GEORGE TOWN: Penang lawmakers expressed concern over the power wielded by the state government following the passing of a law today that allow the state to borrow money from any bank or financial institution from time to time.
The Loan (Bank and Other Financial Source) Enactment 2017 was passed unanimously at the State Legislative Assembly.
It was tabled by Chief Minister Lim Guan Eng (DAP-Air Putih) and was seconded by Deputy Chief Minister I Mohd Rashid Hasnon (Pulau Jerejak - PKR).
Lim said loan taken under the enactment would be used for investment, implementing physical development, economical and social development as well as to implement the Penang Transport Master Plan.
“The state government has signed a memorandum of understanding with China Exim Bank on Dec 16, 2014 which allows us to take up a loan at any time for purposes agreed upon.
“The enactment is brought to the assembly today upon the recommendation of the Prime Minister in a letter dated May 31, 2016.
“The Prime Minister said if the state government wanted to take up a loan from China Exim Bank, it has to fulfil several requirements as per Article 111(2) of the Federal Constitution,” he said during his debate on the enactment today.
Lim said one of the requirements was for the state Legislative Assembly to pass a law giving the state government the power to take up the loan.
“The other requirement is that the borrowed monies must be repaid within five years.
“All loan applications must also go through the National Finance Council as the Federal government has the final say whether to allow the state government to apply for loans,” he said, adding that the money would be be charged to the state’s Consolidated Fund.
Meanwhile, Dr. Norlela Ariffin (PKR-Penanti) said it was not enough for the state government to merely notify the state assembly after taking the loan.
Under Section 3(2) of the enactment, the state government was required to notify the state Legislative Assembly on the number of loans taken.
She said it was best to create an oversight body to monitor loan applications and ensure that it does not financially cripple the state.
Norlela said the body, when created, should also set a ceiling on how much the state can borrow in the five years.
“The words ‘approved by the committee’ must also appear in the enactment. This way we can ensure the loan does not burden us all,” she said during the debate of the bill.
Cheah Kah Peng (PKR-Kebun Bunga) in supporting Norlela’s call, said that the current “notifying” clause gives the executive branch absolute power to decide on loan matters.
“If the assembly is merely notified by the executive on loans, in my opinion, this is not democracy.
“It is also surprising to see that no one else has asked how much are we going to take in loans?
“This law presented here is vague and I am afraid in the future, if a bad government uses this act, they could put people’s interest at stake,” he said.
He said he was also disappointed that the state’s executive did not discuss with the state Legislative Assembly before coming out with the bill.
Also concurring with Cheah and Norlela, Teh Yee Cheu (DAP-Tanjung Bungah) worried that the enactment was effectively giving the state executive branch a “blank cheque”.
“If there is no check and balance before approval, then what’s the use (of having an assembly)?
“We need to strengthen the separation of powers, we need this (enactment) to be amended and approved through the assembly.” he said.