Yesterday, Minister in the Prime Minister’s Department Datuk Seri Abdul Rahman Dahlan once again tried to deflect questions and criticisms of the RM55 billion ECRL project by painting it as “a domestic investment with foreign funding”.
This was in response to the statement issued by former Finance Minister, Tun Daim Zainuddin who responded to questions from the media last weekend on whether the country should be worried over foreign investments from China.
“How much investment did they bring in? Like Forest City? Does the train project (ECRL) bring in money?,” he asked
“If it is a loan, that means we have to pay (it) back. If you have to pay (it) back, does that mean it is an investment? If you were an investor, what would you say? Its not (an investment). It’s a loan,” Tun Daim explained.
Dato’ Seri Rahman Dahlan then retorted in his statement, “Would Daim and Bersatu be happier if foreigners own and operate the ECRL instead?”
The Minister who is in-charge of the Economic Planning Unit (EPU) is trying to be disingeneuous in his response.
While the fact of the matter is that ECRL is indeed an infrastructure project which funded with foreign debt, the Prime Minister Dato’ Seri Najib Razak himself, together with many other Cabinet Ministers have often used the project as a successful example of Malaysia’s ability to attract sizeable investments from China.
For example, earlier in January this year, Dato’ Seri Najib Razak defended “investments” from China, stating that “This is unfair, because investments from China benefits the nation including us in Pahang, not only large investments like ECRL but the price of palm oil also go up, to simultaneously profit smallholders and settlers,” he said said this at ‘An Evening With the Chinese Community In Pekan’ programme.[1]
Hence Tun Daim is merely trying to correct the ‘managed’ perception that these large infrastructure projects are not ‘investments’ from China, but are effectively huge debts which have to be repaid by Malaysians in the future.
The question isn’t where former Prime Minister, Tun Dr Mahathir Mohammad or Tun Daim or any Malaysian for that matter, “be happier if foreigners own and operate the ECRL instead”.
Instead, Malaysians would “be happier” if the ECRL project was tendered openly and competitively so that our tax-payers will receive best value for our ringgit. Why was a infrastructure project of this magnitude awarded directly without any competitive tender? Hence, it begs the question - who will really profit from this contract?
It has already been exposed that the Government’s own appointed engineering consultants, HSS Integrated (HSSI) has estimated in December 2015 the project's value was RM29 billion (RM53.2 million per km), whereas China-owned China Communications Construction Company (CCCC) was awarded the contract at RM55 billion (RM91.7 million per km).
We have demanded for the HSSI to be publicly disclosed and Transport Minister, Dato’ Seri Liow Tiong Lai has promised in Parliament in November 2016 to “publish” the feasibility study when it is “finalised”[2]. However, the HSSI report remains a secret document with the BN Government.
The question which remains unanswered to date – if ECRL were to cost RM30 billion or less, why was CCCC awarded the contract via direct negotiation for RM55 billion, even if there so-called favourable financing terms? Where would the excess RM25 billion go to? Would it be used to pay-off some of 1MDB’s debts as speculated so as to cover up the Najib administration’s largest international financial scandal?
Showing posts with label China. Show all posts
Showing posts with label China. Show all posts
Monday, December 18, 2017
Thursday, November 30, 2017
Whose head should roll when East Coast Rail Link’s outrageous claims of profitability fail to materialise?
The East Coast Rail Link (ECRL) project which was awarded without any tender to China Communications and Construction Company (CCCC) has been criticised for being overly expensive at RM55 billion and potentially soaring to RM70 billion according to some reports. The government’s own consultants had estimated the cost to be only RM29 billion.
Yet despite the heavy price tag, the Deputy Finance Minister Datuk Othman Aziz told Parliament on 28 November that the project was expected to “break even from the operational aspect”, after just 8 years of operation in 2032.
The Deputy Minister’s statement is wildly ambitious on many counts.
Firstly, we have to assume that the Deputy Minister meant that “break even from the operational aspect” meant that it does not cover the enormous cost of constructing the ECRL, which is covered entirely by debt.
