A national wasteful mission

Since independence in 1957, the BN government would have spent trillions of ringgit but had failed to produce some competitive and efficient Bumiputera contractors.

COMMENT

By Koon Yew Yin

After reading an article entitled “Room for Competitive Bumiputera Companies” in The Edge earlier this week, I am encouraged to write this piece to support Petronas chairman Shamsul Azhar Abbas.

Shamsul had said that in 2010 and 2011 alone Petronas awarded about RM74 billion worth of contracts to Bumiputera-controlled companies, a sum which cannot be described as anything else but huge.

Despite this, Petronas has become a punching bag for Malay right-wing and business groups in recent months.

The Malay Economic Action Council (MTEM) – an umbrella of more than 60 business groups – blamed Petronas for sideling Bumiputera companies and favouring more competitive foreign companies.

The MTEM has called for Shamsul and the members of the Petronas board to resign.

Former prime minister Dr Mahathir Mohamad also appears to be playing a mischievous game against Petronas behind the scenes by undermining public confidence in the management’s policies which appear aimed at ensuring that contracts are given out on a merit basis.

Petronas is a national company with all Malaysians as stakeholders. I wish to emphasise that Petronas is not a Malay company.

Malay cronies of Umno cannot continue to expect more handouts and juicy contracts. It is time they must realise that they have to become more efficient and competitive to face the real business world.

Although I do not know enough in the oil and gas business to comment on Bumiputera contractors in that field, I am fully qualified to comment on Bumiputera contractors in the civil, electrical and mechanical engineering construction industries which covers a wide range of work including roads, buildings, water supply, sewerage, irrigation, power stations, electrical cabling and so on.

Failed efforts

I would like to pose two questions which may appear unkind or insensitive but nonetheless need to be asked:

• Out of the hundreds of high-rise buildings in Kuala Lumpur, does anyone know of any Bumiputera contractor who has won any of the building contracts through an open competitive tender process?
• Out of the hundreds of kilometres of highways in Malaysia, can any Bumiputera contractor who won any part of the highway contracts through open tender be identified?

The answer to the above questions unfortunately is in the negative. The evidence is that all the government’s well-intentioned efforts in trying to produce competitive Bumiputera contractors since 1957 have failed.

Contracting is a very difficult business yet it is so easy to register as a contractor. Why this has happened needs to be openly discussed rather than swept under the carpet.

Continuously giving out contracts to Bumiputeras without competitive tenders will only make them more inefficient.

Contracting is one of the most, if not the most, difficult business to undertake and it takes a very long time to produce competent contractors.

It is very dangerous to quickly produce half-baked ones as they will soon find themselves in financial difficulties and require bailouts.

The bankruptcy record shows that a large number of debtors are Bumiputera contractors with many of them unable to pay back the loans given by government-controlled financial institutions.

The government must change its methods and policies which have proven unworkable. There is no urgency in producing more Bumiputera contractors as many of the key industries, for example the banks, plantations, motor vehicles, taxis, rice and so on are already under the control of Bumiputeras.

Our government must not be narrowly communalistic and should make use of all the groups, including foreigners, irrespective of race, that are more efficient in the contracting business.

Giving out contracts without a full tender process is akin to corruption. I urge the government and Petronas to stop this corrupt practice.

Since independence in 1957, the BN government would have spent trillions of ringgit but had failed to produce some competitive and efficient Bumiputera contractors.

It must be the most wasteful national mission ever known.

Koon Yew Yin, 80, is an investor and philantropist. He is the founder of IJM Group, Gamuda and Mudajaya. He says this is considered analysis for the benefit of the country, the Bumiputera contractors and the construction industry.