COMMENT | The cost we pay for our klepto-economics
COMMENT | Just as when Malaysians were enjoying a peaceful New Year’s day, the government announced the termination of the Malaysia-Singapore high-speed rail project (HSR).
The timing of the announcement may have been inspired by my call for being brutally honest in my Dec 31 ‘Five Covid-19 resets’ article, however unsavoury it is.
To me, it is not so much this news, nor this mega-project, but its implication in a wider context. The BN government touted the HSR project as a game-changer when launched in 2016. It was speedily implemented despite many questioning the rationale and humongous cost, and dire warnings to the government’s finances.
The Pakatan Harapan government after taking power in 2018 was forced to scale down the costs, as termination was not an option due to the prohibitive penalty.
Two years later, the Perikatan Nasional (PN) government continued the discussions, but then terminated this project yesterday citing implications for the nation’s coffers due to the Covid-19 pandemic, and disagreement over a reduction in costs.
It has gone one full cycle over four years, from nothing to nothing, but with a major financial loss to Malaysia, not to mention another blow to the confidence of foreign investors.
The Edge Markets estimated compensation of about RM300 million to Singapore alone. Projecting on a scale-basis, the sunk costs/compensation on the Malaysian side could reach up to RM700 million, making it about a billion ringgit of public money, burnt at the stroke of a pen.
The government could allay our concerns on actual costs by being transparent but will cite a non-disclosure clause, as always. Didn’t the contract contain the standard force-majeure clause against a hefty penalty? Wasn’t this a business venture where risks and returns are equitably shared or was Singapore doing us a favour...
