Wednesday, December 16, 2009

PAC Must Investigate Matrade Exhibition & Convention Centre

Questions to Finance Minister(s) on RM628 million MATRADE Exhibition & Convention Centre: Why the Elegant Silence?

The Ministry of International Trade and Industry (MITI) has awarded a RM628 million contract to Naza TTDI to build Malaysia's largest exhibition and convention centre in exchange for a 62.5 acres of prime land near Mont Kiara. The contract has been awarded in a highly opaque manner with no tender for the project or auction for the piece of land. The Naza TTDI group managing director SM Faliq SM Nasimuddin has already suggested that an iconic building higher than 100 storeys could be built on the site.

I've raised the issue with regards to the award of a new RM628 million Matrade Exhibition & Convention Centre (MECC) mega-project in parliament over the past month. The first time was when the Deputy Minister of Finance, Datuk Seri Dr Awang Adek was winding up the committee stage debate for the 2010 Budget for his Ministry on 23 November. He responded that he was completely unaware of the matter and asked me to refer to the Prime Minister.

The second time was yesterday, when debating the Finance Bill (2) 2009. The other Deputy Finance Minister, Datuk Wira Chor Chee Heung responded that due to the “sudden” query of the matter, he's unable to reply my query when winding up the debate.

The only time when we received any reply on the question was during the committee stage debate on the MITI, where the Minister, Datuk Mustapa Mohamed insisted that the transaction was “value for money” and even told the press that the Government got the MECC “for free”.

The Government, and in particular the Finance Ministry headed by the Prime Minister, Datuk Seri Najib Abdul Razak himself appears to be maintaining an “elegant silence” over the issue, hoping that it will just go away.

In the interest of ensuring good governance and promoting transparency, the Government cannot hope kill the issue with its silence. The following simple questions must be answered:

1. Why was there no open tender to award the construction of the Exhibition & Convention Centre?

In his recent keynote speech at the National Economic Outlook Conference by the 2nd Finance Minister, Datuk Seri Ahmad Husni Hanadzlah had emphasized on the critical need for “competition” in Malaysia. He said that:
Entrepreneurs need to know that the public institutions are transparent and are run by the highest standards of governance. Entrepreneurs need to know that they do not compete in a market whereby their competitors seemed to possess institutional advantage. We need to see better competition policies and better regulatory environment which can allow market forces to operate in an orderly manner...

If there is one operative word that runs through consistently in all the points that I have just put across to you just now, the word would be competition. 1 Malaysia equals inclusivity and by being inclusive, we introduce competition. We have to increase the level of competition in all the relevant sectors of our economy... We want to see a steady decline in those that suffer from the “dependency syndrome”.
Why is the Finance Minister telling Malaysians about the merits of “competition” on the one hand, but at the same time, continue to allow opaque direct negotiations which has resulted in countless scandals and millions of ringgit in losses in the past?

2. Why was there no open auction for the 62.5 acres of government land given to Naza TTDI?

The Prime Minister had himself promised that “the Government planned to maximise income on all its existing assets, including on parcels of land that have not been developed, via open tender.” In addition, he has also stated that “opting for the tender system will curb corruption and bring back the people’s confidence in the Government.”

The MITI Minister had disclosed that the 62.5 acres of land was only worth RM197 million. However, established property consultants have valued the land to be worth between RM970 million to RM1.5 billion. The only credible mechanism to establish its true market value has to be via an open auction system for the land.

The question then is why did the Prime Minister approve of the transaction despite having himself stated his disapproval for the direct negotiation mechanism?

I will be making a formal request to the Public Accounts Committee (PAC) of which I'm a member to investigate this particular transaction.

The questions I will ask will include:
  • access to the feasibility study conducted by MITI
  • comparative market study against the performance of local and overseas competitors
  • the determination of cost of RM628m for the convention centre
  • the determination of RM197m valuation for the 62.5 acres of land
  • the rationale behind approval by MOF for direct negotiation without tender, and
  • an audit of proposal evaluation process by MITI and MOF
  • the need for the Government to get into the business of operating an Exhibition and Convention Centre
It is important that the PAC takes up this investigation as we need conduct more prevention exercises instead of waiting for projects to become incurable such as the multi-billion Port Klang Free Zone and the double-tracking project scandals.
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