Frankly Speaking: March 9, 2009

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Open and shut caseWhat’s wrong with open tenders? Aren’t we supposed to be headed that way?Sadly, the government does not feel the urge to adopt this practice, so contrary to what has been preached, it is far from being the standard procedure that it should be.The latest instance of where the practice should have been adopted involves a huge defence contract. In debating the Royal Address last week, Selayang MP William Leong Jee Keen pointed out that the Ministry of Defence had awarded a RM2.45 billion contract through direct negotiation to Target Resources Sdn Bhd for the provision of submarine rescue systems. According to Leong, another company had offered the same services at a fraction of the price, at RM200 million, for a 10-year period, to be exact. In the current tough economic climate, the amount saved would have been handy to finance the government’s stimulus package or other such initiatives.Letting other companies submit their proposals could have saved the government and taxpayers a huge sum. Under the current contract, the company gets paid RM98 million annually for 25 years to stand by for rescue efforts should the two Scorpene class submarines malfunction. Thus, the cost of owning the two Scorpene submarines has gone up considerably.Furthermore, considering that the sum could have been spent to improve the public transport system and other infrastructure or build public hospitals and schools, spending RM2.45 billion on the maintenance of two Scorpene class submarines doesn’t seem to be cost effective or the best use of public money.Leong also expressed his reservations over the fact that nine Defence Ministry projects under the Ninth Malaysia Plan are pending approval for awarding by direct negotiation. Why can’t the government invite open tenders for these projects?

Overseeing the sheriffObviously, something is seriously amiss in the handling of the custodial death of A Kugan, the suspect in a luxury car theft ring. The troubling questions start with the initial post-mortem report which said that Kugan, 22, had died from “fluid in the lungs”. However, family members whose suspicions were aroused by signs of injury on his body had to storm the Serdang Hospital mortuary in an effort to get to the bottom of the matter. A video of the incident, which included footage showing signs that there was more to Kugan’s death than the authorities were admitting to, brought the matter to public notice. Now, a second post-mortem, commissioned by Kugan’s family, shows that he died after being repeatedly beaten.The case clearly demonstrates the need for an independent mechanism for investigating allegations of abuse of power by the police. If this sounds like an old, familiar tune, it only goes to show that the nation’s efforts to improve oversight of this key institution have hardly made progress even after some five years.Although there had been strong calls for an Independent Police Complaints and Misconduct Commission (IPCMC) to be set up, it is unfortunate that the momentum for reform had been deflected and neutralised. The Kugan case demonstrates the vital importance of summoning the necessary political will to establish this body, so that an effective check and balance to the powers of the police can exist. Indeed, it is clearly detrimental to the protection of civil liberties to delay the formation of the IPCMC any longer.Furthermore, the doubts raised over the first post-mortem report suggest that an inquiry into the hospital’s independence in the case is in order. The unfortunate circumstances of Kugan’s death and the subsequent official reaction to the entire episode can have a lasting effect on public perceptions about the rule of law, with implications for investor confidence.

What’s the cost of the new LCCT?Rightfully, by now, Malaysia Airports Holdings Bhd (MAHB) and AirAsia Bhd should have firmed up the agreement on the new low-cost carrier terminal (LCCT) at the Kuala Lumpur International Airport (KLIA).When representatives of both companies were summoned to present their case to Finance Minister and Deputy Prime Minister Datuk Seri Najib Razak about three weeks ago, they were told to work out an agreement for the LCCT to be built at KLIA. Both parties were told to come back with a solution within two weeks. Any disputes are to be settled by the finance minister.It has been more than two weeks now. But, apparently, an agreement has not been concluded yet — there has been no public announcement on the matter.Probably both parties are in hard negotiations. But are there pressing differences? Are they so difficult to reconcile that a new LCCT that will benefit the nation as a whole cannot take off in the quickest time possible? And more importantly, what is the cost of the new LCCT?AirAsia had budgeted its airport in Labu at RM1.6 billion, excluding land cost. Critics of the plan, which is now shelved, had contended that the price did not include the cost of building infrastructure to-and-fro the airport in Labu.But now, since the airport is to be built at KLIA, there is no issue of infrastructure cost. And the cost of the new LCCT should in fact be lower because it is located at the KLIA which already has some facilities.In fact, the cost of the new LCCT should be even lower than RM1.6 billion, even if it is a contract that is awarded on a directly negotiated basis.There is nothing wrong in directly negotiated contracts. But the price must be so low that even competitors eyeing the job should concede. A good example is the awarding of the RM650 million Besraya Elevated Expressway (BEE) to Besraya (M) Sdn Bhd.The cost per kilometre of the highway at about RM53 million is so low that nobody disputes the award, even though it is said that the job was given on a directly negotiated basis.Similarly, the cost for the new LCCT should also be so low that it should not be a subject of discussion, especially by its competitors. Low-cost infrastructure is especially vital now when the government’s budget deficit is an increasing concern.

This article appeared in The Edge Malaysia, Issue 745, March 9-15, 2009.