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YeinJee's Asian blog

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Malaysia’s mega development projects

August 5, 2007 by Yein Jee

Malaysian Prime Minister Abdullah Badawi is happily announcing one mega development project after another, e.g. the Iskandar Development Region (IDR), Northern Corridor Economic Region (NCER), the Trans-Peninsular Oil Pipeline, and a number railway projects etc.

It’s easy to come out with these “grand” plans, but lots of questions remain uncertain. Is it feasible to work on all the mega projects at the same time? Are Malaysians capable of funding these ourselves? How are we going to attract foreign investments? What will happen if another economic crisis strikes again?

And most important of all, who are going to benefit from the projects?

Do we need these projects?

Perak state government has spent millions, if not billions, to develop various industrial zones over the past two decades; but most of those areas are wasteland now. It’s not difficult to prepare the infrastructures, the challenging part is to attract the businesses instead.

There are many other special projects around the country that have yet to achieve their goals. And to make it worse, some established zones are losing tenants at a worrying rate because foreign investors are leaving for various reasons.

What makes the government thinks that we can attract new investments when we are failing badly to keep the current ones? Why don’t we focus on existing economic zones instead?

Who are going to benefit from the development?

Some people may be happy that the central government are finally developing their home states. I can’t blame them, but as mentioned above setting the infrastructures guarantees nothing.

One good thing I see in NCER is that the agriculture plays a huge part in the scheme. I’ve always felt that we over-focused on commercial plantation (rubber, palm oil) instead of food. For example, we shouldn’t have to rely on import for our rice supply, we need to get the balance right.

Besides, I am not sure if small plantation owners and farmers are going to benefit from the project. I hope their business are not taken away by conglomerates instead.

The first group of people that will benefit from the plans are land owners, followed by the foreign labours. The construction work will demand lots of workforce, but I doubt many Malaysians would want to work in those environment. Besides, construction firms will probably hire foreign workers straight away.

The transparency of government contracts will also be in question again. Will there be open tenders for the contracts, or will the money goes directly to pre-selected companies? Even if there’s open tender for the contracts, will it be fair and square? We all know how “well” these worked in the past.

For common citizens, the projects may create working opportunities in long run. That’s a big if though, until then there are very little (to none) benefits. It may be better to spend the money elsewhere.

Private Finance Initiatives (PFI)

Majority of the projects will be funded by Private Finance Initiatives. Two-thirds of the NCER’s RM177 billions investment will be funded by the private sectors, that’s about RM109 billions alone for NCER.

How many investors in Malaysia are capable to support these developments though? In the end it’s likely that government-linked companies such as Petronas which have to dump out large sum of money to fund the projects. It’s only PFI on surface, it’s our national treasury for real.

The Port Klang Free Zone is a good example of the failure for PFI funded projects; and seems like our government may have to bail out the project. And it’s turning into a corruption scandal, which reminds us of how easy (and often) these projects are used to feed the corrupted leaders.

Foreign investments

Malaysia is losing cutting edge to attract huge foreign investors. We are failing as a whole, and whatever the plans are we are not going to attract new investments if the fundamental doesn’t change.

Besides, as said earlier, we already have some (vacant) developed areas that can fulfilled the demand. The new zones, if work, will simply pull businesses away from other Malaysian states. The country as a whole doesn’t benefit much if we don’t have new productive investments.

Unfortunately I can only ask questions without offering much suggestions. Our country just don’t have much advantage against our neighbours these days. What I can suggest is that we need to think twice before launching these mega projects, don’t just do it for the sake of winning an election.

Filed Under: General Tagged With: Businesses and companies, Economies and finances, Malaysia blog

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Yein Jee is a Malaysian traveller, food lover & self proclaimed entrepreneur. This blog is about Asian culture, lifestyle, travel, food, fun and entertainment ... Read More...

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