News: Economists Urge Government To Resume Mega Infrastructure Projects

Jul 7, 2020

Considered one of the key growth catalysts for the country’s economy, the planned infrastructure projects should fully resume to make up for the aggregate drop in demand during the enforcement of the Movement Control Order (MCO) to contain the spread of COVID-19.

These include the Light Rail Transit Line 3, Klang Valley Mass Rapid Transit Line 2 (MRT2), Pan Borneo Highway (PBH) and East Coast Rail Link (ECRL), reported the News Straits Times.

“The continuation of these projects will boost investor’s confidence and add to the investment demand, while creating employment,” the New Straits Times quoted Sunway University Business School economics Professor Dr Yeah Kim Leng as saying.

And while there is a need to look at the financial capacity of the government, he noted that the funding for these infrastructure projects have been planned prior to the crisis.

Yeah said these projects can be used by the government to crowd private investment as well as related activities.

Read what is HSR and why is it important for Malaysians.

“For instance, ECRL has various plans to establish industrial park and transit oriented development along this project. This is an opportunity to attract more foreign investors into the country,” he said.

Yeah explained that the relaxation by the government of measures to contain COVID-19 was necessary to normalise the country’s economic activities and help the construction sector recover.

The construction sector’s contribution to Malaysia’s gross domestic product (GDP) is expected to contract 15% to RM61 billion this year from 2019’s RM70.90 billion contribution, due to heightened uncertainties both in the global and domestic environment, he added.

In concurring, Putra Business School business development manager Associate Professor Dr Ahmed Razman Abdul Latiff said the government should push through with the mega infrastructure projects as this would create business and employment opportunities for the locals.

He also suggested for the government to enter into smart equity partnership with the private sector, instead of the traditional debt financing like bond and bank loan to fund the project.

“This will reduce risk to government financial commitment if these projects are unable to achieve their desired return on investments once they start operating,” he told the New Straits Times.

He sees the construction sector positively growing this year even as it contracted by RM15.35 billion in Q1 2020.

“We forecast GDP from construction to increase above RM16 billion in the fourth quarter of this year, with around 4.5% contribution to overall annual GDP,” he said.

 

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