Tuesday, April 22, 2008

Reviewing Projects Under RMK 9

From Reuters:

KUALA LUMPUR, April 22 (Reuters) - Malaysia is reviewing some projects under a state development blueprint, the prime minister said on Tuesday, reviving concerns the government may shelve them after its shock electoral setback in last month's poll.

"There are many projects that are being reviewed at the moment," Abdullah Ahmad Badawi told reporters, referring to jobs under a $54 billion, five-year state development plan.

He did not elaborate but government officials said the state was reconsidering some projects due to the rising cost of building materials and to give priority to food projects to ensure sufficient supply and help curb rising prices.

Last week, state-linked builder UEM Builders (UEMU.KL: Quote, Profile, Research) said work on a bridge it is developing to link Malaysia's northern island state of Penang with the peninsula would be finished later than planned.

Abdullah said completion of the bridge had been delayed due to various factors including land acquisition, design and cost of materials. "We have to review the costs," he told reporters on the sidelines of a meeting with Asian and European culture ministers. "The costs have changed because the prices of materials have gone up."

Under the state development plan, Abdullah had pledged to cut red tape, upgrade infrastructure and improve the investment climate to boost an economy that is losing its edge in electronics manufacturing.

But investors are worried the government may call off some projects after the ruling coalition recorded its worst-ever performance in its 50-year rule in last month's poll.

The ruling coalition lost its two-thirds parliamentary majority and five states to the opposition in the election. With water and land matters under the purview of state governments, investors fret that the coalition's setback could scupper some projects.

A fund manager said Abdullah's comments could further stoke investor worries.

"More likely than not it will be taken negatively because things are still very fragile," said Raymond Tang, chief investment officer of CIMB-Principal Asset Management.

My say is that we need to stop wasting public money in projects that does not provide any economic value added.We have wasted lots of money under Tun Mahathir.

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