Media statement by Tony Pua Kiam Wee in Petaling Jaya on Wednesday, 6^th October 2010:

The "New Economic Model" and "Economic Transformation Programme" will fail if Government assets and projects continue to be awarded without open competitive tenders

In the midst of strong "New Economic Model (NEM)" and "Economic Transformation Programme (ETP)" rhetoric by the Government, there is a worrying trend that mega-projects under the guise of "private finance initiatives" or "public-private partnerships" as well as privatisation of government assets will be awarded directly without any form of open or competitive tenders.

The Deputy Prime Minister admitted that the Cabinet is mulling over the RM50 billion proposal by a little-known company, Asas Serba whose only claim to fame is its connection to Tan Sri Halim Saad, a well-known proxy for those in power when he led the now defunct Renong Bhd. The proposal was to take over all highway concessions in Malaysia. It should have been rejected outright for it was proposed completely without basis, merit and it was completely unsolicited.

More recently, MMC Berhad, owned by another beneficiary of many privatisation projects in Malaysia in the 1990s, Tan Sri Syed Mokhtar Al-Bukhary has confirmed that it has submitted a bid to acquire UEM Group Bhd from Khazanah Nasional for the amount of RM15.6 billion. UEM have substantial stakes in 8 public listed companies, and is prized for its 38.5% ownership of PLUS Expressways Bhd, 28.7% of Time dotCom Bhd, 32.0% of Faber Group Bhd and 77.1% of UEM Land Bhd. It also owns the Penang Bridge Sdn Bhd as well as Cement Industries Malaysia Bhd. As at the end of 2009, the net assets of UEM Group Bhd amounted to RM12.3 billion.

At the same time, the government is weighing the award of Malaysia's largest infrastructure project to date, that is the Greater KL Mass Rapid Transit (MRT) system which is expected to cost up to RM46 billion with a Gamuda Bhd and MMC Bhd joint venture being touted as the "winners" of the project. In fact Gamuda has already told equity analysts that it is 80% certain of being awarded the bulk of the project, and this would be because they are the only commercial party who have been in consultation with the Government as well as Pemandu to develop the entire plan for the project. Similarly, YTL Corporation Bhd is expected to "win" the project to develop the high-speed train service between Kuala Lumpur and Singapore due to its involvement with Pemandu at the "laboratory" stage of the ETP.

These developments are of great concern because they have failed to demonstrate that the government is committed to competition and transparency in order to achieve the highest quality outcome at the lowest possible cost to the government. Should the Government decide to "dispose" of UEM Group Bhd, then bids must be solicited from all investors to ensure that the Government receives the highest possible value for its assets. At the same time, are Gamuda, MMC and YTL the only parties who are able to deliver MRTs or high-speed trains in this country?

The Prime Minister had in his speech espousing the NEM had emphasized that "competition should be promoted to allow dynamic and efficient markets". He had admitted that it "is imperative to set the economy right - to remove distortions, barriers and impediments that hinder our economy from progressing up the value chain and to promote healthy competition. Implementing these policies is a pre-condition to successfully tapping new sources of growth."

Hence should the Government decides to proceed with any of the above projects or privatisation of assets without any form of open competition, it will not only reflect the fact that the NEM is nothing but rhetoric, and it has no sincerity in wanting to promote "dynamic and efficient markets" or isn't serious about "tapping new sources of growth".

What's more, Datuk Seri Najib Abdul Razak had emphasized that "we can no longer tolerate practices that support the behavior of rent-seeking and patronage", calling for "inclusiveness, where all Malaysians contribute and benefit from economic growth". The direct and opaque award of these contracts to these connected parties flies in the face of the Prime Minister's call for "inclusiveness" and to eradicate "rent-seeking and patronage".

Datuk Seri Najib Abdul Razak must ensure and reiterate in the upcoming 2011 Budget announcement that all government projects, large and small as well as all government owned assets which are to be privatised will be tendered openly and competitively instead of being awarded on a directly negotiated basis which will only perpetuate the "behaviour of rent-seeking and patronage" in his government ending all hopes of a successful economic transformation through the much-touted NEM.

* Tony Pua Kiam Wee, DAP National Publicity Secretary & MP for Petaling Jaya Utara