Room for competent bumiputera companies

After reading the article titled, "Room for Competitive Bumiputera Companies" in The Edge this morning, I was encouraged to write this piece in support of Petronas' chairperson, Shamsul Azhar Abbas.

He 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 the Malay right wing and business groups in recent months.

The Malay Economic Action Council (MTEM) - an umbrella of more than 60 business groups - has blamed Petronas for siding with the bumiputera companies, and favouring more competitive foreign companies. In addition, the MTEM has since urged Shamsul and the board members of Petronas to resign.

Former Prime Minister Dr Mahathir Mohamad (left) also appears to be playing a mischievous game against Petronas behind the scenes by undermining public confidence in the management's policies, which appears to be aimed at ensuring that contracts are given out on a merit basis.

This politicking against Petronas - a national company with all Malaysians as its stakeholders - has compelled me 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 for them to 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 the bumiputera contractors in that field, I am fully qualified to comment on the 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, etc.

I would like to pose a few questions which may appear unkind or insensitive, but nonetheless need to be asked.

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

The evidence shows no affirmative

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 seems so easy to register yourself 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 businesses 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 being unable to pay back the loans given by government-controlled financial institutions.

The government must change its methods and policies which have been proven to be unworkable. There is no urgency in producing more bumiputera contractors, as many of the key industries such as the banks, plantations, motor vehicles, taxis, and so on, are already under the control of the bumiputeras.

Our government must not be narrowly communalistic, and should be making use of all the groups, including foreign ones irrespective of race, who are known to be 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 which has been going on since the country's independence in 1957. The BN government would have had spent trillions of ringgit, and yet they have continued to fail in producing some competitive and efficient bumiputera contractors. It seems to be the most wasteful national mission ever known.

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KOON YEW YIN, a retired chartered engineer, is a philanthropist.