Government Confirms Chinese Firm Exempted From GST For The RM55 Billion ECRL Project
Customs director-general said that it is to reduce the cost of implementation.
By Justin Tan — 17 Apr 2018, 02:56 PM
Customs director-general Datuk Seri Subromaniam Tholasy has confirmed that China Communications Construction Sdn Bhd will be given GST relief for the acquisition of goods and services for the East Coast Rail Link (ECRL) project yesterday, 16 April
According to Malaysiakini, Subromaniam explained that the Royal Malaysian Customs Department had supported the tax relief certification granted by Ministry of Finance because it is a method to reduce the cost of implementation.
The RM55 billion ECRL project is owned and operated by a subsidiary of the Finance Ministry after securing a soft loan from the Export-Import Bank of China, as reported previously by New Straits Times.
The Customs director-general listed several reasons as to why the department supported the GST exemption idea
In his statement, as reported by Malaysiakini, he said:
1. The ECRL is a project backed by both governments and the interest rate of the loan given was "better" than the cost of GST.
2. The Malaysian government will bear the cost of the estimated RM55 billion project.
3. The public will benefit from the lower implementation cost and to ensure that the strategic ECRL project will be a success.
His statement comes after Amanah vice-president Husam Musa uploaded a certificate of GST relief signed by the Ministry of Finance given to the Chinese firm
Husam said in his Facebook post, "How true is this? A company from China being granted GST relief. Finance Ministry, please provide an explanation."
Meanwhile, Barisan Nasional (BN) strategist Eric See-To said that it does not make any sense for the government to pay GST to itself
He said in a statement last night, 16 April, "Unlike standard government projects, remember that the project is funded by soft loans (from China).
"With GST, (it) will raise the total amount of loans and hence the interest.
"It is better to grant the company an exemption, which is provided by the law to reduce unnecessary processes and expenses."
See-To chided Pakatan Harapan leaders for taking advantage of the situation and their failure to understand the GST system.Malaysia worked with China to build the ECRL because it offered the most attractive deal, including a seven-year relief from servicing of the loan, Datuk Seri Najib Tun Razak admitted, as reported by The Star
The 688km project, which links Port Klang, Selangor with Pahang, Terengganu, and Kelantan, will have 28 stations in total.
The rail link will offer passenger and cargo rail services. It will be built and funded by Chinese state firms, is projected for completion in 2024.