by Koon Yew Yin
After reading the article “Room for Competitive Bumiputera Companies’ in The Edge this morning, I am encouraged to write this piece to support Petronas Chairman Tan Sri Shamsul Azhar Abbas.

welding

He said that in 2010 and 2011 alone Petronas awarded about Rm 74 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 Malay right wing and business groups in recent months. The Malay Economic Action Council (MTEM)- an umbrella of more than 60 business group blamed Petronas for sideling Bumiputera companies and favouring more competitive foreign companies. The MTEM has called for Tan Sri Shamsul and the Members of the Board of Petronas to resign.

The former prime minister, Dr Mahathir also appears to be playing a mischievous game against Petronas behind the scenes by undermining public confidence in the management’s policies which appears aimed at ensuring that contracts are given out on a merit basis.

This politicking against Petronas which is a national company with all Malaysians as stakeholders- I wish to emphasize that Petronas is not a Malay company. Malay cronies of UMNO cannot continue to expect more hand outs and juicy contracts. It is time they must 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 Bumiputera contractors in that field, I am fully qualified to comment on 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 contractor who has won any of the building contracts through an open competitive tender process? Out of hundreds of kilometers of highway in Malaysia, can any Bumiputera contractor who won any part of the highway contracts through open tender be identified?

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 is so easy to register 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 business 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 unable to pay back the loans given by government-controlled financial institutions.

The government must change its methods and policies which have proven unworkable. There is no urgency in producing more Bumiputera contractors as many of the key industries e.g. the banks, plantations, motor vehicles, taxis, rice etc are already under the control of Bumiputeras.

Our government must not be narrowly communalistic and should make use of all the groups, including foreign, irrespective of race, that are 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 Since independence 1957, the BN Government would have spent trillions of ringgit and have failed to produce some competitive and efficient Bumiputera contractors. It must be the most wasteful national mission ever known.

Note on the Author

I am a 80 year-old chartered civil engineer and one of the founders of the three larger construction companies listed in Bursa Malaysia. These are Gamuda Bhd, Mudajaya Group Bhd, and IJM Corporation Bhd.

I was a member of the Board of Engineers, Malaysia for three terms. I was also on the Sirim Board responsible in writing the Malaysian standard specifications for cement and concrete. In addition, I was the Secretary General of Master Builders Association, Malaysia for nine years.

These days, I am completely retired. My intention in writing this article is honourable. Many people may not like reading what I have written and the truth may be difficult to accept. Nevertheless, this is my considered analysis for the benefit of my country, the Bumiputera contractors and the construction industry.


    5 replies to "Room for Competent Bumiputera Companies: A National Wasteful Mission"

    • Syah

      yup, company nowadays, their project full of defect. plus consultant drawing also. blame the contractor? dunno. blame the consultant? maybe. blame the budget? ask the QS/contract team.

      trying to do cost saving that/high profit margin that the project turn ugly. fail to settle early prob resulting in more cost in future. trying to please the higher up result in major defect. this is construction in bumi company. not that i want to talk bad but this is reality.

      high profit margin is what they seek. under quote for big project is typical. try to cover up by lowering budget for the construction resulting in lack of SHE supervision (accident happen but…), not enough manpower to follow up details of construction resulting in miscommunication and lost of update/revise IFC, etc.

      we can change but the mentality of the higher up, the needing to please them, this thing sucks. it really bring down the standard of construction. entertainment budget is high (meaning that..)

    • MOHD AZLI SAHIBON

      My question to you will all respects:

      Out of hundreds of high-rise buildings contracts in Kuala Lumpur that has won by the non bumiputera (especially chinese) through an open competitive tender process, can you name one that built up without defects?

      I have been in construction industries for 13 years as technical personnel and involved with more than 10 landmarks buildings in Malaysia and each of them build with unacceptable defects. With the power of money used by those chinese builders, the problems was ignored.

      Let’s first stop the cheating in business and stop the “unofficial” business monopoly. Then we will see who is the champion.

      • BL Lau

        My Dear Fellow Malaysian Mohd Azli :

        Since ur the technical personnel in thous 10 landmarks building which had unacceptable defects (sound very serious) …. and was ignored by irresponsible Malaysian builders with money …..

        I sincerely wish you could carry out your duty as a professional technical personnel and expose what you know to Board of Engineer (IEM) or Architect (PAM) or MACC or the press ……. im sure all those government department or professional body are responsible enough to charge the related person or revoke their business or professional licence.

        Im sure with more responsible person like u (put things into immediate action & not just talking like many others Malaysian did) will make Malaysia a better place to stay. Save you & me & our family from possible collapse of prominent building.

        people always tell me construction technical personal are very easy to handle because they all take bribe ? ….. i wish you are the exceptional person that will make all Malaysian proud.

        other people said they have to cut project budget and sacrifice the project quality because need to pay the Alibaba’s commission … like the JB – Singapore crooked Dr M Bridge where gov pay RM 260mil to the contractor for the Bridge in the drawing only & the Judge order the contractor to pay RM 20mil as commission to a guy call Dato T ? (just because this Dato T know Dr M ?) what a jock !! the same species of Dato T like Sharizat, K Toyol, Abd Ang, Dr Ling, Chan KC … r the one need to be highlighted ……… don’t u agree with me ??

        • nodin

          are you generalizing that every contract involve ali baba commission?.. what about private contract? how many buildings involve private contract and how many bulding involve government contract?

    • […] Koon Yew Yin I recently published an article with the title, “Room for Competitive Bumiputera Companies – A Wasteful National Mission”. My intention was to support Petronas Chairman Tan Sri Shamsul Azhar Abbas who is under fire […]

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