MRT Corp Defends RM16.8b Ceiling for Penang LRT as MCA Demands Transparency Over Rising Costs

PETALING JAYA – Mass Rapid Transit Corporation Sdn Bhd (MRT Corp) has rejected claims of uncontrolled cost escalation in the Penang Light Rail Transit (LRT) project, insisting that the revised budget ceiling of RM16.8 billion reflects prevailing market conditions and an expanded project scope.

The project, also known as the Mutiara Line, was initially estimated at RM10 billion in 2016 under the Penang state government’s proposal, then limited to the Silicon Island–Komtar alignment. The cost rose to RM13 billion in 2024 when the federal government took over and extended the line from Macallum to Penang Sentral. By December 2024, the ceiling was revised to RM16.8 billion.

In a statement, MRT Corp explained that a conditional contract worth RM8.31 billion was awarded to SRS Consortium Sdn Bhd in January for the civil main contract package 1. This was later reduced to RM7.93 billion following a value management exercise in April.

It added that the revised ceiling includes RM2 billion for land acquisition, while the balance RM6.8 billion will cover the civil main contract package 2, a stabling depot at Sungai Nibong, systems turnkey contract, as well as project management and consultancy fees.

“MRT Corp reiterates that the revised ceiling does not represent uncontrolled cost escalation. It primarily reflects the prevailing market conditions over the last eight years,” the statement said.

The 29.5km line will feature 21 stations, connecting a reclaimed island near the Penang International Airport to Komtar before crossing into Butterworth via a new channel link.

MCA Raises Alarm

Despite MRT Corp’s clarification, the Malaysian Chinese Association (MCA) has voiced concern over the soaring costs, noting that the project’s budget jumped from RM10 billion, as announced in Budget 2024, to RM16–17 billion today.

MCA vice-president and Penang chief Datuk Tan Teik Cheng said the scale of increase was alarming, given that the project is funded entirely by public funds.

“As a large-scale infrastructure project funded by taxpayer money, the Penang LRT has serious implications for fiscal sustainability. The rakyat deserves a clear, honest, and comprehensive explanation for this drastic increase,” he said in a statement.

Tan criticised the transport ministry for attributing the ballooning costs to “value management” without offering details.

“If cost efficiency was the objective, why has the price skyrocketed by over 70%? What components of the project were revised? Could this be a case of inflated projections or misrepresented spending?” he asked.

Tan also questioned the government’s decision to abandon the Public-Private Partnership (PPP) model in favour of full federal funding.

“Originally, the LRT was proposed under a PPP model to lessen the government’s financial burden and distribute risk. Yet the government has since reversed course, claiming a ‘budget surplus’ in the transport ministry as justification. Has the full financial risk now been shifted onto ordinary Malaysians?” he asked.

Loke Clarifies in Parliament

Transport Minister Anthony Loke told the Dewan Rakyat on Monday that the RM16–17 billion figure was a budget ceiling rather than the final cost. He explained that the earlier RM10 billion figure, announced by Prime Minister Datuk Seri Anwar Ibrahim in Budget 2024, was only a preliminary projection that did not account for value management and value lab exercises.

He stressed that the government has yet to award packages two and three and pledged that open tenders will help keep costs down.

“The ceiling is set higher than what is required, but we will try to reduce costs through competitive bidding,” Loke said during the winding-up debate on the 13th Malaysia Plan.

Ongoing Debate

Tan, however, urged continued public scrutiny, warning that the LRT project is no longer just a regional transport initiative but a national financial commitment borne by all Malaysians.

“The rakyat has every right to demand answers. Until the government provides a full, transparent account, we must continue to question and hold it to account,” he said.

With work on the Mutiara Line underway, the debate over its financing underscores the challenge of balancing infrastructure expansion with public accountability.

MRT Corp

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