Penang's open tender spree shows up Putrajaya

Lee Wei Lian, Malaysian Insider

KUALA LUMPUR, Aug 3 — The Penang government’s open tender spree in the past few months could put the federal government in a bad light as both strive to show the public that they stand for transparency and excellence.

While both have initiated efforts to make procurement more transparent to the public, the Pakatan Rakyat (PR) Penang government seems to have taken the lead with a stream of open tenders announcements for its big ticket items while the Barisan Nasional (BN) federal government has appeared very slow off the mark.

Among landmark projects that were tendered out by the Penang state government include the multi-billion 100 acre Bayan Mutiara township project, the restoration of Fort Cornwallis, restoration of Crag Hotel, management of the Penang International Sports Arena and the Penang Hill facelift. Upcoming tenders include that for the Pulau Jerejak tourist development project.

In the case of the Bayan Mutiara project, the Penang government seems to have taken a leaf out of the Singapore playbook and has opened the tender to international bidders in an attempt to build an “iconic, prestigious and sustainable” development.

Singapore’s newest landmarks — the two world class integrated resorts (IR) at Sentosa Island and Marina Bay were built by international investors. A subsidiary of Malaysia’s own Genting Berhad had built the IR at Sentosa Island.

The federal government on the other hand has been slow to open up major projects to open tenders. The highly valuable 65 acre piece of government land in the prestigious Jalan Duta area was privatised last November to the Naza group without an open tender.

Other major parcels of land where open tenders have yet to be called for redevelopment include the 3,300 acre Malaysia Rubber Board land in Sungai Buloh and the redevelopment of the 400 acre Sungai Besi Airport and the development of the 85 acre KL Financial District. Other valuable tracts of land where no open tenders have been called include 204 acres of government land in Jalan Cochrane and land at Jalan Peel and Jalan Lidcol.

The open tender debate in Malaysia is a politically charged one as it is widely acknowledged that many if not most government contracts and licenses go to companies controlled by persons close to the political leadership. As companies are not selected based on merit, completed projects and public services are often of poor quality despite high costs and subject to much public complaint.

Both governments also maintain public procurement portals but Penang had launched its portal first. The federal government portal — MyProcurement — also suffered the embarrassment of having glaring data entry errors discovered just a few days after being launched by Prime Minister Datuk Seri Najib Razak.

While Najib has taken steps to tidy up procurement and the New Economic Model (NEM) framework mooted by his administration has also stressed the need for open tenders, the slow pace at which such reforms are taking place under his administration are leaving many wondering if anything has really changed.

The danger for the prime minister than is that the island state will prove to be much more serious in terms of public accountability and performance and his government will suffer in comparison.

While some expressed fears that the Penang open tender system would penalise Bumiputeras, Penang chief minister Lim Guan Eng quashed such claims and revealed in January that 70 per cent of tenders from two state owned firms were won by Bumiputera contractors.

He said that Malay contractors had won 16 out of 23 tender awards, or 70 per cent, from the Penang Development Corporation(PDC) and 44 out of 66 or 67 per cent of contracts issued by the Perbadanan Bekalan Air Pulau Pinang(PBAPP) in open tenders since March 2008.

Najib has had to contend with continued demand for quotas set aside for Malay contractors after he said the NEM will free the economy and make it more competitive.

Malay rights group point out that the BN government has yet to meet the 30 per cent target for Malay equity with just nearly 20 per cent since the New Economic Policy (NEP) came to effect in 1970.

But detractors say the amount does not include equity by government units and companies investing on behalf of the Malays and Bumiputeras such as PNB and others.