysia. I am writing on behalf of contractors like myself who are silently suffering as a result of committed projects being delayed or cancelled.

While we understand the rationale behind these decisions – to alleviate our national debt and curb any elements of overpricing or corruption in projects previously secured – we would like to reiterate the negative impacts which arise as a result of such sweeping decisions.

It is common knowledge that the construction of mega projects is closely tied to numerous social and economic infrastructures which are necessary for the growth of the nation. The LRT extension is a typical example, and the MRT is another. The HSR project was one that the nation was looking forward to, and we the business community were eager to see the project hit the “go” button before it came to an unceremonious halt.

I run a medium-scale, home-grown business with an interest in rail projects in Malaysia. You can imagine the impact of mega decisions on my business. I used to employ about 467 workers but I have halved the number in order to sustain my business.

I also have dozens of suppliers comprising small- and medium-scale businessmen. They share the same plight. There is nothing we can do apart from writing in to seek consideration from the new government whom we voted for in hopes of a better future for us and the generations to come.

It has been estimated that there was a 4.3% reduction in the construction sector as a result of the decisions made in the last three months. The effects are felt as jobs are difficult to come by.

Existing local supply chains, contractors and stakeholders which had gathered momentum in their businesses and operational growth during the boom of previous or existing mega projects are now hard-pressed to reallocate their resources.

In effect, there will be a gross oversupply of building material plus losses incurred from the underutilisation of plants, machinery, warehouses and manufacturing facilities especially when instalment payment is not an option.

As a mature nation, we must know that we are also adding strain to bilateral ties with partners engaged for big jobs, i.e. in the case of the ECRL with China and HSR with respect to Singapore.

The perceived volatility of the country’s economic and political state is further aggravated by the major reversals of mega projects. This deters potential investors which leads to an immediate loss in FDIs and our credibility on global playing fields.

Projects already ongoing such as the LRT3 and ECRL together with other mega project contracts already awarded like the ECRL will incur heavy compensation costs for termination or aborted works including lead time purchases.

The legal implications from the cancellations together with all the repercussions mentioned above far outweighs the savings generated.

I was also saddened by the recent reports of contractors who haven’t been paid for work already done or in the offing. This is not justifiable, whatever the reasons may be.

Looking at the issue holistically, in the bigger picture and long-term perspective of the industry, we strongly urge the government to review the decisions made and revive mega public projects for the future of the new Malaysia, which will cease to exist without economic activity. We also appeal to the government to release the payments owed to contractors and builders for jobs completed and undertaken.

Please be mindful not to penalise the many innocent while punishing the few.

Teoh See How is an FMT reader.

The views expressed are those of the author and do not necessarily reflect those of FMT.