PM: Govt writes off RM3.8b state govt debt for rural water supply project

Prime Minister Tun Dr Mahathir Mohammad speaks during the National Finance Council Meeting 2019 press conference in Putrajaya on May 27, 2019. — Picture by Miera Zulyana
Prime Minister Tun Dr Mahathir Mohammad speaks during the National Finance Council Meeting 2019 press conference in Putrajaya on May 27, 2019. — Picture by Miera Zulyana

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PUTRAJAYA, May 27 — The Federal Government has agreed to write off the loan given to the state government for the rural water supply project on 2001 onward, said Prime Minister Tun Dr Mahathir Mohamad today.

He said the loan was based on the balance that had not been settled on December 31, 2018 with the total amount of RM3.8 billion, which was subject to the state government to finalise the restructuring of water supply by December 31, 2019 at the latest.

For the future, he said the rural water supply project would no longer be financed in the form of soft loan from the federal government but allocated in the form of a grant under regulations of the Rural Development Ministry.

“It is hoped that the implementation of the write-off could speed up the restructuring of the water supply industry and reduce the annual financial burden of the state as well as ensuring that continued benefits could be enjoyed by the people in the long term,” he said at a media conference after chairing the National Financial Council Meeting, here today.

At the same time, Dr Mahathir said the state operating company could focus attention to improving the water supply service quality. 

At the meeting today, Dr Mahathir also said the federal government had agreed to approve an additional allocation of RM60 million for the state governments beginning this year.

He said the additional allocation was to finance the new rate of Allocation Based on the Level of Development of the Economy, Infrastructure and Wellbeing (TAHAP) of the people beginning 2019 aimed at protecting the forest and marine protection areas and helping the states earning less revenue to implement programs and projects in order to raise state revenue.

Dr Mahathir said the meeting also agreed to approve the granting of 50 per cent of revenue from the collection of tourism tax to become a new grant to the state government beginning this year.

The granting of half of the tax collection would help the state governments to maintain and provide tourism facilities, as well as promote and market tourist destinations besides improving the reporting of tourism statistics, he said.

“We have imposed a tax payment of RM10 per room and so on. The collection is actually for the federal government and we have agreed to give back 50 per cent to the state government,” he added.

Meanwhile in improving safety for road users, he said, the government had improved the Malaysian Road Record  Information System  (MARRIS) including by expanding the expenditure allowed for financing road maintenance which did not reach the minimum standards of the Public Works Department and not registered in the online Marris system.

The improvement included involving expenditure to upgrade the roads, bridges, drains with a maximum of not more than 15 per cent of the real maintenance expenditure of the previous year or 15 million, whichever was lower, he said.

“So we can improve existing roads but excluding village roads, as they are financed by other channels,” he added.

According to the prime minister, the decision of the meeting today had directly raised assistance to the state governments by taking into account the deficit suffered by the present state government.

Dr Mahathir, who was asked whether the measures to be taken would have a financial burden to the federal government, said: “We have to a certain extent to give more from the federal government to the state governments but the amount could be afforded by the federal government.” — Beranam

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