by Koon Yew Yin
Centre for Policy Initiatives
Monday, 11 October 2010
I refer to the article ‘Transparency in MRT Planning’ by Risen Jayaseelan which appeared in a major newspaper recently on Oct 5. The purpose of my writing this piece is to forewarn the public and the government that the way this proposed project is being considered by the government is basically wrong and may well end up with taxpayers having to pay a much higher toll rate than justifiable.
This warning is not only for the MRT project but for all 131 projects that are being envisaged under the Economic Transformation Programme (ETP) which is supposed to transform Malaysia into a high-income nation.
Basically I see no change at all in the current procurement procedure which has been used before in large concessions. The results of the evaluation and bidding procedure for mega projects such as the current MRT, the power provided by IPPs, toll roads, and the Selangor water supply have seen the consumers being forced to pay unreasonable rates because the bidding and tender process has been riddled with opportunities for rent-seeking, corruption and wastage.
Besides, cheaper and more efficient alternatives have not been fully considered by the Government.
I was shocked to read that the chairman of Land Public Transport Commission, Syed Hamid Albar, has said that the technical study of the proposal submitted by Gamuda and MMC would be completed by the end of the month and that following it, LPTC would submit their report to the government for approval.
I would like to ask how in the first place can the LPTC know that this proposal is the best in terms of technology and costing? It is impossible for LPTC to do an honest job if they have only one proposal to study and they do not have at least several other proposals to compare with.
As we know, the cost of this MRT project will be several billion ringgit. Negotiating with only one consortium, Gamuda and MMC, is likely to encourage corruption and waste, and is against all elementary principles of good economic governance. The price can be 10, 11 or 12 billion ringgit. Who is there to decide whether a costing of 10 billion ringgit is in the best public interest and will provide full value for Malaysians and not the project developers?
The sum provided by the only bidder is like taking a figure out of a hat. We are talking about billions of ringgit involved. Are there saints in the evaluation committee or project developers who do not like big money? The amount of money involved is so enormous that even saints will surely be tempted.
The public must demand that the government stops this method of award. It is the height of economic foolishness to award a concession or monopoly on a first-come first-served basis. Mega project awards should not be given out on the basis of service that is dished out in restaurants. If we do that, we will end up with a lethal case of economic poisoning of the Malaysian consumer.
Best way to evaluate tenders
The best way in terms of award of tenders is for the government to follow the guidelines as established by the World Bank. Incidentally these procurement guidelines are easily available over the website and are even applied in some of the most corrupt countries of the world in an effort to reduce corruption. It does not cost us even one sen to adopt them.
Firstly, the government must engage a reputable engineering consulting firm which has experience with similar projects to put up a proposal and to open the project bidding to all contractors to tender.
All the contractors must be prequalified based on both their technical and financial ability. All contractors must submit tenders confirming to the original design so that the cheapest tender can be selected. If all the contractors are prequalified, the government tender board has only to look at the tendered price.
Always award the contract to the contractor who submits the cheapest tender assuming that all the other criteria are met. It is important not to allow anybody from the government to negotiate with any contractor to avoid corruption.
Finally, transparency and accountability requires that all documents on the proposal and the other 131 projects in the ETP be placed in the public sphere – not just limited information but detailed and full breakdowns in accordance with international best practices.
If we want to reach the status of a highly developed nation, we must immediately implement the standards of economic good governance, accountability and transparency that come with it.
Building MRT is not a simple matter. Those familiar with the LRT projects and Smart tunnel know its very very easy to run into overcost especially when you dig underground. Its not the same as building roads or even KTM. The cost could easily double or more depending on what they find down there, the weather, logistics, accidents etc. If the politician start pocketing money from the job, you can guarantee that it will run into problems, delays and overun in cost.
Malaysian should insist should there be cost overun, BN politicians have to empty their pockets first before it comes back to the treasury for more money. Even then, rakyat will likely still have to cough out more than stated. Its just the very nature of th beast that is beyond the enterprise of BN and their cronies.
Koon Yew Yin is trying to take away the job satisfaction of being politicians here or what!
Project feasibility, best practices in procurement esp mega projects based on economic good governance, accountability and transparency?
This is what the shepherd says only to try persuade the sheep that their interests and his own are the same.
They certainly know whats best practices – no need for further advice – but can one take it seriously that they mean to implement these and take away their own joy in politics?
