Invocation of Water Services Industry Act may hurt Malaysian economy
Published on by Water Network Research, Official research team of The Water Network in Government
The invocation of Section 114 of the Water Services Industry Act (Wasia) 2006 by the Federal government to take over water operators in Selangor could have severe implications on the sanctity of Malaysian government-linked contracts.The Section 114 allows the minister in-charge of water to take over control of license if national interest is concerned.
A report by Credit Suisse said when investors question the validity of Malaysian contract, it would lead to the collapse and freeze of equity and bond markets which would be a huge price for the country to pay.
It said some 40 per cent or approximately RM430 billion of bonds are related to infrastructure and power concessions.
"The Federal government must understand the repercussions of the nation and domestic capital markets as the cost of equity and debt would rise," it said.
Companies with bond financed concession agreements that may be at risk include power, water, toll roads, ports, media, and telecommunications spectrum.
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