This article first appeared in The Edge Financial Daily on November 19, 2019

KUALA LUMPUR: SME Bank has allocated RM1 billion worth of financing specially for local contractors appointed for the civil work packages of the East Coast Rail Link (ECRL) project.

The development financial institution signed a memorandum of understanding (MoU) with the ECRL project’s owner Malaysia Rail Link Sdn Bhd (MRL) and its main contractor China Communications Construction (ECRL) Sdn Bhd (CCC-ECRL) yesterday.

The MoU is aimed at facilitating the provision of financial solutions to the local subcontractors of the ECRL project.

“SME Bank is proud to be one of the key players that contribute to the success of an impactful project for our nation building.

“This initiative is in line with the vision of the National Entrepreneurship Policy 2030, which aims to make Malaysia a leading entrepreneurial nation and, at the same time, achieve the Shared Prosperity Vision 2030 goals,” said SME Bank group president cum chief executive officer Aria Putera Ismail.

Meanwhile, MRL chief executive officer Datuk Seri Darwis Abdul Razak said the MoU would accelerate the commencement of civil works under the 40% local participation portion of the 640km rail infrastructure from Kota Baru, Kelantan to Port Klang, Selangor.

He said the tripartite collaboration was timely, as the initial award of ECRL civil work packages to local subcontractors has been taking place in stages for tunnels and temporary works within the Dungun-Mentakab section.

“The sooner local construction companies come on stream with civil works on the ECRL, the faster the project would contribute to the growth of Malaysia’s construction and building material sectors, as well as the railway industry,” Darwis said.

The collaboration also serves as an endorsement for the ECRL project under the improved deal between Malaysia and China which, among others, has increased local participation in civil works from 30% to 40%.

As more ECRL civil work packages would be awarded over the next one to two years, the collaboration would encourage local construction companies to play an active role in the project and ensure it is on track for completion by December 2026.