Malaysiakini Letter

Big-ticket projects a funny way of managing our economy

Rosli Khan  |  Published:  |  Modified:

Our current government is doing all sort of funny things. Every day, you can read funny stories or statements made by cabinet ministers. It makes you think whether they actually take their jobs seriously or otherwise? For instance, managing our economy is a serious matter. Managing economic drivers, such as large-scale projects for the country’s infrastructure, is certainly a serious subject and very fundamental to our economic performance.

Large scale project planning, however, seems to be done hurriedly. Is it being thought through to suit a certain purpose? Normally, a government-driven project is often backed by economic factors and rudimentary financial considerations, at the very least. Now, we seem to have lost that procedure, for it is no longer fashionable to show us your figures and share with us your statistics?

Take the high speed rail (MyHSR) for instance. Why are we in such a hurry to build this?

Is there a problem in getting to and from Singapore, right now? Is there a bottleneck that exists for passengers travelling between KL/Singapore? Is there a massive congestion that prevent a free flow of passengers between the two countries that justify us to spend RM60 billion of our taxpayers’ money for this purpose?

Or are there other hidden agenda items that we, the rakyat, are not aware of?

To many ordinary thinking men and women in this country, it does not look right to embark on such a luxurious project such as MyHSR, when half of the country’s population are still living just above or below poverty line. As we speak, many unfortunate people are now in temporary shelters in Kelantan and Terengganu due to floods.

What kind of planners do we have in independent Malaysia, that after so many decades, we still cannot resolve this flood problem that hits us every year? The truth is, there are no drainage systems in Kelantan and Terengganu. The federal government (and the not so competent state governments), obviously have not looked into this problem.

They never built any drainage systems to manage the excessive collection of water that are brought by excessive rain in a few weeks of the year, and cause groundwater to rise and flooded these two poor states. We need to correct this basic first before we could talk about other fancy development.

And yet there will be East Coast Rail Link (ECRL) line coming to Terengganu and Kelantan soon (via Pahang, of course); a railway system also to be built by China. At 620km in length, the railway will be running in parallel to the existing roads thus directly competing with road transport.

Designed to chug along at an average speed of 80kph, one wonders what economics benefit will it bring to the state? (Will the lines be submerged underwater every year end when there are floods?)

Can any government economists or planners tell us in simple terms, how the rakyats,will benefit from this expensive project? How that simple benefit will justify spending RM60-RM70 billion of taxpayers’ money for a project that will go to pay China? (Unless, of course, there are other agenda items which we do not know about.)

A government-driven economy

A government should drive the economy. There is no doubt about that. But not necessarily through government spending all the time. A large scale project such as the ECRL or MyHSR will benefit the country economically if proper plans that will drive the local economy itself, is put in place.

For instance, if many of the local professionals are involved in the planning stage of the project, then local economic activities could be created in order to enhance or maximise the benefits to the local population.

Townships could be developed around major stations;new housing schemes could be built that could become commuter towns with proper facilities. Indirectly, these new townships would create less burden for major cities such as KL as far as housing is concerned. Industrial areas and rail freight villages could be established, where appropriate, where land prices are not so high.

How the project would impact the locals or how they could participate in the project, as part of the wider economic agenda, could be studied, proposed and formulated. It is true, this will take a longer time; but why the hurry? When you can actually plan properly to maximise the benefits for the people?

For example, we have learned a bitter and expensive lesson from the implementation of the Klang Valley Mass Rapid Transit (KV-MRT) project. Despite a massive injection of government fund (in billions of RM), local consulting engineers, architects, project managers and many other professionals that would have benefited directly from the project, were hardly given the opportunity.

Local contractors also could not participate directly as they lacked the expertise, skills and experience required.

Foreigners, including foreign workers, flocked into Malaysia in large numbers to work on KV-MRT, as if we are truly a third world country with no knowledge, let alone skills and technology. Billions of dollars were paid out to foreign consulting companies for works and jobs that could have been handled by locals.

And the worst part was that some of these foreign consulting firms hired local personnel from local consulting firms with a slightly higher salaries resulting in local firms losing out; not only they didn’t get the lucrative contracts, local firms also lost their experienced staff; a double whammy, so to speak.

Similarly, many local contracting companies only came in into the project after layers and layers of sub-contracting arrangements, resulting in them collecting only a pittance from such a multi-billion dollar project on their own turf. This is certainly not the right way to manage the economy or large-scale projects funded by the government where most bread went to foreigners and locals got the crumbs.

This situation is also very upsetting for many local firms. Participation in the local economy offers employment (financial), knowledge, skills and on-the-job training opportunities that will benefits Malaysians in both, short and long terms. This type of economic activities would also ensure that money earned in the country is mostly kept and spent in the country. It will spur other related economies such as housing, retail, transport and social components.

But more importantly, the local population remain employed and can move up the economic ladder. Those are the benefits which Malaysians would like to see.

Instead, as we witnessed the collapse of the local property and housing market and the banks refused further housing loan exposure, it goes to show that such large scale projects through government spending is not working and failed to jive the local economy.

Not only did the large-scale projects fail to provide the much-needed impetus to the national economy, they were actually poorly planned and poorly implemented through a project delivery partner (PDP) concept of approach; another issue of misfortune to many.

This approach has proven to be very costly to the government too and has resulted in excessive financial revenue to the PDP company in relation to their minimal roles and responsibilities. It has shown many weaknesses on the part of the government machinery in dealing with such a large-scale project, both in terms of management and execution.

The government should have learned their lessons from such a venture. Now that the government is planning for MRT2, MRT3, ECR and MyHSR, it is hoped that history does not repeat itself by applying the same approach, concept and procedures.

A complete revamp on how the government should manage their spending is required. At the very least, a choice on the PDP company should be tendered out and their costs, fees, etc be made more transparent from the beginning with limited escalation. This will at least ensure that no excessive fees are paid to the favoured PDP company.

In the case of MyHSR, the project is being studied and planned by a foreign consulting firm that employs a few Malaysians instead of by a Malaysian firm employing a few foreigners. This is certainly not right. There should be a reversal in the concept; a Malaysian consulting firm should be given the task to study and plan. If necessary, the firm can employ foreign experts to assist, if we, Malaysians, are not capable to undertake the tasks ourselves.

For instance, the location of the main station in KL is another major issue that has not been dealt with correctly. The MyHSR station will be at Bandar Malaysia, Kuala Lumpur, whereas the Express Rail Link (ERL), another fast train to our international airport, stationed at KL Sentral. MyHSR will be running in parallel but separately from ERL lines that serve KLIA and KLIA2.

Can anyone imagine the kind of complication that will be created by these two rail lines? KLIA and KLIA2 ERL passengers who wish to travel south on MyHSR will need to come up all the way to KL Sentral and then travel to the Bandar Malaysia station. Only then can they take MyHSR which goes back southward in the same direction as KLIA.

In reverse fashion, passengers travelling on MyHSR from the south (Singapore included) who wish to go to KLIA will have to travel all the way up to Bandar Malaysia, cut across the city to KL Sentral and take ERL back south to KLIA or KLIA2.

I honestly think, this unnecessary journey will not be so funny after all!

DR ROSLI KHAN is a transport economist and currently the VP for the Chartered Institute of Logistics & Transport, Malaysia.

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