An update on the Light Rail Transit 3 (LRT3) project, which will link Bandar Utama to Klang when it is completed. When it was first announced, the Shah Alam Line consisted of a planned 26 …
sorry for the long post but I think you’re conflating microeconomic demand with macroeconomic demand in this context. Let’s think about this holistically in the eyes of an economist and a public servant (LGE) - At the end of the day it’s about mitigating project risks and ensure commercial viability of infrastructure project and at that point in time the government reached its fiscal limits.
demand/ demand risk (price, quality etc) very much plays a role, it would dictate how much the government is paying back to their investors. demand risk also goes hand-in-hand with service quality. I went back to the post from 2018 and he stressed that “I wish to stress that the reduction in cost for the LRT 3 will not compromise the quality of its service or capacity”. All other things being equal - if you could almost halve the project cost, whilst being able to manage demand risk it’s a win-win-win.
What are your personal thoughts on the U turn of LGE decision? If the current unity govt really think LGE did the right thing they wouldn’t fund the stations? I’ve read the article by Slainthayer and I really think its BS that service quality or capacity won’t be compromised.
If the current unity govt really think LGE did the right thing they wouldn’t fund the stations?
It was the best decision at that point in time. 1MDB liabilities totalled US$ 7.8 Billion which goes without saying, had to be serviced by the Government of Malaysia. There was also the ongoing court case with Najib and Malaysia trying its best to recover lost assets to service that debt. Hindsight is always 20/20 as I mentioned in the other reply.
Since then, the economic outlook has changed + Malaysia largely completed its 1MDB debt obligations. Various economic cycles could also change the ways in which a project is delivered, and the way is funded also ie. whether to borrow or fund current spending.
I really think its BS that service quality or capacity won’t be compromised.
Do you have any proof? or is that based on a hunch? I had a quick glance @ slainthayar’s argument. I appreciate the precise calculations for some of the indicators he provided. But Ministry of Finance had access to even more precise calculated forecast as service quality is invariably tied to demand and subsequently revenue generation. in the governments opinion at that point in time, it won’t be compromised or at least it won’t be compromised to the extent of harming revenue. So I tend to agree with him and/or whatever consulting firm they hired to come up with that calculation.
Secondly, I have mentioned that this is very much a business/economic decision and a question of risk/return. Service quality is just one of many factors that could influence revenue. Revenue is also dependent on many other things like operational risks, economic conditions etc… many of which changed since 2018.
At the end of the day, you have to ask yourself: (a) how much extra revenue this project is going to make for the government to repay the investors and the banks for each extra dollar spent (b) how much social impact the project could generate. you could do a cost-benefit analysis, maybe forecasted based on the lifecycle of the project and the answer will become clearer.
And as former public servant myself, my advice is don’t ever question or challenge the logic of bureaucrats. I have once witnessed a USD$4.4B public project shut down overnight. Even the Principal Manager in charge of the project didn’t know until she read the Press news. could be worse lol.
Do you have any proof? or is that based on a hunch?
This is just from reading articles because I don’t have financial experience like you or LGE. But I know Budget 2024 is more focused on social benefits from attending a panel discussion. Were you aware of the questionable background of MinConsult, the consultant used to rationalise MRT2 and LRT3?
Why theres no publicly available social impact assessment of rationalisations is beyond me other than platitude statements.
Why theres no publicly available social impact assessment of rationalisations is beyond me other than platitude statements.
There are a lot of things in malaysia that’s not publicly available online, this is sth the government definitely needs to work on moving forward as transparency is very important when it comes to public infras.
Were you aware of the questionable background of MinConsult, the consultant used to rationalise MRT2 and LRT3?
There are a lot of things in malaysia that’s not publicly available online, this is sth the government definitely needs to work on moving forward as transparency is very important when it comes to public infras.
Also why it sickens me there is no public inspection on LRT3 rationalisation compared to MRT2 rationalisation, which was during the backdoor govt era.
nope. what happened?
