By S. Ashwiinie
A few analysts and market watchers are lukewarm on giant construction projects such as the multi-billion Mass Rapid Transit (MRT) phases two and three, as well as the RM30 billion KL Singapore High Speed Rail (HSR)— saying that the actual award of the jobs could be delayed and determined by the political landscape more than anything else.
Hong Leong Investment Bank (HLIB) construction analyst Jarrod Soon explained, “Any contractors at this point of time need to have the support of both sides (government and opposition) in order to be safe.”
He explained that in the event of any change— either from within the incumbent Barisan Nasional or be it the Pakatan Rakyat winning— there would surely be reviews of the projects which have been mooted and awarded.
“They would not want a dislocated economy (so) they would definitely review the projects…So in other words delays can be expected,” Soon said.
Soon of HLIB added that officials from Gamuda Bhd for instance, had sought approvals from politicians from both sides of the divide in many of their endeavours for the MRT project, which was commendable as it reduced risks.
“Despite politicians giving their thumbs up for several projects, many of them—the HSR for instance—are still a long way from being feasible,” a market watcher said.
On the HSR he added, “It’s not like it’s a new project it’s been mooted for very long,” he said.
The HSR link was first proposed before the 1997 crisis, but has yet to kick off. The Bangkok Post put it aptly when it said, “The talk of a high speed rail link between Singapore and Malaysia has been in the air for years and it seems like a courtship ; when the mood is good it is on, when the mood is changes it is off.”
Another analyst from a local bank backed research house said that another major concern of the HSR link is whether the parties involved could raise the requisite funding.
“Any project that has foreign direct investment influence has greater advantage on the economy,” he added.
The market watcher meanwhile said that they would not be surprised if the two projects, HSR and phases 2 and 3 of the MRT did not take off, if the opposition strengthened its footing in the country.
“Whenever there is any change at the helm, even if from within Barisan (Nasional) there is a risk of projects being scrapped,” one market watcher said.
Abdullah Abdul Badawi
He highlighted former premier Abdullah Ahmad Badawi scrapping the RM14.5 billion double tracking project and the crooked bridge to Singapore, which were hastily awarded by Mahathir Mohamad, Badawi’s predecessor, just before he gave up office.
“So don’t hold your breath (and wait for these projects),” the market watcher cautioned.
While the original promoter for the HSR link was YTL Corp Bhd, a company controlled the Yeoh family, there are many other players such as United Engineers Malaysia Bhd which is controlled by state controlled investment arm Khazanah Nasional and well-connected billionaire Syed Mokhtar Albukhary vying for the job as well, which basically means the gargantuan project is literally up for grabs.
Insiders however say that the bidding could commence as early as the third quarter of this year, but nothing is etched in stone as yet.
On the MRT phase two and three, analysts are expecting more updates in the second half of 2013, after the general elections as well.
The MRT phase two would be a circle line within the city centre, connecting to other rail networks and largely running underground, while the phase three of the MRT would likely be a radial line connection the northwest and southwest of the Klang Valley, Kepong, Selayang and Klang.
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