So far, the government has said that 85% of the project will be financed by China’s Export-Import Bank (EXIM), with a soft loan carrying an interest rate of 3.25% per annum repaid over 20 years with a 7-year moratorium. The remainder 15% will be financed via a sukuk issuance.
Therefore, the annual repayment of the ECRL borrowings will amount to an estimated whopping RM3.7 billion. This simply means that even if the ECRL is to “break even from the operational aspect” after 8 years, it will still be suffering cashflow losses of some RM3.7 billion annually!
However, even Datuk Othman Aziz’s claim of “break even from the operational aspect” is preposterous to begin with.
Datuk Othman claimed that the government was projecting a revenue of RM2.9 billion to be recorded in 2024. But this amount is more than 4 times the current revenue of KTM Berhad today!
The ridiculous revenue projection is achieved with a fantastical projection of cargo the ECRL will transport. As raised by economist KS Jomo, the ECRL is expecting to carry 60 million tonnes of freight yearly by 2032 even though KTM’s existing freight haulage is only 6 million tonnes across the entirety of its existing rail network from Padang Besar to Johor Bahru.
How exactly is the ECRL expecting to see 10 times the amount of freight currently being transported on the matured and industrialised west coast of Peninsula Malaysia?
The BN Government must stop trying to mislead the people with fanciful daydreams and start providing data, analysis and studies to back up its wild and preposterous claims. Who will also take responsibility if the ECRL fails achieve any where close to the projections above? Will the Deputy Minister take responsibility by resigning from his position? Or will it be the Prime and Finance Minister, Dato’ Seri Najib Razak who owns the ECRL brainchild and awarded to contract to CCCC?
The rakyat has the right to know the details because it will be our children and grandchildren who will have to bear the reckless debt burden of the current government should the project fail to meet its lofty targets.
Yet despite the heavy price tag, the Deputy Finance Minister Datuk Othman Aziz told Parliament on 28 November that the project was expected to “break even from the operational aspect”, after just 8 years of operation in 2032.
The Deputy Minister’s statement is wildly ambitious on many counts.
Firstly, we have to assume that the Deputy Minister meant that “break even from the operational aspect” meant that it does not cover the enormous cost of constructing the ECRL, which is covered entirely by debt.
So far, the government has said that 85% of the project will be financed by China’s Export-Import Bank (EXIM), with a soft loan carrying an interest rate of 3.25% per annum repaid over 20 years with a 7-year moratorium. The remainder 15% will be financed via a sukuk issuance.
Therefore, the annual repayment of the ECRL borrowings will amount to an estimated whopping RM3.7 billion. This simply means that even if the ECRL is to “break even from the operational aspect” after 8 years, it will still be suffering cashflow losses of some RM3.7 billion annually!
However, even Datuk Othman Aziz’s claim of “break even from the operational aspect” is preposterous to begin with.
Datuk Othman claimed that the government was projecting a revenue of RM2.9 billion to be recorded in 2024. But this amount is more than 4 times the current revenue of KTM Berhad today!
The ridiculous revenue projection is achieved with a fantastical projection of cargo the ECRL will transport. As raised by economist KS Jomo, the ECRL is expecting to carry 60 million tonnes of freight yearly by 2032 even though KTM’s existing freight haulage is only 6 million tonnes across the entirety of its existing rail network from Padang Besar to Johor Bahru.
How exactly is the ECRL expecting to see 10 times the amount of freight currently being transported on the matured and industrialised west coast of Peninsula Malaysia?
The BN Government must stop trying to mislead the people with fanciful daydreams and start providing data, analysis and studies to back up its wild and preposterous claims. Who will also take responsibility if the ECRL fails achieve any where close to the projections above? Will the Deputy Minister take responsibility by resigning from his position? Or will it be the Prime and Finance Minister, Dato’ Seri Najib Razak who owns the ECRL brainchild and awarded to contract to CCCC?
The rakyat has the right to know the details because it will be our children and grandchildren who will have to bear the reckless debt burden of the current government should the project fail to meet its lofty targets.
Tuesday, November 14, 2017
Current Bandar Malaysia RFP likely to suffer same fate as its failed sale to Iskandar Waterfront Holdings and subsequent imaginary sale to Dalian Wanda Group
In my parliamentary question on 8 November I had asked the Ministry of Finance (MoF) for a simple update on the progress of Bandar Malaysia’s search for a new master developer.
