CCC-ECRL confirms staff lay-offs following suspension of ECRL project

This article first appeared in The Edge Financial Daily, on July 24, 2018.
CCC-ECRL confirms staff lay-offs following suspension of ECRL project
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KUALA LUMPUR: China Communications Construction (ECRL) Sdn Bhd (CCC-ECRL) has taken the necessary steps to rationalise its workforce in view of the finance ministry’s (MoF) instruction to suspend work on the 688km East Coast Rail Link (ECRL) project, according to its media statement yesterday.

It highlighted that the affected staff are primarily from non-critical departments.

“This rationalisation exercise has been carried out in accordance with the employment contracts between the staff and CCC-ECRL, and is also in compliance with all international and Malaysian laws and regulations,” it said, adding that the company also offered pay reduction and non-pay leave to other staff.

This is the first time that CCC-ECRL, a unit of state-controlled China Communications Construction Co Ltd (CCCC), which is dual-listed on the Hong Kong and Shanghai stock exchanges, has issued a statement on the lay-off exercise.

The Edge Financial Daily reported on July 11 that CCCC dismissed Malaysian staff a week after the suspension order early this month. When queried, the company only said it was in the midst of investigation to clarify the incident.

It was reported that a source familiar with CCCC had said that as many as 30% of the company’s local employees tied to the ECRL project would eventually be laid off due to the suspension. That number suggested that about 675 Malaysian-held jobs were at risk, based on the previous statement by CCCC that it had 2,250 local employees. Another source said that Chinese employees involved with the ECRL project were also expected to be redeployed soon amid the suspension.

Sources said the employment contracts of the dismissed workers contain a clause that provides for automatic termination if the ECRL project is suspended, terminated or completed. Such a clause is not unusual in project-based employment but the speed of the terminations has surprised Malaysia Rail Link Sdn Bhd (MRL) as there is no telling how soon the project may resume.

MRL is a wholly-owned unit of the Minister of Finance Inc, the corporate vehicle of the MoF. It was set up as the project owner of ECRL.

Following that, a letter by MRL to CCC-ECRL, which was sighted by The Edge Financial Daily, was reported to show that MRL said in the letter that it was observing the contractor’s “drastic action especially on the demobilisation of your staff”.

In the letter dated July 17, MRL also said that it required CCC-ECRL to officially notify it of personnel who had been registered as “person-in-charge to all local authorities, that is, CIDB, JKKP, etc”.

“It is required for you to maintain those staff during the suspension period to avoid any unforeseen actions by the authorities, like closing of your site offices, or imposing penalties, etc,” it added.

The reference to registered personnel likely refers to compliance-related officers on site, who by regulation need to avail themselves to regulatory authorities for enquiries and checks. CIDB refers to the Construction Industry Development Board Malaysia, which regulates construction activity. JKKP is the Malay acronym for the Department of Occupational Safety and Health.

The media statement yesterday also affirmed that MRL has requested for the retention of a number of local staff to secure work sites.

“As requested by asset owner Malaysia Rail Link Sdn Bhd, CCC-ECRL has also retained a considerable number of local staff to secure work sites,” it said.

The company also said in the statement that it intends to extend its cooperation and assistance to the Malaysian government and other related authorities during the review of the project and is hopeful that the suspension of work will only be temporary.

“We look forward to the lifting of the work suspension order as soon as possible,” it noted.

The ECRL project has come under scrutiny as Finance Minister Lim Guan Eng pointed to its hefty cost of RM81 billion, which is far higher than the initial price tag of RM55 billion indicated by the previous government.