New Delhi, Jan 10 – Issues affecting Malaysian investments in India, especially road projects, were among the matters raised by the Special Envoy (Infrastructure) to India & South Asia, Datuk Seri Utama S. Samy Vellu, during his meeting with India’s Finance Minister, P. Chidambaram.
Among them were the two road projects in Tamil Nadu that were given to Malaysian contractors via a government-to-government agreement.
“The Malaysian contractors have studied the projects and there seems to be no Viable Gap Funding (VGF) for them,” he told Bernama on the sidelines of the 12th Pravasi Bharatiya Divas (Non-Resident Indian Day), which ended here Thursday.
VGF is a scheme used for projects with high-economic returns, but the financial returns may not be adequate for a profit-seeking investor.
In such cases, the government can pitch in and meet a portion of the cost, making the project viable.
Malaysia and India signed a memorandum of understanding in 2010 on highway management and development.
During Prime Minister Datuk Seri Najib Tun Razak’s visit in December 2012, the Indian government announced it would award the two highway projects.
Also present at the meeting were Malaysia’s Deputy High Commissioner to India, Wan Aznainnizam Yusri Wan Abd Rashid, and Second Secretary (Political), Mohamed Ariff Mohamed Ali.
The second issue raised was the claim disputes involving Malaysian contractors with the National Highway Authority of India (NHAI).
“When a dispute is taken to arbitration and the outcome favours Malaysian contractors, NHAI don’t abide by the decision and takes it to the court.
“As investors, Malaysian contractors want a speedy solutions but it is not the case here. One must make a decision whether to go to arbitration or to court (where sometimes cases drag up to six-seven years).
“Hence the bigger loser here is the concession holder,” said Samy Vellu.
Samy Vellu said another issue faced by the Malaysian contractors was that they were not allowed to diversify their stakes in the company set-up for projects in India.
“Their concession can be 27 or 28 years and in between if they get better offer for the stake they want to dispose of it. However, the state government does not allow them to do so,” he said.
He said if such constraints were addressed they would enable the Malaysian contractors to use the fund for other investments in India.
The special envoy said Malaysian contractors should also be more vigilant when taking up projects in India or any other country.
“We are good road builders but we must also understand that every market is different in the way it operates. They must understand every procedures, the pros and cons before entering into an agreements,” he said.
Samy Vellu said he was here to help the Malaysian companies.
“So, it will be good for them to seek our help before taking up projects,” said Samy Vellu, who has been instrumental in securing a lot of road projects in India and construction of world class infrastructures in Malaysia during his tenure as Works Minister.
Samy Vellu said Chidambaram has agreed to look into the matter.
“He has asked us to submit detailed report on the issues raised and also bring up this matters to the India’s Ministry of Road Transport and Highways,” he said.
The special envoy said he would brief Najib on the outcome of his meeting with Chidambaram.
– Bernama
