Bumi firms to get 43pc of MRT works bill, says Putrajaya

UPDATED @ 05:22:04 PM 26-08-2011

By Shannon Teoh

August 26, 2011

Najib speaks at the “Strengthening the 1Jihad for Bumiputera Economy” conference in Shah Alam, August 19, 2011. — File pic

KUALA LUMPUR, Aug 26 — The Najib administration has allotted Bumiputera companies RM8 billion worth of contracts to construct the Sungai Buloh – Kajang stretch of the Klang Valley Mass Rapid Transit (MRT), in what is seen as a concession to the influential business community.

Datuk Seri Najib Razak announced this at the Bumiputera Agenda Action Council (MTAB) today, carving out 43 per cent of the total value of civil engineering work for Malaysia’s biggest infrastructure project to-date.

“The prime minister stated that several packages have been specially allocated for Bumiputera contractors,” said a statement from Teraju, the unit in the Prime Minister’s Department in charge of co-ordinating efforts to increase the Bumiputera stake in the economy.

This places the total civil engineering work — not including rolling stock and land acquisition — for the first MRT line at about RM18 billion.

Putrajaya was forced to ease pre-qualification criteria for the MRT project to allow joint ventures, and set aside requirements for minimum paid-up capital following complaints from Malay rights group Perkasa and the Malay Chamber of Commerce that conditions imposed were too restrictive.

Today’s announcement comes just days after a new state-owned company, MRT Co, was formed to take over as project owner from Prasarana, a move that analysts say could ease procurement for Bumiputera firms.

Experts have said that a Bumiputera quota may swell the cost of the multi-billion ringgit rail project as some small Bumiputera contractors may not be able to leverage on economy of scale in terms of equipment and resources.

The government has also made several other concessions to Malay hardliners including blocking the sale of prime land worth billions of ringgit by UDA Holdings due to buyers not being “Bumiputera enough.”

Analysts say these moves are threatening the Najib administration’s economic liberalisation agenda, creating concern among investors about the prime minister’s willingness to undertake hard reforms.

However, Teraju insisted that only qualified Bumiputera contractors will be selected through a “bidding process based on transparency, merit, ability and track record.”