No more easy jobs

MASS Rapid Transit Corp Sdn Bhd’s (MRT Corp) notice outlining the framework for the construction of the Mass Rapid Transit line 3 (MRT3) has caused some consternation among local contractors.

Unlike the first two MRT lines, which were financed by the government, the private sector has to fund MRT3.

MRT Corp has opened tenders for the lead contractor to work on a turnkey basis and be responsible for the engineering, procurement, construction, testing and commissioning of the 40-km rail project. That’s not all.

The turnkey contractor has to come up with a financing package of up to 90% of the total MRT3 cost and it is to have a minimum 30-year repayment period. The party has to have experience in having carried out civil works of either two urban metro projects worth at least RM5bil.

It is quite obvious that MRT Corp only wants serious players to undertake the project. Even the bond to tender is priced at RM5mil and is to be retained for six months.

The notice stated explicitly that the financing can be in the form of foreign denominations, meaning that the government is open to foreign companies forking out the construction cost.

Should local contractors be worried? The good ones should not be.

Government finances are already stretched. So far, the government has financed all public transport systems and it is something that cannot be sustained.

So for MRT3, the government is opening up the financing and construction work to the private sector. Not many local companies have the financial strength to undertake projects of this nature.

It is a work only for the big boys. And they have to team up with the foreign names for the financing. In return, a substantial portion of the jobs will go to foreign contractors.

Since it is market-driven, only the most efficient of contractors would land jobs in MRT3, unlike the previous two lines where 30% of the jobs were allocated to contractors that were majority owned by bumiputras.