First, I wish to congratulate the project delivery partner MMC-Gamuda Joint Venture for the successful completion of the MRT Putrajaya Line Phase 1 (MRT2) project, which was officially launched today by Prime Minister Ismail Sabri Yaakob.
Despite the pandemic, Gamuda Bhd posted a 38% jump in net profit to RM152.37mil in the first quarter ended Oct 31, 2021, from RM110.30mil a year ago. Its Year-to-Date (Aug 2021 – Jan 2022) performance also saw the Group’s current half-year earnings increasing by 41% to RM329 million in comparison to RM234 million earned in the first half of 2021. Gamuda’s financial performance shows that, despite the Pakatan Harapan (PH) government’s efforts to re-negotiate the original cost of the MRT2 project, the company was able to remain strong in its profitability.
Through the re-negotiation, the then finance minister, Lim Guan Eng, ably assisted by his then political secretary, Tony Pua, were able to save public funds of RM5.22 billion after the MMC-Gamuda was issued an offer on October 3, 2018, to complete the above ground portion of the MRT2 project as a turnkey contractor at the cost of RM17.42 billion, versus the original cost of RM22.64 billion.
This was achieved within five months of negotiation after the cost rationalisation exercise of the MRT2 kick-started immediately after PH took over Putrajaya in May 2018. The Ministry of Finance had then insisted that all unfinished underground work should be re-tendered out through an international open tender process.
The initial estimated project cost of the project was RM28 billion, when it was first approved by the Cabinet on Feb 26, 2014. How and why the cost had ballooned to RM56.93 billion during Najib Abdul Razak’s tenure as Prime Minister, was what shocked the nation, forcing the PH government to earmark the MRT2 project as one of top priorities for cost reduction.
Financial prudence and good governance is much needed in Malaysia. As a result of the work by the short-lived Pakatan Harapan government, the saving of billions of ringgit will help to reduce the national debt and interest that the government will need to repay using taxpayers’ money.