Port Klang Free Zone sinks deeper into money woes
Posted by omong on June 1, 2009
Malaysia port project sinks deeper into money woes – News Wires – CNBC.com
A scandal-plagued port project that has embarrassed the Malaysian government amid accusations of mismanagement is in worse financial trouble than thought, according to an auditor’s report released Thursday.The Port Klang Free Zone — a 1,000-acre (400-hectare) industrial and trading hub that opened in November 2006 — has been a publicity nightmare for the government over the past two years after Malaysia’s main port authority incurred massive cost overruns to develop the project.
The government approved a loan in 2007 to rescue the Port Klang Authority from debts exceeding $1 billion, raising opposition allegations of corruption and a lack of transparency in government-linked projects.
The port authority might have problems paying the loan installments, which would result in additional interest and send the project’s bill soaring to 12.5 billion ringgit ($3.5 billion), according to a report by accountancy firm PriceWaterhouseCoopers, which was appointed in October to audit the project.
The project had originally been targeted to cost 1.8 billion ringgit, but the figure ballooned to 4.6 billion ringgit by the time it was ready to open, officials previously said.
The auditor’s report listed a wide range of missteps, saying there was “a general lack of board oversight and governance.” It also noted there could be “potential conflicts of interest” in company officials involved in land acquisitions for the project.
Transport Minister Ong Tee Keat had promised Wednesday that the government would act on the report and take action against anyone involved in wrongdoing.
Dozens of companies involved in manufacturing, trading and logistics have set up shop at the Klang zone. It is targeted mainly at investors from the Middle East, China, Japan and India.
Government bailouts of prominent companies occurred regularly in the 1990s, damaging public confidence in big state projects. The opposition blamed the bailouts on corruption and undisciplined spending.
Read:
