As I had written in an earlier post, Mahathir did NOT succeed in his attempts to persuade Chinese leaders to accept him withdrawing from projects contracted with China without any penalties.
At most, China might have allowed a longer period for Malaysia to settle the compensations. They might have offered Mahathir 'tea & sympathy' but probably ended up saying, "Business is business, we cannot interfere with the companies who signed those contracts with Malaysia".
I gather that unfavourable outcome for Mahathir after reading the Hong Kong English daily, the Southern China Morning Post, which tells a different story from what Malaysian press reported, that Mahathir did succeed in his reach-out to China and that Chinese leaders understood him.
But alas, no, the Malaysian look-good news might have been the diplomatic gloss and frills of the visit, but they didn't reveal the Chinese very firm stand on compensations.
Mahathir was probably so stunned by the quantum of the compensation required by the Chinese that he showed his anger when he uttered rather dejectedly:
“If we have to pay compensation, we have to pay. This is the stupidity of the negotiations before. We must find a way to exit these projects … this is our own people’s stupidity.”
He has blamed Najib's "stupidity" for not having an exit clause to the projects' contracts, but Najib came back with a challenge which Mahathir has yet to respond to, namely, to hold a RCI on the project contracts and exit clauses, which Najib assured us do exist.
For more, see MM Online - Najib challenges Putrajaya to RCI on cancelled China projects (extracts):
He said the public have a right to know all the reasons why the projects were cancelled on the Malaysian government’s insistence, instead of only depending on the allegations made against him and the defeated Barisan Nasional (BN) government.
“I urge the government to conduct RCIs (royal commissions of inquiry) into all three projects to determine if there was wrongdoing,” he wrote on his Facebook page this evening.
Hmmm, maybe Mahathir dares NOT because those exit clauses do exists.
But let's leave those aside for a while and discuss what's the penalty for abandoning the projects - since I am not an expert I defer you to Suara Kmp (KijangMAS Perkasa) FB page on the ECRL.
Extracts of what he (I am assuming KijangMAS is a 'he') are as follows:
Land Acquisition : RM 2.0 billion
-----------------------
RM42.0 billion
add Finance Charge RM 7.7 billion
-----------------------
Total Cost RM49.7 billion
Ok?
Faham?
Now . . . that's over RM31 billion LESS than LGE's oft-repeated RM81 billion plucked from thin air!
LGE might ask again: "what about operating costs? RM600 million to RM1.0 billion annually wohhh!"
Haiyaa . . . first of all, those figures come from where?
Thin air again?
Secondly, of course lah got "operating costs" once you start to operate things.
IWK plant got operating costs. Water treatment plant got operating costs. The future Penang LRT and undersea tunnel also got operating costs. Zoo Negara got operating costs. My cars and trucks got operating costs. My houses and rental properties got operating costs. Even kapchais got operating costs maaa.
BUT . . . you cannot plough "operating costs" into the project Capex.
You buy a RM500,000 house. Do you add the monthly TNB bill and water bill and Astro subscription and gardener fees and helper salary and neighborhood watch bill and Cukai Pintu and Cukai Tanah to the "purchase price" of your house?
Gila kah?
Mana boleh treat the operating costs of a project or asset as Capex and tally them up as "project cost" in perpetuity.
Once the trains start to roll, of course lah MRL will generate revenue from passenger tickets and freight charges. And of course lah it will NOT be enough to cover all costs, but this is PUBLIC transport lah dei.
Mana boleh fully cover cost?
KL MRT and LRT ridership charges can cover loan servicing and operating costs ka? Singapore MRT? London Underground? New York Subway? Tokyo Subway? Japanese Shinkansen? France's TGV? Penang Ferry? The two Penang Bridges? Rapid Penang?
Semua mana boleh cover cost.
We all must understand, railways by and large are public amenities paid mostly by public funds for the public good.
