Why has Penang not formally applied for the China loan yet?

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Penang Has Not Formally Applied for China Loan Due to Procedural Requirements

The Penang state government has not yet submitted a formal application for a loan from the Export-Import Bank of China (EXIM) to finance the Penang Transport Master Plan (PTMP) project. This is primarily because the Finance Ministry (MoF) requires adherence to specific procedures to ensure the borrowing entity's repayment capability. While the federal government has no fundamental objection to the loan, it mandates that all proper channels, including Bank Negara's guidelines, must be followed.
Formal Application Awaits Procedural Compliance

The Finance Ministry has indicated that no formal application has been received from the Penang state government concerning the proposed loan from the Export-Import Bank of China. The loan is earmarked for the RM27 billion Penang Transport Master Plan (PTMP). The MoF's stance is that any such application must undergo rigorous scrutiny to confirm the borrower's capacity to service the debt.
Repayment Capability is a Key Federal Requirement

Datuk Seri Johari Abdul Ghani, the Second Finance Minister, emphasised that the federal government's approval hinges on the borrowing entity's ability to repay the loan. He stated that the process involves not only MoF procedures but also strict adherence to Bank Negara's regulations. This is to guarantee that the loan's repayment can be sustained from the proceeds generated by the business activities undertaken in Malaysia.
Justification for Overseas Funding Needed Amidst Domestic Liquidity

Furthermore, the borrower must provide a clear justification for seeking funding from overseas sources. This requirement is particularly relevant given the assertion that ample liquidity is available domestically. The state government had previously passed a bill in May, empowering it to borrow from financial institutions, with the Chief Minister indicating the funds would support state development and social programmes, including the PTMP.

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Why has Penang not formally applied for the China loan yet?

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