THE Penang legislative assembly today passed the Penang Loan (Bank and Other Financial Source) Enactment 2017.

The enactment authorises the state government to borrow money from any bank or financial source approved by the federal government, for the purpose of financial investment; implementing physical, economic and social development in Penang; or other matters.

Chief Minister Lim Guan Eng said the new “enabling legislation” would allow Penang to take loans from the Export-Import Bank of China (Exim) for the state’s ambitious RM27 billion Penang Transport Master Plan (PTMP).

The bank and the Penang government signed a memorandum of understanding in December 2014.

Lim said it was not easy to get Exim to have an interest in Penang and to lend the state money, meaning that the state was positively viewed as having a triple A rating.

“I think it is something we should celebrate because it is a recognition of our financial standing and success. For them to have interest in us is a credit to the state.

“Imagine the savings derived from the lower interest rate by Exim,” Lim said after the new law was passed this evening at the state legislative assembly.

He said borrowing money from a national financial institution like Exim, which is owned by the government of China, would incur lower interest rates compared to borrowing from commercial banks.

“This is Exim, a national bank, not the Bank of China. Their focus is not on profit.

“You can save millions even if the interest is just one percent,” he said, adding that the interest rate would be “definitely lower”.

Under the enactment, any loans taken by the state must be notified to the state legislative assembly as soon as possible.

The money borrowed with all interests and other expenses are charged on the State Consolidated Fund.

The loan made under the enactment also must not exceed a period of five years.

Pakatan Harapan backbenchers – Lee Khai Loon (PKR–Machang Bubok), Cheah Kah Peng (PKR-Kebun Bunga), Norlela Ariffin (PKR-Penanti), Lydia Ong (DAP-Berapit) and Teh Yee Cheu (DAP-Tanjung Bungah) – raised concerns during debates that the state might risk borrowing too much money without the ability to repay.

They said the bill should be amended so that the state legislature could first check the loan application for approval.

Deputy chief minister II Dr P. Ramasamy (DAP-Prai) and local government exco Chow Kon Yeow (DAP-Padang Kota) said checks were already in the enactment because the loans must be approved by Putrajaya.

The loan period that cannot exceed five years also meant the state could not borrow too high an amount. – May 25, 2017.