FINANCE Minister Lim Guan Eng said the country is not on an austerity drive despite drastic cost-cutting measures, adding that the government will continue infrastructure spending to stimulate growth.

He said the government has also established a public finance committee, chaired by himself, with the Minister of Economic Affairs and the Governor of the Bank Negara as members, to strengthen the country’s fiscal position.

“However, while it is imperative for the government to be prudent with our expenditure, we are equally cognisant that we must not fall into the austerity trap,” said at the Malaysia: A New Dawn investment conference in Kuala Lumpur today.

“What we want is merely to get a bigger bang for the buck, to make sure that every taxpayer’s ringgit will generate the equivalent value and maximum multiplier effect.”

“There are also many mega infrastructure projects which we recognise as crucial towards increasing productivity and economic growth for Malaysia,” he said, with examples being rail-based public transport projects such as the LRT3 and MRT2.

“For these projects, we have every intention of continuing, but we are committed to ensuring that there is no unnecessary and excessive scope, while also guaranteeing that the cost is reasonable.”

Hence for LRT3, Lim said the government has renegotiated with the main contractor and Syarikat Prasarana to reduce the overall cost of the project from RM31.6 billion to RM16.6 billion, a savings of RM15 billion or 47%.

However, “clear cut white elephant projects” such as the MultiProduct Pipeline and the Trans-Sabah Pipeline projects, expected to cost more than RM10 billion, have been cancelled, he said.

“This is despite the fact we have paid approximately RM8.5 billion of the fees of the total project, even though less than 15% of the works have been completed,” he said.  

Suria Strategic Energy Resources, the project owner which is wholly owned by the Ministry of Finance, is in the process of negotiating with the main contractor, China Petroleum and Pipeline Bureau to determine the compensation quantum and amount to be refunded to Malaysia, he said. – October 9, 2018.