KUALA LUMPUR, Oct 15 — The federal government will face obstacles in convincing the private sector to help finance the massive infrastructure projects planned in Budget 2020, Fitch Solutions Macro Research said.
In a research note today, the Fitch Group subsidiary suggested that the government’s move to revisit previously decided infrastructure projects might deter private investors from enthusiastically backing its new ventures.
The research house nevertheless said the strong focus on infrastructure spending in next year’s federal spending plan would provide the construction sector with enough momentum to continue expanding.
“However, attracting private capital through public-private partnerships will remain a challenge to the government and we will watch for developments in the PPP space that could boost the growth of the infrastructure sector.
“We await the news on several suspended projects, with a decision on the suspended Johor-Singapore Rail Transit System expected by the end of October 2019,” it said.
Private sector financing will be critical to the ambitions of the government that is constrained by what it insists to be a public debt in excess of “RM1 trillion.”
After winning the general election last year, Pakatan Harapan reviewed several infrastructure projects launched under the previous Barisan Nasional administration before cancelling or postponing some.
Finance Minister Lim Guan Eng tabled a deficit budget for 2020 on Friday, which will continue funding for massive infrastructure projects such as the Mass Rapid Transit in the Klang Valley and the Pan-Borneo Highway that will link Sabah and Sarawak.
The federal government is also proposing to spend billions on infrastructure development in the rural regions of Malaysia.