KUALA LUMPUR – Various approved large-scale projects, or those in the process of approval, have been given the boot in recent years, all of which came with high prices.
Reaching hundreds of millions of ringgit, these compensation measures often include complicated legal wrangling and suits.
Taxpayer funds are often tapped into to reimburse project developers.
The most recent project cancellation, the PJD Link, may incur compensation costs reaching up to RM20 million, all to be shouldered by taxpayers.
The final claim amount might surge beyond RM100 million, given that the project concession company has already covered expenses for feasibility studies and approvals since 2016.
Scoop takes a look into the mega projects cancelled by the government since 2007.
Southern Gateway (2007) – compensation of RM222.4 million
The cancelled Southern Integrated Gateway had two initial packages, a Customs, Immigration, and Quarantine (CIQ) project, as well as a package for a crooked bridge and train bridge connecting Johor to Singapore.
Then-works minister Datuk Seri Samy Vellu informed the Dewan Rakyat that the compensation paid by the government following the project’s cancellation amounted to RM222.4 million.
He said the initial contract for the crooked bridge and train bridge contract was RM1.113 billion.
“To allow the CIQ to operate, the government decided to build a temporary road connecting the Johor embankment and the complex, with a total of RM190.7 million,” he said in response to Salahuddin Ayub (Kubang Kerian-PAS).
Samy said the site possession date for both packages was January 1, 2003, but the contract for the bridge was terminated on April 12, 2006.
SKIN (2018) – compensation of RM231.55 million
The Sistem Kawalan Imigresen Nasional (SKIN) project under the Immigration Department worth RM3.5 billion was axed to make way for the development of more comprehensive, effective and user-friendly systems, according to then-home minister Tan Sri Muhyiddin Yassin.
SKIN, which was expected to be implemented in 2021, was a system aimed at empowering the nation’s immigration regulation, ensuring border security, and fulfilling the current and future needs of immigration operations.
On March 14 this year, Awanbiru Technology Bhd (Awantec), previously known as Prestariang Bhd, won a suit against the government following SKIN’s cancellation.
The high court ordered the government to pay Awantec subsidiary, Presaring Skin Sdn Bhd (PSKIN), in addition to the company’s legal fees during the litigation process.
ECRL and TSGP (2018)
Then-prime minister Tun Dr Mahathir Mohamad announced the cancellation of the East Coast Rail Link (ECRL) and Trans-Sabah Gas Pipeline (TSGP) projects.
He said it was because the government could not afford to bear the costs, and Malaysia did not need such projects.
“It is a large loan, and we cannot afford to continue and pay it back. We do not need such projects in Malaysia at this point.”
Dr Mahathir said the government had 30 years to pay off the debt, which would result in more compensation for ECRL’s contractor. He said the burdensome project also cost over RM100 billion to implement.
However, the government announced it would continue the project with construction costs amounting to RM44 billion in 2019.
The Prime Minister’s Department said the cost for ECRL’s first and second phases was cut down from RM65.5 billion to RM21.5 billion.
The cost reduction was made possible after Malaysia Rail Link Sdn Bhd (MRL) sealed a settlement agreement with China Communications Construction Company Ltd (CCCC).
PR1MA (2020) – compensation of RM172 million
The government axed 32 PR1MA projects and forked out RM172 million to pay compensation for 17 of the development projects.
Then-housing and local government minister Zuraida Kamaruddin said the remaining 15 projects were still in the negotiation process.
“We have managed to reduce 30% of the claims,” she said in response to a supplementary question by Chow Kon Yeow (Tanjong-PH) at the Dewan Rakyat.
High-Speed Rail (2021) – compensation: RM320 million
Malaysia paid some RM320 million to Singapore as compensation following the cancellation of the Kuala Lumpur-Singapore High-Speed Rail (HSR) project.
In a statement, the then-minister in the Prime Minister’s Department (Economy) Datuk Seri Mustapa Mohamed and Singapore’s Transport Minister Ong Ye Kung said the amount was mutually agreed upon.
“The payment of S$102,815,576.00 (RM320,270,519.24) has been made by the Malaysian government as compensation towards the cost borne by the Singaporean government in the HSR development project, following its delay,” Mustapa said.
PJD Link (2024)
The government recently decided to scrap the long discussed Petaling Jaya Traffic Dispersal Elevated elevated highway (PJD Link) project.
Communications Minister Fahmi Fadzil said the cabinet agreed to cancel the project after its developers failed to fulfil several necessary terms.
“PJD Link’s representative asked for additional time to fulfil several terms, but their request was rejected by the government,” said Fahmi, who is also the government spokesperson.
However, with the cancellation, the compensation expected to be borne by taxpayers could reach between RM20 million and RM100 million.
This is because the project’s concessionaire incurred costs for various feasibility studies and approvals spanning years.
At the same time, most residents in Taman Medan, Petaling Jaya reportedly expressed their support for PJD Link’s construction, as they have been facing traffic issues for a long time.
Speaking to Scoop, area assemblyman Dr Afif Bahardin said lawmakers from the unity government, namely Petaling Jaya MP Lee Chean Chung and Damasara MP Gobind Singh Deo, must provide alternative solutions, as the alignment of the proposed elevated highway had passed through their constituencies.
“The majority of residents in Taman Medan supported the PJD Link because we have been dealing with road congestion problems for too long.” – April 21, 2024