A RM180 million electronic monitoring system (EMS) project that was awarded to MyEG Services Bhd in December last year is being eyed by privately held Sinarvezion Sdn Bhd, a little-known company backed by China’s Aisino Co Ltd.

A Sinarvezion executive, when contacted, confirms that the company has a collaboration agreement with Shanghai-listed Aisino and has submitted a proposal to the government, but declines to elaborate. The Chinese company offers a national e-receipt system (NRS), which is being sold as a transparent and efficient system to track the collection of the Goods and Services Tax (GST).

A source familiar with Sinarvezion says it has obtained a couple of letters of support from very high levels in the Ministry of Finance, which would indicate that the government is somewhat supportive of the company’s proposal.

But a senior official of MyEG (fundamental: 2.6; valuation: 1.5) says that it is not aware of any competing bid for the EMS project.

“We are not aware of any such competition for a contract which we have already secured,” he tells The Edge when contacted.

He adds that MyEG is starting the roll-out of its two-phase EMS project nationwide by this week, demonstrating the company’s commitment to the contract.

To recap, MyEG had in December 2014 announced the acceptance of a revised letter of award to undertake the Customs Online Tax Reporting, or EMS project,  from the Royal Malaysian Customs Department, but the details were not readily available. 

Likewise, details on Sinarvezion and its capabilities were also scarce.

A quick search with the Companies Commission of Malaysia (SSM) shows that Sinarvezion was registered on Aug 8, 2014, with an address at Damansara Intan, Petaling Jaya.

The company provides consultancy services in public relations and communications, and has no official website.

The SSM search also shows that Sinarvezion has an issued share capital of RM100,000.

It has two direct shareholders, namely Michael Choong Wan An and James Khong Poh Wah, who own 50,000 shares each. Choong, 46, and Khong, 47, are listed as the company directors.

Online checks reveal that Choong was formerly a director of sales with Iris Corp Bhd, and had a stint with Ericsson, while Khong was a corporate lawyer, worked at investment banks, and was a director at Kencana Petroleum Bhd (which has since morphed into oil and gas giant SapuraKencana Petroleum Bhd).  

Considering the company was only registered in August last year, Sinarvezion’s financials are not available.

The source says the company is linked to the Vezion group, a technology and business consulting company, with its core expertise in identity management, smart cards and electronic payment.

A check with SSM indicates that Vezion is equally owned by Choong and Khong as well, and they are the only two directors of Vezion.

For its financial year ended March 31, 2014, Vezion posted an after-tax profit of RM27,091 from RM1.2 million in revenue. It is not known if there are any other companies within the group.

However, Sinarvezion’s Beijing-based partner, Aisino, is a big corporation with a market capitalisation of more than US$5.76 billion.  Apart from the e-receipt system, it manufactures electronics and telecommunication equipment, as well as anti-fraud tax control systems.

It is also noteworthy that Aisino is a Chinese government-linked company.     

However, considering that MyEG won the RM180 million GST deal in an open tender held a few years ago, there would have to be some form of compensation were there to be any material changes to the award of the contract.

How much MyEG has spent over the years developing the requisite systems and whether it has undertaken any debt to fund the contract is not clear.

For the first three months of its financial year ending June 30, 2015, MyEG posted net profits of RM12 million from RM27.7 million in revenue. MyEG’e earnings per share (EPS) for the three months was two sen.  

As at end-September last year, the company had cash and bank balances of RM21.7 million, and short-term debt commitments of RM8.4 million. MyEG did not have any long-term borrowings.

MyEG, an e-government service provider, has been in the limelight for the wrong reasons as its online renewal for foreign worker permits has stirred debate on its monopoly of the service.

MyEG ended trading last Friday at RM2.45, giving it a market capitalisation of RM2.9 billion.

While Sinarvezion’s proposal may have its merits, there could be concerns over the outsourcing of such an important contract to a foreign firm, as certain aspects of the information gathered is sensitive.  

Sinarvezion’s system, it seems, can use algorithms to produce a receipt with a 20-digit code, ensuring that only a GST-registered business is entitled to collect the tax.

“With its NRS, consumers will be able to catch the fraud themselves. There will be no under collection and profiteering activities with its system,” says the source familiar with the company.

This article first appeared in The Edge Malaysia Weekly, on February 16 - 22, 2015.

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