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'I have to cut hospitals'? Experts question Rafizi's argument for airport deal

The economy minister continues to attract criticism for claiming that government funds for schools and hospitals will be affected if a foreign entity is not brought in to run the airports.

3 minute read
Rafizi Ramli.
Rafizi Ramli.

The government's latest defence of the participation of a controversial firm in a consortium to manage the country's airports has been panned by economists and aviation experts.

Economy Minister Rafizi Ramli had said that the government was caught in a dilemma between forking out funds for the high cost of maintaining airports and channelling hundreds of millions of ringgit towards hospitals and schools.

"Every year there will be requests to build a new airport and upgrade airports. Each upgrade usually costs RM2-3 billion, even a small airport costs RM700 million," he said while campaigning for Pakatan Harapan ahead of the Sungai Bakap by-election.

Using the first person pronoun, Rafizi said if he "gives airports", the government would have to cut other allocations meant for the people.

"I would have to cut schools. One school costs RM40-50 million, one hospital RM500 million.

"Say upgrading an airport or building a new one costs RM2 billion, it means I have to cut four hospitals," he added.

Rafizi also said that financial constraints compelled Malaysia Airports Holdings Bhd (MAHB), a state-owned company that manages more than 30 airports nationwide, to seek more funds, adding that it could no longer remain a public listed company.

Experts who spoke to MalaysiaNow however questioned Rafizi's "dilemma", pointing out other ways of raising funds to upgrade infrastructure without touching allocations for more critical sectors.

"There should not be a dilemma for the government. Health and education are equally important and I understand that the government has allocated most of the budget for these two areas," said Amanda Yeo, a researcher and senior fellow at the Pacific Research Center  – a think tank that offers consultancy services in geopolitics, socioeconomics, development trends, and risk management.

Yeo also said funds for airports could be raised through a public-private partnership model.

"To attract more tourists to Malaysia, the government may consider looking for investors who are into tourism," she said.

Putrajaya has been fighting opposition to its decision to bring in Global Infrastructure Partners (GIP), a company owned by BlackRock, a US fund manager accused of complicity with Israeli war crimes.

Under the plan announced in May, GIP will get a 30% stake in a consortium to manage MAHB, alongside Khazanah Nasional and the Employees Provident Fund (EPF), both entities under the jurisdiction of the finance ministry helmed by Prime Minister Anwar Ibrahim.

GIP manages several airports including the Edinburgh Airport in Scotland as well as Gatwick in the UK and Sydney in Australia.

But critics have questioned its credibility, citing poor global rankings of airports under its care.

They also said Putrajaya had more options in its search for partners, and that many players in Asia have performed well with their airports ranked as some of the top in the world.

Rafizi's claim of a lack of funds also drew the ire of some social media users.

The PKR deputy president previously offered similar reasons in defending the move to withdraw diesel subsidies, which caused a 56% price hike for the fuel in the peninsula.

Rafizi said that financial constraints as well as high debts compelled the government to take austerity measures.

Analyst Adilah Zafirah Mohd Suberi however questioned Rafizi's line of argument.

She said there were many other ways to get the funds to upgrade airports without involving government budgets.

Noting that MAHB had posted huge profits last year – some RM500 million, up from RM187 million the previous year – Adilah also said there seemed to be double standards by the government in its reasons for lack of funds.

She said there was no such reason cited in the approval of the Penang LRT project worth RM10 billion under the 2024 budget.

At the same time, Putrajaya refused to approve the construction of the Kulim airport in Kedah even though the state government said it had raised enough funds, she added.

"It (Kulim airport) has the necessary funds and is just waiting for the approval of the transport ministry," Adilah, a researcher at IRIS Institute, told MalaysiaNow.

"It reeks of double standards. Is the government really serious about reducing the development gap between regions in the country? Why only focus development in one area, not the entire northern corridor?" she asked, referring to the government's masterplan for Perlis, Penang, Kedah and Perak.

Aviation expert Shukor Yusof agreed that there was a need to upgrade airports, which often involved huge costs. 

"But it should take into account the most suitable business model.

"The government doesn't have money to develop KLIA but there are other options, not just privatisation," said Syukor from Endau Analytics, referring to the controversial move to privatise MAHB.

"Privatisation is the easy way without taking into account the unique landscape of Malaysian aviation which also includes Sarawak and Sabah," he said.