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Countries and Regions Country Assistance Plans Document
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Country Assistance Plans - Malaysia : I. Country Performance Assessment
D. Implementation Assessment1. The Portfolio22. The total value of Asian Development Bank (ADB) loans approved during the Sixth Malaysia Plan, 1992-1996 (6MP) was $303.9 million. Such loans ranged from $22.6 million in 1992 to $105 million in 1996. In 1997, only one loan of $40 million was approved. Government policy on the private sector shifted radically during the 6MP. Areas that were traditionally monopolized by the public sector (such as power generation, highways, urban transport, water supply and sewerage) were opened to the private sector. As a consequence, the scope for ADB’s involvement in these sectors declined sharply. Moreover, the Government limited external borrowing from official agencies as a matter of public policy and prepaid several loans. Hence, the size of ADB’s Malaysia portfolio has declined steadily. Alongside the declining volume of lending operations, ADB’s TA operations in Malaysia have also steadily declined in the recent past. The technical assistance (TA) program for Malaysia is characterized by the significant contribution made by the Government in the total funding of TA projects. Overall, the TA program for Malaysia has been successful. Notable contributions of the program include support for environmental policy and management, capital market development and reform of public sector corporations. 2. Issues in Project Implementation23. Overall, ADB’s postevaluation experience in Malaysia has been favorable, with over 60 percent of the postevaluated projects having been rated generally successful. ADB-financed projects have had a significant impact on the economic, social and institutional development of the country. They contributed to improving the quality and access to technical and vocational education, raising productivity and reducing rural poverty. This was achieved through integrated area development and other agriculture sector projects. ADB has also been involved in river basin and coastal zone management. ADB also supported the Government's health sector strategy, which has been instrumental in achieving significant improvements in rural health. Public utilities have generally kept charges at reasonable levels. Where charges have not met full cost recovery, the performance of projects and executing agencies has been adversely affected. This is an area to which greater attention should be paid by the Government. 24. There have been three unsuccessful projects in the postevaluated portfolio: an agricultural support services project, a fisheries project and a mini-hydropower project. Some projects have suffered implementation delays and cost overruns. The average implementation delay was 2.4 years. Above average implementation delay has occurred in agriculture (2.5 years) and social infrastructure (2.7 years). Major causes of delay in agriculture projects were the inadequacy of engineering designs, late recruitment of consultants, delayed preparation of engineering design, late delivery of equipment, as well as changes of project scope and design; in addition, there were site reclamation and land acquisition problems. Delays in social infrastructure projects resulted from difficulties in land acquisition, delayed recruitment of consultants, procurement and civil works as well as inadequate site, geological studies and design during project preparation. The average cost overrun was 52.3 percent. Major reasons for cost overruns included expanded project scope, underestimation of project costs, land acquisition difficulties and implementation delays. The major lessons learnt from postevaluation experience are that thorough preparation, appropriate design and strong institutional capability of executing agencies are key to project success. 25. In recent years disbursement performance of the Malaysia portfolio improved steadily. However, the disbursement ratio decreased from 25.8 percent in 1997 to 22.6 percent in 1998. This was due to the reduction of public expenditure by the Government and the corresponding decline in the availability of counterpart funds for ADB-financed projects, in response to the economic crisis. In terms of disbursement, Malaysia's performance ranks among the highest, which is consistent with its status as a Group C DMC. Detailed portfolio performance indicators are provided in Appendix 2.
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