No decision yet on ECRL’s bumiputera quota

This article first appeared in The Edge Financial Daily, on May 28, 2019.
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PUTRAJAYA: Prime Minister Tun Dr Mahathir Mohamad said the government had yet to decide on imposing a bumiputera quota on the civil works that are reserved for local contractors in the East Coast Rail Link (ECRL) project.

“We have decided that local contractors [will] be given jobs, but whether they are bumiputeras or non-bumiputeras has not been decided,” Dr Mahathir told reporters here after chairing the annual National Finance Council meeting.

He was commenting on reports that the Malaysian Bumiputera Contractors Association had called on the government to provide a special quota of at least 20% of the local work portion to bumiputera contractors.

The association had reportedly said the request was “reasonable” as bumiputera contractors would find it difficult to compete for any jobs from the ECRL or share it with other local companies without the special quota.

Notably, under the new supplementary agreement signed on April 12, Dr Mahathir previously said China Communications Construction Co Ltd had agreed to ensure 40% of the civil works are awarded to local contractors.


Govt yet to decide on toll rate reduction

Meanwhile, he told reporters yesterday that a decision had yet to be made on reducing toll rates in the country, and that the government is now “facing some issues” on the matter despite Pakatan Harapan’s promise to abolish tolls.

He reiterated his position that the government’s burden will increase substantially if the tolls are to be abolished. “For example, if we abolish the North-South Expressway (PLUS) toll, the government has to buy over the highway for RM30 billion. [It is] better to use that money to pay debts, [which] can reduce our burden a bit,” Dr Mahathir said.

He also said there had been some proposals from the private sector on how to reduce the toll rates, but not to the extent of reducing the toll rates by 25%. “The government has not decided on this,” he added when asked about the government’s view on whether it could reduce the toll rates by as much as 25%.

“That is Tun Daim [Zainuddin]’s opinion, but we have yet to study how are we going to reduce the toll rates,” said Dr Mahathir.

“It is true that if we abolish tolls, the people will feel relieved because they do not have to pay tolls, but the government would feel the opposite because the government will have to pay the price,” he quipped.

Recall that in February this year, Putrajaya announced that it had begun talks with Gamuda Bhd to negotiate the acquisition of four highway concessions that the company has a majority stake in, with the aim of abolishing toll collection on these highways.

The four highways involved in Putrajaya’s talks with Gamuda are: Lebuhraya Damansara-Puchong (LDP), Sistem Penyuraian Trafik KL Barat (Sprint), Lebuhraya Shah Alam (Kesas) and the Smart Tunnel.

This was the “first step” the Pakatan government was taking towards fulfilling its election promise to abolish toll collection in stages to alleviate the cost of commuting.

Upon successful takeovers of these highways, the government intends to abolish the existing toll mechanism and replace it with a “congestion charge”, where commuters will have to pay a fee equivalent to the existing toll for six hours of the “peak period” a day.

This means that during the “off-peak period” of between 11pm and 5am, commuters will be able to travel on the highways for free. During other “normal” travelling hours, commuters will enjoy discounted rates of up to 30% compared with existing toll rates.

The revenue collected from the congestion charge will go towards the operations and maintenance of the highways and repayment of borrowings.

Any surplus collected will then be channelled into a public transportation fund to improve the quality of public transport in Malaysia.