Published December 1, 2008

MALAYSIA INSIGHT
Improve infrastructure in these lean times

By PAULINE NG
KL CORRESPONDENT
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WITH the US national deficit ballooning to unheard of proportions, President-elect Barack Obama has promised a detailed re-examination of the national budget, 'page by page, line by line', to see the projects that can be canned, while those that cannot are vigorously vetted so that there will be maximum bang for every buck spent.

At the same time, he has talked about creating an estimated 2.5 million new jobs under an economic recovery plan, and he has pointed to constructive infrastructure development such as rebuilding the country's crumbling bridges and highways and developing the green sector.

In times like these, constructive pump priming not only stimulates the economy, but also provides much needed employment with the economic hum giving a general sense of activity, of business as usual.

For Malaysia, arguably, one such project, especially since it is an investment for the future, ought to be the proposed RM10 billion (S$4.2 billion) bullet train between Kuala Lumpur and Singapore, which independent studies have found to be feasible and from which a great deal of economic benefit would be derived upon its completion.

But the government has shelved it for the time being, perhaps daunted by the political ramifications and costs - even though it could have left it to the private sector to build, via an open tender.



The complexity of a mega project involving two countries aside, numerous smaller ones mooted by the government itself are also languishing on the drawing board, one being the proposed highway linking Kapit to Sibu in Sarawak.

The lawmaker for the area observed last week in Parliament that the highway was to have been constructed under the 7th Malaysia Plan (1996-2000), but two successive five-year development plans later, it has yet to be sighted.

The neglect of basic public infrastructure continues to be a huge deterrent to investors used to reliable public transport networks. A number of potential investors of Iskandar Malaysia in Johor, for example, found the lack of existing public transport systems such a big disincentive that it outweighed other incentives thrown at them. 'How are employees expected to get to work on time?' asked a would-be Japanese investor.

The same concerns deter foreigners looking to acquire residential properties, developers say.

In the populous Klang Valley, where train services are already bursting at the seams, the promise of an extension of train services to outer lying suburbs remains just that.

Back in February 2006, when petrol prices were increased about 19 per cent, the government assured the public the estimated RM4.4 billion saved in fuel subsidies would go towards a public transportation fund and 'every effort made to improve public transport throughout the country for the people's benefit'.

Subsequently, when oil prices continued to climb, the public was told the fuel subsidy savings had evaporated.

If sky-high commodity prices resulted in projects being too costly to implement a year or two ago, the excuses certainly can't hold true now that oil and steel prices have collapsed.

Well-managed companies analyse cycles, conserving funds so that good assets can be acquired cheaply in times of distress.

Similarly, it should behoove the authorities to capitalise on the window of opportunity that lower commodity prices present before a recovery in the global economy in a year or two makes such projects too costly

As Mr Obama put it, these projects 'aren't just steps to pull ourselves out of this immediate crisis: these are the long-term investments in our economic future that have been ignored for far too long'.