Syabas’ Open Violation Of Its Contractual Obligations To The Government Is Symptomatic Of Government Contracts That Are Not Transparent, Not Accountable, Not Competitive And Riddled With Crony Capitalism

Press Statement

Lim Guan Eng

(Petaling Jaya, Tuesday): The public is not shocked by Energy, Water and Communications Minister Datuk Dr Lim Keng Yaik expose in the papers that Syarikat Bekalan Air Selangor(Syabas) has violated its RM 375 million concessionaire agreement by procuring pipes from Indonesia to replace ageing water pipes in Klang Valley instead of sourcing them locally. Further violations of the contractual obligations include issuing tenders without getting required approvals from the government. Such open violation of its contractual obligations to the government is only symptomatic of government contracts that are not transparent, not accountable, and not competitive as well as riddled with crony capitalism. 

What is shocking however is the open defiance expressed by Syabas and Puncak Niaga Chair Tan Sri Rozali Ismail for committing such violations of their obligations! There was neither denial nor apology. Instead Syabas blamed local pipe manufacturers for charging expensive and non-competitive rates forcing them to turn to cheaper foreign manufacturers. Such unrepentance is not only disrespectful to a Malaysian Minister but also contemptuous of the agreement signed between Syabas and the government.


Is this the type of gratitude Syabas has shown when the government has given a grant of RM 250 million to enable Syabas to replace RM 835 km of pipes and complete the RM 375 million contract? Syabas has shown itself to be undeserving of such contractual largesse and trust given by the Malaysian government. If an agreement is not even worth the paper it is signed on, where lie the credibility and authority of the government of Malaysia? Clearly Syabas thinks it is bigger than the signed agreement until it is not bound by its contractual obligations that it can do as it likes.


Malaysia’s drop in the World Competitiveness ranking from 16th in 2004 to No. 28th in 2005 behind Thailand(27) underlines the need for Malaysia to carry out structural democratic and economic reforms. The competitiveness report undertaken by the International Institute For Management Development supported by the World Economic Forum shows that of 60 countries Malaysia suffered the most drastic drop in competitiveness.


DAP wishes to remind the government of the urgency to carry out structural economic reforms that would lead to more competitive, knowledge-driven and results-based industries. If the government can not resolve basic compliance issues because of political connections, how can foreign investors have confidence in the Malaysian economy? This perhaps explains Malaysian International Development Agency (MIDA) own figures where Foreign Direct Investment (FDI) in 2004 went down by RM 2.5 billion or 16% from RM 15.6 billion in 2003 to RM 13.1 billion in 2004. Total foreign and domestic investment went down by 1.4% from RM 29.1 billion in 2004 to RM 28.7 billion in 2003.


Such a provision of locally sourced pipes is well-intentioned to help local pipe manufacturers to secure businesses. Public interest therefore demands an immediate termination of the RM 375 million contract to Syabas, which should be given to another company that observes respect and obeys its contractual obligations. Should the government appears indecisive and weak, then these well-connected companies would continue to bully the people and openly violate its contractual obligations to the detriment of the people.



*  Lim Guan Eng, DAP Secretary-General