To read his full article, which is fairly long, please go to his FB page (linked as above), but I'll provide a short extract here on the consequence of cancelling the ECRL project:
By the time the dust settles, we are staring at RM25-30 billion down the drain with nothing to show for it!
That is IF we cancel the project.
That's why back in June 2018, I said that Malaysia faced two choices: a painful choice or a more painful choice.
We either spend an additional RM20+ billion to complete Phase 1 and have a modern 600km high-speed rail line from Gombak to Kuantan, KT and KB . . . OR . . . we abandon the project and incur RM25-30 billion in sunk costs, breach of contract penalties and major clean-up and rehab of worksites along the 600km route.
That is IF we cancel the project.
That's why back in June 2018, I said that Malaysia faced two choices: a painful choice or a more painful choice.
We either spend an additional RM20+ billion to complete Phase 1 and have a modern 600km high-speed rail line from Gombak to Kuantan, KT and KB . . . OR . . . we abandon the project and incur RM25-30 billion in sunk costs, breach of contract penalties and major clean-up and rehab of worksites along the 600km route.
We will end up almost RM30 billion in debt payable NOW with nothing tangible to show in return.
(1) ABC (Aug 21, 2018, 5:47 AM ET) - Malaysian PM says China-financed projects canceled:
(2) TMI (23 Aug 2018 5:09PM) - No cancellation of Chinese projects yet, says PM:
Yes, KijangMAS said that the cancellation costs will be MORE than continuing, though of course for Mahathir to continue with a Najib project is far too much for his poor heart - at this stage anyway.
I have seen two headlines which I reproduce for your reading pleasure, as follows:
As I had written in an earlier post:
And on the US$20 billion East Coast Rail Link and two pipelines worth over US$2 billion, when queried by reporters, he stated rather ambiguously that the projects had been cancelled outright, but also they may be “deferred”.
I have to admit I cannot read what that ambiguous statement means.
But what I can read between the lines would be that he probably isn't enamoured with China, Chinese and probably Chinese Malaysians, especially now.
And it's worthwhile reading what the Chinese spokesman said: ... it would take a “long-term” view to resolving the underlying tension with Kuala Lumpur.
“When … two countries cooperate, it is unavoidable that various problems may emerge and we may take different views at different times.”
So Mahathir has failed and presumably Daim too must have failed in their pow-wow with the Chinese leaders.
I have to admit I cannot read what that ambiguous statement means.
But what I can read between the lines would be that he probably isn't enamoured with China, Chinese and probably Chinese Malaysians, especially now.
And it's worthwhile reading what the Chinese spokesman said: ... it would take a “long-term” view to resolving the underlying tension with Kuala Lumpur.
“When … two countries cooperate, it is unavoidable that various problems may emerge and we may take different views at different times.”
So Mahathir has failed and presumably Daim too must have failed in their pow-wow with the Chinese leaders.
But now it becomes clearer that on realising the painful consequences of cancelling the ECRL, he might have swallowed his pride, wait for a while to regain his 'face', and then backtrack on his earlier cancellation ..... which has been why he now says as per the TMI report (23 Aug 2018 5:09PM) that there is No cancellation of Chinese projects yet:
Anytime when bad political emotions come into decision making, it clouds good judgement and make fools of the decision maker.
ReplyDeleteBefore all the farts contaminating the air surrounding the ecrl project, let's look at the issue of an exit clause.
ReplyDeleteIf exit clause exists then WHAT entails its empowerment?
Normal contract USUALLY lists out in detail the conditions when the exit clause comes into effect.
Such conditions MUST be mutually agreed upon by both parties during negotiation of the contract.
NOW, for whatsoever reason(s), if one party plays 'dumb' in negotiating for the enforceable conditions of the exit clause, then the other party can take full advantage to formulate the terms of the exit clause to his favour!
This WAS the very likely situation when mamak came to know about the terms of the exit clause. In a spur-of-the-moment anger, mamak lashed out the cry of Najib's "stupidity" for not having an exit clause to the projects' contracts.
