LAST_UPDATETue, 19 Jun 2018 12am

HSBC: ECRL May Be Delayed If Opposition Win GE14

KUALA LUMPUR: There could be possible delays to large-scale infrastructure projects such as the East Coast Rail Link (ECRL) if the opposition coalition were to win the 14th General Election (GE14), HSBC Group said.

This was based on the opposition’s manifesto, which pledged to review mega projects, in particular those funded by China, estimated at US$38 billion (US$1=RM3.89), it said in its Global Research report.

Besides the possible delays in large-scale infrastructure projects, the financial services giant pointed out that such a move could weigh on the short-term investment outlook which could result in a deceleration in private investment.

China’s foreign direct investment (FDI) now comprises nearly half of the total FDI into Malaysia.

Among the top five Chinese-backed projects in Malaysia under its Belt and Road Initiative are the ECRL (US$13 billion), Melaka Gateway (US$10.8 billion), Malaysia-China Kuantan Industrial Park in Pahang (US$3.8 billion), Robotic Future City in Johor (US$3.5 billion), and a steel plant in Sarawak (US$3.3 billion).

HSBC said the opposition’s manifesto did not provide visibility on a balanced budget, instead, it would create a higher fiscal deficit in the short term if policy pledges were to be realised in the first 100 days of taking the reins.

“We have noted in previous research that Malaysia's investment outlook will be increasingly driven by foreign-financed infrastructure and other investment projects, partly due to the fiscal constraints faced by the government,” it said.

It noted that the Barisan Nasional government had made progress in reducing budget deficits from 6.4 per cent of gross domestic product in 2009 to a projected 2.8 per cent in 2018.

HSBC said this was in line with the government's commitment to achieving a balanced budget, even though it had now been pushed back a few years from the initial target by 2020.