Prasarana to reduce dependency on foreign suppliers by 20% in five years

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KUALA LUMPUR (April 10): Prasarana Malaysia Bhd said it is targeting to reduce dependency on foreign suppliers for domestic railway projects by 20% over the next five years, as foreign input currently accounts for about 80% of its operations and maintenance (O&M) contracts.

“We rely a lot on foreign players as we don’t yet have a developed railway industry here to supply our own parts,” said Prasarana president and chief executive officer Masnizam Hisham. “The local players right now are mostly involved in the services segment, but we are also looking for players that are developing products.”

The measures that have been implemented to encourage more local content in railway projects include the requirement for all railway projects to have at least 30% of its input sourced domestically.

This compulsory requirement applies to all railway projects, whether it’s the Light Rail Transit (LRT), Mass Rapid Transit (MRT), High Speed Rail (HSR) or the East Coast Rail Link (ECRL), Masnizam said.

She also pointed out that the Industrial Collaboration Programme (ICP), initiated by the Finance Ministry’s Technology Depository Agency, encourages the localisation of foreign technologies.

“Under the ICP, we impose a 5% bond for players that are not able to satisfy the requirements of the ICP programme, which includes the localisation of the technology, enabling market access for local players to market their products overseas, as well as training.

“If they don’t meet the requirements, they will have to pay 5% more, based on the total value of their contract,” Masnizam added.

However, local players will have to step up to the challenge, she said. 

These players must demonstrate they are competent enough to receive the technology from the foreign players. Otherwise, domestic players will miss out on the booming local railway industry, she added.

Masnizam spoke to the media today after the signing of a landmark collaboration agreement between Prasarana and local railway technology players LCE Resources Sdn Bhd and Amantronic Sdn Bhd, marking a shift in the local industry towards the involvement of more local players.

Under the agreement, Prasarana has granted Amantronic the authority to promote and market the onboard Rail Lubrication System which was developed by Rapid Rail.

Meanwhile, LCE will be involved in the replacement of the platform screen door system at the five underground LRT stations, from Ampang Park to Masjid Jamek. Prasarana had previously initiated a life extension programme and engaged LCE to localise the development of the system in 2015.

Masnizam said Prasarana is working with KTM and developers of the MRT service and the ECRL, to develop the local railway industry and to create volume, in order to attract investments into the production of local products.

“Without volume, it is unattractive to invest in new plants, to hire people and to produce products locally, because Malaysia is small. We need to make sure we have enough volume to generate interest.

“We have identified certain common components that all railway projects need, like for instance, the braking system,” Masnizam said.

Costs can be significantly reduced when local content is used, as there is no foreign exchange factor, no need for freight or shipping, and there is faster turnaround times, she added.

Masnizam also touched on the other railway projects such as the Johor Bahru–Singapore Rapid Transit System Link (RTS Link), which will be managed by Prasarana and Singapore SMRT Corp Ltd.

She said the two parties will be signing a joint venture agreement soon, sometime within the first half of 2018.