The out burst of anger was for the UNFAVORABLE terms that had been worded into the exit clause.
Looking at it logically (Chinaman business acueme), no Chinaman Worth's his/her salt WOULDN'T safeguard his/her investment w/o careful worded terms to recover possible unforseen circumstances. Especially, when dealing with a known crook!
Judging from the superbly favourable advanced claim payments that were not commensurate with the progressive works done for most of these China linked projects, the Chinaman would be Bob's uncle if he/she hasn't put in some ironcladed penalties/compensations to protect these lopsided payment terms!
Mamak's impulsive outburst, for a experienced politikus like him, ONLY puts to pay HOW unsavoury r those exit clause terms!
Jibby has indeed sold M'sia cheap2 to save his skin while still scrapping the barrel's bottom clean!
Jibby's cry for RCI on the project contracts and exit clauses IS comicky & foolishly ill-adviced!
When mamak discloses those terms worded into the exit clause, jibby IS getting himself deeper into the cesspool. Just like when two gas line projects totaling RM9.4bil, where 88% of the amount has been drawn down - but only 13% of the work had been completed.
The funniest part IS there r moronic sycophants take that RCI claim as a winning chip!
Memang pariah to the nth!
communist china is the worst crook, lets have a rci, see if harapan hv ball to deal with this in a transparent manner.
DeleteYr master pkr CAN?
DeleteWakakakaka……
chabo I have gut wrenching news for you, whatever the outcome, whether we cancel or proceed, maddy will still come out smelling like a rose, the perception is we are farked either way because of your idol's folly, nobody sees it like you do, that is, maddy being vindictive, but people tend to believe that he is trying to do the right thing
ReplyDeleteyou know, I do agree with you - plenty of gullible guppies still around in the same way anwaristas used to be
DeleteWakakakakaka……
ReplyDeleteSo u r a sycophant for that truly xenophobic & cinapek-hater - deminegara!
When his bigoted farts towards the cinapeks ONLY drawn choirboys to his discourses he had no choice but stopped the site many moons ago.
Now he resurface as Suara Kmp (KijangMAS Perkasa) on FB.
1) wakakakaka… is his cost spreadsheet for the ecrl phase cost a guesstimate of his own making?
Macam the one he claimed lge 'fabricated'!
Moronic 2x5.
2) yes, you cannot plough "operating costs" into the project Capex. But is that what lge implied?
Once u r committed to the project, inadvertently a public one, the operating cost IS a recurrent headache that's forever present & accumulating due to project aging.
In a nutshell, it's a hidden cost that impaired upon the capex consideration. Remember that golden phrase of good design reduces operating costs? & good design IS a capex consideration!
3) Mana boleh fully cover cost?
If the project can sustain itself by at least generating 60% of the operating cost then there is a chance that the project is viable.
Serving a large consuming population is a way to achieve that 60% target.
Otherwise, that project is a sinkhole of no return.
HK's MTR covers her business - utilising the landbanks on top of its stations to generate rental incomes. Similarly with the RedDot's catching up MRT.
This 'trained' monkey can't think out of the box le!
4) By the time the dust settles, we are staring at RM25-30 billion down the drain with nothing to show for it!
From where that RM25-30 billion down the drain come from? The superbly favourable advanced payment scheme concocted by jibby/hippo team?
Otherwise, the initial cost is no where near that figure.
This numeric deficient moron should engage his Uranus money pal for number crunching lah.
5) ECRL is a project sinkhole that ONLY serves the South China Sea military initiative of China. The mainland Chinese has the money to spare. That money they can be recovered in an affordable period as in “long-term” view to resolving the underlying tension with Kuala Lumpur under the jibby's reign.
If it ever been built it would only serve the China just like that Ceylon strategic port of Hambantota leased to China on a 99-year lease. The East coast inhabitants would only be getting crumbs from possible trade spillovers.
This is a deal that COULD threatens the country’s sovereignty.
Is this another M'sian “long-term” view that mfers, like u can't see?
