Murky practices in rail tenders deter foreign firms, weekly reports

By Lisa J. Ariffin
The Malaysian Insider
Jun 17, 2012

KUALA LUMPUR, June 17 — International companies are shying away from Malaysia’s rail sector due to less-than-transparent decisions in the tender process, The Edge weekly has reported.

According to an article in the business and investment weekly’s latest edition, “intense lobbying, glitches in the tender process and political favouritism” are among some of the reasons why foreign firms are snubbing rail tenders, a move which could deprive the country of a high-quality rail system.

The Edge writer Lim Ben Shane reported that the response to open tenders has been poor purportedly due to the unfair selection of large contracts, adding that government officials have acknowledged the problem but have defended it as a relatively new phenomenon.

“It is a learning process, but the government is committed to the open tender system,” an unnamed official from a government transport agency that oversees the country’s rail networks was quoted as saying.

However, the weekly reported that international investors are not convinced of this assurance, with a representative of a company in pursuit of engineering contracts in Malaysia saying: “Most tenders start off well. It is in the evaluation process where things get very murky and you are often left feeling that it is not a level playing field”.

Another foreign consultant pointed out: “Not attracting bids only raises more questions about the tender process”.

Lim said that since the late 1980s, Malaysia has preferred direct negotiations in awarding “public works and the construction of infrastructure projects over public tender because the government was keen to speed up the development of the country’s infrastructure”.

“But the practice has long been criticised because the awards have often favoured politically well-connected business groups,” he said.

“Critics also gripe that the negotiated tender practice is littered with failed projects that have resulted in costly government bailouts,” he added.

Lim said that with contracts valued at more than RM1 billion up for grabs in the coming months, the loss of international investors would prove detrimental.

“More than RM70 billion worth of rail projects have been slated for the next decade, including the prized RM50billion Klang Valley MRT project,” he said.

“Industry executives have noted the government needs to quickly deal with the grievances faced by international companies to salvage the open tender system,” he added

  1. #1 by yhsiew on Sunday, 17 June 2012 - 6:13 pm

    Open tender system under the BN government is only a dream.

  2. #2 by Winston on Sunday, 17 June 2012 - 8:22 pm

    “It is a learning process, but the government is committed to the open tender system,” an unnamed official from a government transport agency that oversees the country’s rail networks was quoted as saying. – end of quote

    Five and a half decades of learning.
    The learning curve must be steeper then Mount Everest!
    It’s in fact the same old same old.
    That’s all there is to it.

  3. #3 by negarawan on Sunday, 17 June 2012 - 9:01 pm

    Guess who Gamuda belongs to? Guess who played out the Perakians?

  4. #4 by Jeffrey on Sunday, 17 June 2012 - 10:47 pm

    Not just rail sector. Foreign investors and international companies now shy away from any sector where capital investment is substantial and take time to recoup. They don’t wish to be “used” to lend legitimacy to tender process with “glitches” favouring others with local political crony connection. They eschew absence of meritocracy and level playing field. Even investors with local crony partners. The latter may ask them to finance their stake. Midway pressure is exerted in foreign investor to sell their stake to local equity partner under pretext of Malaysianisation (just when company has turned the corner to make profits). Other times where’s dispute they’re unsure of either the laws or the independence of judicial arbiters. Besides they are waiting for election to happen first to see if BN wins with convincing majority (read stability). They don’t want to partner with a local party with connection/leverage with present powers-to- be (whether at federal or state level) when the powers-to- be may be changed by another set in the coming GE with their own other cronies. Besides many are not doing that well in their home base with Eurozone contagion and market uncertainty.

  5. #5 by sheriff singh on Monday, 18 June 2012 - 4:43 am

    Are there problems with the gravy trains ? It will be very good news for PR if the trains stall and the passengers have to get off.

  6. #6 by undertaker888 on Monday, 18 June 2012 - 7:39 am

    Who would come with 30% gravy needed to be given to them? Most western companies need to abide to their regional or homeland bribery act. Maybe the stench of corruption here is so pungent that they stayed away. Not worth the stigma or prosecution.

  7. #7 by Godfather on Monday, 18 June 2012 - 12:28 pm

    All these foreign companies are prostitutes. They don’t complain when they are partners with the “right” bidders and told to increase their prices to accomodate “grease” money.

  8. #8 by dagen wanna "ABU" on Tuesday, 19 June 2012 - 12:41 pm

    Yeah. Foreign companies are also about profitability and profit margin. So they too participated in bribery. No issue. Just mere additional operating costs. Simple. And so look at the submarine deal. Corruption money (errr commission)? Ok. Ok. No problem. How much. Just tell them and they will pay.

    So you see, for a long long time corrupt gobermen in the world were able to enjoy the fruits of their excessive greed. But the world, esp the advanced nations, have taken on a global fight against corruption. And suddenly nobody wants to be seen as business associates of the “mafias” (so to speak). Umno is now caught in a situation.

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