Penang Chief Minister Lim Guan Eng has given his assurance that the state’s plan to borrow money from the Export-Import Bank of China (Exim) to fund the Penang Transport Master Plan (PTMP) will not meet the fate of the debt-laden 1MDB.

The loan is made possible by the Penang Loan (Bank and Other Financial Source) Enactment 2017, which was passed unanimously by the state legislative assembly last night.

Lim said the money for PTMP would be loaned from a national bank in China, and not from private sources, or even 1MDB.

He said the loan must also first be approved by the authorities in China and Malaysia as it is a “government to government” deal.

The National Financial Council, chaired by Prime Minister Najib Abdul Razak, will have to approve the loan before Penang can borrow money from Exim, he added.

Lim said Penang could only borrow a limited sum - at the most RM1 billion - as the state must repay the loan in five years.

But China’s interest in loaning the money to Penang must be “celebrated” as it means the state is in good financial standing, he added.

“So I am very surprised that Umno assemblypersons said they do not agree with the move, when they did not speak out against it in the state legislative assembly last night,” Lim told reporters today.

“The backbenchers raised their concerns as part of a democratic process, and after I explained, the enactment was passed unanimously.

“Speaker Law Choo Kiang asked twice if the enactment was supported unanimously, and the BN reps did not oppose it, even though State Opposition chief Jahara Hamid was in the House,” said the DAP secretary-general.

Risky loan

Lim was responding to Umno Telok Bahang assemblyman Shah Headan Ayoob Shah Hussain who held a press conference outside the Dewan after the enactment was passed, saying it would be risky for the state to borrow money from China.

“There are only 700,000 people on the island, the PTMP will be only built on the island, not for the whole of Penang, and transportation is not known to be profitable,” Shah Headan told reporters at the opposition’s office at the state legislative assembly last night.

However, Shah Headan said he did not oppose the loan facility for the Penang government but cautioned against borrowing money to fund the RM27 billion PTMP.

He cited examples of the Light Rail Transit (LRT) transportation services in Hong Kong, Singapore, Kuala Lumpur, and the United States which continue to operate at a loss despite billions spent on building their infrastructure.

The PTMP is an ambitious plan by Penang to address the island's traffic woes by building LRTs, providing public busses and highways to connect the entire island.