Would like to correct that MinConsult has questionable actions rather than background. They have rail experience but it doesnt involve tunnelling, which affects the credibility of how they propose rationalisation of the underground sections. Though they are an independent consultant, they also have a consistent stance against MMC-Gamuda. Not surprised why LGE would choose it over Arup, AECOM etc.
sorry for the long post but I think you’re conflating microeconomic demand with macroeconomic demand in this context. Let’s think about this holistically in the eyes of an economist and a public servant (LGE) - At the end of the day it’s about mitigating project risks and ensure commercial viability of infrastructure project and at that point in time the government reached its fiscal limits.
demand/ demand risk (price, quality etc) very much plays a role, it would dictate how much the government is paying back to their investors. demand risk also goes hand-in-hand with service quality. I went back to the post from 2018 and he stressed that “I wish to stress that the reduction in cost for the LRT 3 will not compromise the quality of its service or capacity”. All other things being equal - if you could almost halve the project cost, whilst being able to manage demand risk it’s a win-win-win.
What are your personal thoughts on the U turn of LGE decision? If the current unity govt really think LGE did the right thing they wouldn’t fund the stations? I’ve read the article by Slainthayer and I really think its BS that service quality or capacity won’t be compromised.
It was the best decision at that point in time. 1MDB liabilities totalled US$ 7.8 Billion which goes without saying, had to be serviced by the Government of Malaysia. There was also the ongoing court case with Najib and Malaysia trying its best to recover lost assets to service that debt. Hindsight is always 20/20 as I mentioned in the other reply.
Since then, the economic outlook has changed + Malaysia largely completed its 1MDB debt obligations. Various economic cycles could also change the ways in which a project is delivered, and the way is funded also ie. whether to borrow or fund current spending.
Do you have any proof? or is that based on a hunch? I had a quick glance @ slainthayar’s argument. I appreciate the precise calculations for some of the indicators he provided. But Ministry of Finance had access to even more precise calculated forecast as service quality is invariably tied to demand and subsequently revenue generation. in the governments opinion at that point in time, it won’t be compromised or at least it won’t be compromised to the extent of harming revenue. So I tend to agree with him and/or whatever consulting firm they hired to come up with that calculation.
Secondly, I have mentioned that this is very much a business/economic decision and a question of risk/return. Service quality is just one of many factors that could influence revenue. Revenue is also dependent on many other things like operational risks, economic conditions etc… many of which changed since 2018.
At the end of the day, you have to ask yourself: (a) how much extra revenue this project is going to make for the government to repay the investors and the banks for each extra dollar spent (b) how much social impact the project could generate. you could do a cost-benefit analysis, maybe forecasted based on the lifecycle of the project and the answer will become clearer.
And as former public servant myself, my advice is don’t ever question or challenge the logic of bureaucrats. I have once witnessed a USD$4.4B public project shut down overnight. Even the Principal Manager in charge of the project didn’t know until she read the Press news. could be worse lol.
This is just from reading articles because I don’t have financial experience like you or LGE. But I know Budget 2024 is more focused on social benefits from attending a panel discussion. Were you aware of the questionable background of MinConsult, the consultant used to rationalise MRT2 and LRT3?
Why theres no publicly available social impact assessment of rationalisations is beyond me other than platitude statements.
There are a lot of things in malaysia that’s not publicly available online, this is sth the government definitely needs to work on moving forward as transparency is very important when it comes to public infras.
nope. what happened?
Also why it sickens me there is no public inspection on LRT3 rationalisation compared to MRT2 rationalisation, which was during the backdoor govt era.
Would like to correct that MinConsult has questionable actions rather than background. They have rail experience but it doesnt involve tunnelling, which affects the credibility of how they propose rationalisation of the underground sections. Though they are an independent consultant, they also have a consistent stance against MMC-Gamuda. Not surprised why LGE would choose it over Arup, AECOM etc.