No bailout for private-sector projects, says Badawi

The Malaysian government will not bail out private-sector led projects that run into problems, Prime Minister Abdullah Badawi says. Speaking late Tuesday at a business conference in Singapore, the Malaysian leader said his government's priority was to spend the money on improving the country's infrastructure and other priority areas.
"Spending it, develop the project, operating it is entirely yours and don't ask me to pay for you," he told delegates to the Forbes Global CEO Conference. "If you fail, don't expect us to bail out... I need the money for something else, not for bailing out," he said.
The prime minister was referring to private finance initiative schemes where typically a privately-owned construction firm would design, build, finance and manage a project under a long-term contract. As an example, he mentioned a private-sector proposal for a fast train linking Singapore and Kuala Lumpur.
The government last year received a private proposal from Malaysian property and utility firm YTL Corp for a high-speed train link. Transport minister Chan Kong Choy said in March that the proposal was still being evaluated.
Such a project will require a huge capital outlay which the government would prefer to spend in other areas such as building better schools, said Abdullah. While his government was not against the project, Abdullah said he made clear public funds would not be involved with the fast train proposal. "You spend your money, you build the train, you decide on the fare... because we are not in the business of running a train," said Abdullah.
His comments come just weeks after the government granted a soft loan to a port authority in central Selangor state to cover debts totalling 4.6 billion ringgit (1.3 billion dollars) since construction began in 2004. Opposition leaders and corruption watchdogs had urged the government not to bail out the Port Klang Free Zone and called for a thorough investigation.
Private finance schemes were introduced as a new development approach after a slew of mega projects ran into financial difficulties following privatisation exercises in the 1980s. Reports last year said the government had spent 11 billion ringgit since 2001 to rescue ailing companies and their key projects.