Thursday, June 04, 2009

PKFZ: Forward, March! At All Costs?

Ong Tee Keat knee-jerk reaction to reject a cost-benefit analysis of shutting down the Port Klang Free Zone to save the Government a further RM8.6 billion unhelpful to “make sure that the interest of the people are fully protected and that this Government walks the talk.”

The Minister of Transport, Datuk Seri Ong Tee Keat has on 28th May stated that the Government needs to “seriously act on the findings of the report to make sure that the interest of the people are fully protected and that this Government walks the talk.”

Unfortunately, the DAP's suggestion for the Government to consider and to do a cost-benefit analysis of shutting down the scandalous Port Klang Free Zone (PKFZ) project which will cost the Government a further injection of RM8.6 billion of funds to keep alive, has been rejected by the Minister in a knee-jerk reaction.

Based on the latest existing cashflow forecast provided by the Port Klang Authority (PKA) to PriceWaterhouse Coopers (PwC) for their evaluation, PKA will be suffering a cashflow shortfall for the next 33 years until 2042. By 2029, it will have cumulative cashflow deficit amounting to RM3.56 billion.

This shortfall will require additional and restructured financing, which will result in an additional RM5 billion spent on interest payments. Hence the total additional burden the Government will have to bear will amount to RM8.56 billion. This amount can only be repaid by the year 2051, and that's assuming that the forecast provided by PKA has not been overly optimistic!

Which investor in the world, whether private or government would even consider taking part in such an investment with 33 years of cash shortfall, and that's not even talking about accounting profit which may take even longer to realise?

Therefore it will be an act of ultimate irresponsibility for Datuk Seri Ong Tee Keat to immediately rule out shutting down PKFZ, and to pursue the project at all cost even if it is at the expense of the people he claims to want to protect.

Datuk Seri Ong Tee Keat today announced that “closing down PKFZ as suggested by opposition is clearly a knee jerk reaction which spells of political agenda and defeatist attitude.”

Shutting down PKFZ as it is envisioned today allows the Government to start with a fresh sheet of paper, after salvaging whatever remaining assets in PKA and PKFZ and minimising the losses and commitment of the Government.

Our suggestion to consider closing down PKFZ certainly spells of a “political agenda” to ensure the tax payers are not ripped off. On the other hand, Ong's knee jerk outright rejection however, smacks of wanton recklesses in handling public funds.

Ong claims that he is “not sitting still and playing rhetoric” but up until the report was publicly released recently, we have never seen any concrete steps or measures taken by the Ministry of Transport or PKA to salvage the situation since he has been appointed as the Minister after 14 months.

All we are still hearing is the rhetoric that “professional experts and entrepreneurs have been roped in” or “let the financial consultants and management experts work out a more viable solution”. Ong has not shown us a concrete plan which can possibly be more beneficial to the tax-payers than shutting down PKFZ, salvaging its assets and starting from a fresh sheet.
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