BTW, how could a cinapek-hater SUDDENLY so gungho about Chinaman projects?
Jangan ikut nafsu yang melulu.
ReplyDelete"O David, indeed We have made you a successor upon the earth, so judge between the people in truth and do not follow [your own] desire, as it will lead you astray from the way of Allah ." [38:26]
"But if the Truth had followed their [own] inclinations [desire] , the heavens and the earth and whoever is in them would have been ruined. " [23:71]
Bloody zombie!
DeleteThe path u claimed to follow is Satan's desire masqueraded as Allah's truth!
Ikuti nafsu tu lah sampai Kerala.
In other words, Malaysia has been sodomized with iron-clad contracts for a series of future Mega White Elephants.
ReplyDeleteAll the objective information I see is ECRL is a VERY Bad deal for Malaysia.
ReplyDeleteDo not equate the operating costs of a social necessity like the MRT or vital utility such as IWK to an expensive White Elephant such as the ECRL.
Ktemoc is supporting THE ECRL purely out of Malice towards Mahathir.
For a preview of the ECRL's future, bearing in mind costly tickets for the high speed rail.
ReplyDeleteJust look at the Tolled East Coast Expressway today.
Where are the passengers?
Where are the lorries ?
On a normal day, not just before or after a major national Festival, the East Coast Expressway is deserted.
I have driven 140 kph ( way over the legal speed limit haha,) no problems.
Lim Guan Eng, the good accountant that he is , is right to worry about the ECRL White Elephants future operating costs.
Compared to high speed trains, expressways are cheap to operate.
China's painful experience shows that high speed trains not maintained with the highest standards lead to horrifying disasters.
No la...they will sawasta it...and suddenly people like Jomo will suddenly say...now ecrl is viable...plus with PM4 experience in swastaing why worry...if goes bankrup pun..epf..ltat...th...petronas will be around to bail out cronies...win win. Rakyat got public infra and cronies make skim cepat kaya that never lost one.
ReplyDeleteFrom Wikipedia..
ReplyDelete"A white elephant is a possession which its owner cannot dispose of and whose cost, particularly that of maintenance, is out of proportion to its usefulness. In modern usage, it is an object, building project, scheme, business venture, facility, etc., considered expensive but without use or value"
ECRL
like the Proton car which has cost Malaysians RM360 Billion over 33 years
Deletelike the abandoned crooked bridge custom complex
For a great many Malaysians in the 1990's , a Proton was the first New Car they managed to afford, where previously they made do with 2nd Hand Datsuns and Toyotas.
DeleteI don't regard Proton in its early days as a White Elephant, though Proton lost its way latter, milking its position as an Economic Rentier, instead of building up its quality and technology.
From what I read, the Excise duties for non-National cars went into the Government Consolidated Fund.
It didn't "Cost" Malaysia RM 330 Billion.
If you insist on characterizing it that way, then GST has "Cost" Malaysians some RM 80 Billion, in just 4 short years, it being the Addtional Tax squeezed from Malaysians.
Now, the ECRL RM 81 Billion gets paid to China. Now, China is obviously not Malaysia, so THAT is a real funds outflow, with little to show except a White Elephant.
with little to show except a ...
Deletedon't the people on the East Coast matter - aren't they Malaysians?
as the author of ECRL Requiem wrote: railways by and large are public amenities paid mostly by public funds for the public good.
The ECRL costs RM 80 Million per kilometre, and designed as a Premium High Speed Rail service.
DeleteA Public Amenity is by definition a service accessible to the Common Man, and affordable by the Common Man.
The ECRL is going to be far beyond the affordability of the Common East Coast Pak Cik. Either that or it would require costly permanent subsidies to operate.
ECRL does not qualify to be a public amenity for the public good.
I suspect the main ECRL beneficiary is China strategic geopolitical interests.
Why should the Malaysian taxpayer pay for China's Geopolitical interests ?
Lock Najib up and throw away the key.
ReplyDelete