///Always award the contract to the contractor who submits the cheapest tender assuming that all the other criteria are met. It is important not to allow anybody from the government to negotiate with any contractor to avoid corruption.///– Koon
That is the function of public tender. Mamakthir began the system negotiated tender, and the last one was the crooked bridge. Subsequently the government spent as much not building the crooked bridge as having it built. That was the purpose of negotiated tender, to feed the cronies.
Najib would not dare to stop the practice of negotiated tender whatever he might say about NEM. He will have to wait for the founder to be away, eternally.
In most places, they do the technical studies and project feasibility before any mega-project is proposed for public feedback.
In Malaysia, we also do a feasibilty study but that is top secret as how to publish the manner and amounts the taxpayers are going to be milked?
We do the project whatever the cost and then see how the public complains before we do some cosmetic changes. Just come and observe how the buses operate in JB city after the multi-billon ringgit CIQ was completed.
Underground tunnels for mrt. Right. Good idea. London tube has been running for a good centuary already. And singapore mrt isnt new now eh but definitely well maintained.
Yeah but careful there. KL sits on limestone, as I understand. And limestone erodes easily esp in acidic rainwater. That means we may hit large cavities underground. Dangerous and mighty costly work ahead, one can expect. Of course umno gobermen is prepared to throw a lot of money ala dr mamak punya style. WTF. But at least make sure we have the right engineering consultant and specialist contractor for the job. In any case there are no reasons why the tunneling experience gained from the LRT work and the smart tunnel cannot be recycled and reused.
I only fear that umnoputras would lobby for MRT stations to be situated at or near their assets for immediate capital value enhancement. The rail is suppose to serve the masses. So make sure that all the stations are planted in population centres or as close as possible to them. This will ensure that daily commuters projections are correct. And for God’s sake use a common system for all the lines. Dont repeat the star line/putra line complication facing the LRT.
And dont ever mistake rambutan tree trunks for steel CHSs and use them as columns in the project.
Don’t worry, Syed Hamid Albar knows best and he says to us all “Trust me!” He he he
M’sia has talents, just look at d marvellous CIQ in JB, d curse of all commuters who take d first step out of Singapore
Having witnessed all those so-called mega projects, be rest assured the aim is not the viability of those projects themselves. First objective; maximise cost, then how to extract maximum maintenance, and they are designed to last a short time so that replacements can be done even faster. How would you account for the quality of of KMT today? Isn’t the MRT in Singapore built earlier?
While we still haggling on the double tracking from Gemas to JB, some 200 km. The hi-speed track from Shanghai-Beijing was planned much later, and is expected to be ready by 2012 a distance of some 1,300km. So we still cling to the art of “sloganeering”! Malaysia Boleh to win our coveted stature to be fully developed by 2020? It is obvious that the more we crow about what we plan to do, the more the rest of the world would laugh at us. Can we something first and then crow about it after we have successfully done it?
KL and limestone?
Yes that is bound to happen. What better excuse to chalk up contract VOs that will escalate the project costs to be passed on to taxpayers?
A brilliant strategy indeed!
Underground tunnels for mrt.
Plus another underground tunnel linking Penang to Medan and a longer one linking Putrajaya to Jakarta. Easier for illegal immigrants to come over from Indonesia.
I’ll tell you how this deal is going to be done. The federal government awards the MRT to Gamuda/MMC for RM 45 billion. Immediately, this consortium subcontracts the whole deal to Shanghai Metro or CMEC of China for RM 30 billion.
As the China contractors are about to finish the project, there will be a sudden variation order that will cost the country another RM 5 billion.
Why do you think so many foreign property developers are advertising their property launches here ? We will be helping to prop up the property prices in London, Sydney, Melbourne, Perth and Singapore.
Its heads I win tails you loose strategy. The argument about accountability is unimportant…
If BN spends its way, it is basically using tax payers as guarantors…this country essentially is bank rolling everything from MRTs to God knows what else…Logic dictates that the country is being pushed to the limits of almost bankruptcy and if the gamble works…there will be money in the kitty and maybe a win at GE13..
But if they happen to loose all the billions and trillions…no worries…they exit and the PR inherit a bankrupt nation and will have a tough time getting the country back on its feet while BN play the kacau monkey on them at every turn…
The blatant ripping off of the nation’s finances is like the Russian barren earth strategy they utilized against the French during the Napoleonic wars……everyone in this country must be prepared for the worst….it maybe 1941 all over again…
The message is clear…they just don’t want change… BN has to go…
The BN regime believes that spending money is good for the economy and therefore going on a spending ORGY will make everyone happy; especially the BN cronies.
This ETP with so many megaprojects will burden taxpayers for many generations.