Philosophy Politics Economics

Posted by : Unknown | Sabtu, 7 Mei 2011 | Published in

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Philosophy Politics Economics

MRT: The Recipe to Over-Pay

Posted: 07 May 2011 04:13 AM PDT

The MRT, which is estimated to cost in excess of RM53 billion by CIMB Research is by far the country's largest ever infrastructure project.

The Government Transformation Programme (GTP) launched by the Prime Minister, Datuk Seri Najib Abdul Razak himself, and promoted by Pemandu, quoted PEMUDAH which estimated that corruption could cost Malaysia as much as RM10 billion a year, "when business decisions are made for the wrong reasons."

As one of the key measures to tackle corruption, the GTP specifically sought to "reduce leakages of funds allocated for national development and operational expenditure and ensure transparency in the award of contracts."

The GTP even quoted a 2007 Survey by Merdeka Centre which revealed that 71% and 54% of corporates and public respectively perceives "no transparency and openness" in "the current procurement process or system used for awarding major government projects".

Hence the GTP called to "disclose details of government procurement contracts" and recognises the role of public scrutiny to increase accountability and reduce corruption and wastage.
It is well established that transparency is crucial for a fair and efficient government procurement process. This is because transparency increases public scrutiny on the procurement process and helps ensure that accountability and well-defined policies, regulations and procedures have been put in place and followed closely…

People in both public and private sectors are particularly sceptical of unnecessary projects, award decisions that are not made public or sufficiently justified, project delays, contract variations and concealment of substandard work. (GTP pp133-135)
However, the opaque and obtuse management of the RM53 billion MRT project has proven beyond doubt that Najib's administration is "all talk, and no action".

In the written parliamentary reply to me for my oral question on the Gamuda-MMC "project delivery partner (PDP) contract" on 6 April 2011, the Prime Minister confirmed that the contract has been awarded with no price fixed despite claims that the PDP will bear all cost-overruns on the MRT project. It is an oxymoron for Najib to argue that the PDP will bear all cost-overruns when its own project contract value has yet to be finalised, and may be increasing as we speak, as the cost of the MRT project has already ballooned from a budgeted RM36 billion to now, an estimated RM53 billion.

And as first exposed by The Malaysian Insider, initially denied but now admitted by Syarikat Prasarana Negara Bhd (SPNB), the Government's wholly-owned vehicle to own the MRT project, an "Independent Check Engineer" (ICE) role has been awarded to a consortium led by HSS Integrated Sdn Bhd (HSSI) in a cloak and dagger fashion.

When The Malaysian Insider first exposed the award on 15th April, SPNB Group Managing Director, Shahril Mokhtar immediately refuted the report, claiming that "the appointment of the KVMRT ICE is not finalised. Speculation of the ICE fee quantum at this point will only jeopardise our ability to negotiate competitive fees from the ICE candidates.

However, Syarikat Prasarana Negara Berhad (SPNB) group director for project development Zulkifli Yusoff admitted that an engineering consortium led by HSSI has been on board as an independent check engineer (ICE) since February, clearly contradicting SPNB's initial response.

What is perhaps of greatest concern to Malaysian tax-payers is the fact that while an ICE should not have an existing relationship with the parties managing the project to ensure independence, HSSI has been the contracting engineers for Gamuda's double-tracking projects. Furthermore, the speculated 2% consultancy fee on the cost of the entire project, which has yet to be finalised, is substantially above market rates, understood to be in the region of 0.8%.

Based on the above, assuming a RM50 billion project cost, the HSSI consortium will pocket RM1 billion in fees, RM600 million more than the estimated market rate of RM400 million. It also appears that while the Gamuda-MMC joint-venture is meant only to be a "PDP" and all projects are to be awarded by SPNB, the PDP gets to dictate who gets the contracts for the project, signalling the commencement of crony contract awards for the MRT project.

The above clearly makes a complete mockery of Najib's so-called reforms via the GTP, and raises the question of how much the Malaysian tax-payers will be over-paying for the MRT project. Given the nature and size of the project, PEMUDAH will need to come up with new and higher estimates on how much corruption and government wastage is costing our economy.

1Malaysia Email: Truth & Lies

Posted: 06 May 2011 08:51 PM PDT

Pakatan asks why public funds used to defend Tricubes
By Boo Su-Lyn May 06, 2011

KUALA LUMPUR, May 6 — Pakatan Rakyat (PR) today demanded the government explain why public funds were spent to buy newspaper advertorials defending the 1 Malaysia email project when it was a private initiative.

A two-page advertorial headlined "Truths and Lies about MyEmail" by the Performance Management & Delivery Unit (Pemandu) on the controversial project was published in major newspapers today.


DAP publicity chief Tony Pua similarly denounced Pemandu's advertorial. "I think it has come to a really silly stage where the government is spending tens of thousands in advertorials to defend a so-called private initiative because 'Pemandu believes in integrity and transparency'," said Pua.

"If that's really the case, then just disclose the request for proposal (RFP) documents from the government as well as the full contract terms and letter of award given to Tricubes. Publish them online and save the tens of thousands of tax-payers' money," the Petaling Jaya Utara MP added.

Pemandu refused to divulge the cost of the advertorial when questioned by The Malaysian Insider today. "We have answered your question... I have nothing to add," Pemandu corporate communication chief Ku Kok Peng told The Malaysian Insider on the phone.

Pemandu also emailed a statement to The Malaysian Insider and said it commissioned the advertorials to "make sure that the general public is not misinformed by people who distort the truth."

In the advertorial, Pemandu CEO Senator Datuk Seri Idris Jala said Tricubes Bhd would invest 100 per cent of the RM50 million MyEmail project that was conceptualised as an Entry Point Project (EPP) under the Economic Transformation Programme (ETP). Jala also stressed that the government "will not spend a single sen" in the project's investment and operating costs.

"On the other hand, it is estimated that the government stands to save at least RM200 million over 10 years," he said.

He explained that government agencies would make savings of almost 50 per cent by paying 50 sen per email to accounts, as government agencies currently paid up to RM1 per mail and RM2 for each returned hardcopy correspondence.

Pua pointed out government agencies should instead encourage the public to register their own email accounts. "Now you're paying 50 sen to someone else to send it [electronically]. Why not send it to (email) addresses provided by people and save the entire RM1?" asked Pua.


Pua also questioned why the government conducted a selection process if the project was merely a private initiative. "If it's completely private, [they] don't need to go through Pemandu or Mampu (Malaysian Administrative Modernisation and Management Planning Unit). Just go to the government department and sell their services," said Pua.

Jala said today that the selection process was an assessment to find out which company would likely succeed in rolling out the email service. "Other parties who are not selected or did not submit a proposal earlier can still pursue the opportunity if they see a viable business case for it," said Jala.


For the full article, read it here.

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