KUALA LUMPUR: Malaysia’s 14th general election’s (GE14) outcome is unlikely to affect the execution of rail projects such as the Kuala Lumpur-Singapore High-Speed Rail (KL-SG HSR), said HSBC Bank Malaysia Bhd chief executive officer Mukhtar Hussain.
Hussain said such projects are unlikely to be disrupted by any political change as infrastructure is usually defined as a key economic driver. “There is every expectation that the projects will happen despite changes in the electoral cycle,” he told a media briefing, adding that most governments would define infrastructure projects as matters of national priority.
Hussain added that although proposed projects under China’s One Belt and One Road Initiative (Obor) have been shelved in some Asian countries, investments in infrastructure in Malaysia will continue because of its mature infrastructure procurement system, and deep liquidity in local and international banks.
Last November, Pakistan withdrew from accepting Chinese financing for the US$14 billion (RM55.02 billion) Diamer-Bhasha dam project, alleging that Beijing’s ownership conditions were not aligned with its national interests. Several other Asian countries such as Nepal have also faced hurdles in executing infrastructure projects with Chinese partners.
Opposition coalition Pakatan Harapan’s candidate for the prime minister, Tun Dr Mahathir Mohamad, has been a vocal critic of the KL-SG HSR, questioning the project’s financial feasibility.
HSBC head of infrastructure and real estate for Asia-Pacific James Cameron told the briefing that he expects to see far fewer Obor-related projects not going ahead considering the multiplier effects that such developments have on economic growth.
He describes the KL-SG HSR project as well designed and with transparent processes, saying competition is likely to be tight due the bidders’ varying abilities to meet separate criteria.
So far, the project has attracted a bid from a consortium of at least eight Chinese companies led by China Railway Corp (CRC). The Japanese government has also expressed bidding interest, while Malaysia’s Gamuda Bhd and Malaysian Resources Corp Bhd have announced that they would join hands to bid for the project delivery partner role.
Hussain said HSBC, as a financier of Obor-related initiatives, would continue to assess the bankability and merit of projects on an individual basis, taking into account the credentials of the companies involved.
While a number of Chinese contractors have a record of casualties, concerns about their reliability in infrastructure projects, he said, have been investigated, resulting in an improvement in government policies.
“No one wants to face the risk of losing out on contracts,” Hussain said, adding foreign companies would therefore be motivated to adhere to regulations.
HSBC global head of renminbi business development Candy Ho, also speaking at the briefing, said there is room for an increase in the Chinese currency’s usage despite increased volatility in its exchange rate.
“There is an investment gap of US$1.7 trillion that private investors can fill,” Ho said, referring to the Obor, adding that despite China having the second-largest bond market and the fourth-largest stock market in the world, foreign participation remains weak at under 3% in both markets.
“Malaysian companies will need to manage their [holdings of] the renminbi if they want to use it in cross-border trade with China,” Ho said, adding that the currency is not only being used for trade purposes but for cross-border investments and financing as well.
Hussain also said ringgit financing would continue to remain relevant as China looks increasingly likely to use Malaysia as a hub for its expansion across Asean.
Source: The Edge