The new tender process for Bandar Malaysia’s developer comes following the spectacular collapse of the RM7.41 billion deal with the Iskandar Waterfront Holdings (IWH)-led consortium to acquire a 60% stake in Bandar Malaysia in May 2017.
Following that was another dramatic public relations disaster when the Prime Minister, Dato’ Seri Najib Razak failed to seal an improved multi-billion dollar Bandar Malaysia deal with China’s Dalian Wanda Group.
In attempt to save face and salvage the project, Bandar Malaysia’s owner, the MoF, launched a new request for proposals (RFP) to collect bids for a new master developer for the project.
The new RFP also included more stringent criteria including that the developer needed to be an affiliate of a Fortune 500 company and must have cumulatively generated RM50 billion in revenue in the last 3 consecutive years.
In the Finance Minister’s answer to my question, he only restated information which were already made known to the press for months. He said that the RFP process had been completed and listed out the same criteria that had been said before. He added that 8 companies had met these criteria and that a final decision will be announced soon.
The reply shows that all is clearly not going to plans with the re-bidding process of Bandar Malaysia.
When the RFP was first announced in May, the new Bandar Malaysia chairman and MoF Secretary-General Irwan Serigar Abdullah said that the RFP deadline would close on June 30 and the final decision would be made by July 14.
The RFP was finally launched on July 5, with a deadline on July 20. The Singapore Straits Times had reported on July 25 that 7 Chinese state-controlled entities and two Japanese firms were in competition for the project. They included China State Construction Engineering Co Ltd, China Communications Construction Company (CCCC) from China and Daiwa House Industry Group and Mitsui Fudosan Co Ltd from Japan.
Then on August 23, Tan Sri Irwan Serigar updated Malaysians with his announcement that “6 companies have shown interest and visited the Bandar Malaysia project site”.
“We took them for a site visit and they need to submit their proposal by the end of this month,” he said. However, Irwan said the government does not know how many companies, out of the six, will actually submit their proposals based on the RFP for the project.
Now, it is now 4 months after the RFP was announced and we have had no further updates as to who might become the master developer for the Bandar Malaysia. All we have from the media and parliamentary responses is there are 6 to 8 companies who were perhaps interested in the project.
The delay and inconsistent announcements made however, points to a simple conclusion. The Bandar Malaysia is no nearer to finding a new suitor than it did when it terminated the failed agreement with the IWH-led consortium. The so-called interested parties were either not that interested, or were not willing to offer anything close to MoF’s over-priced valuation of Bandar Malaysia.
The MoF should stop daydreaming and start getting real. The previous Bandar Malaysia “open tender” resulted only with the IWH-consortium winning the bid but failing to secure the necessary financing for the valuation to complete the transaction. It follows to ask why would any global company in the right mind, offer anything more for Bandar Malaysia especially when they also know that MoF is rather desperate to make the sale?
Tony Pua minta Menteri Kewangan menyatakan berapa syarikat telah menyerahkan cadangan muktamad dalam tender semula projek Bandar Malaysia. Berapa antaranya adalah syarikat Fortune 500 dan bilakah keputusan tender tersebut akan diumumkan?
The new tender process for Bandar Malaysia’s developer comes following the spectacular collapse of the RM7.41 billion deal with the Iskandar Waterfront Holdings (IWH)-led consortium to acquire a 60% stake in Bandar Malaysia in May 2017.
Following that was another dramatic public relations disaster when the Prime Minister, Dato’ Seri Najib Razak failed to seal an improved multi-billion dollar Bandar Malaysia deal with China’s Dalian Wanda Group.
In attempt to save face and salvage the project, Bandar Malaysia’s owner, the MoF, launched a new request for proposals (RFP) to collect bids for a new master developer for the project.
The new RFP also included more stringent criteria including that the developer needed to be an affiliate of a Fortune 500 company and must have cumulatively generated RM50 billion in revenue in the last 3 consecutive years.
In the Finance Minister’s answer to my question, he only restated information which were already made known to the press for months. He said that the RFP process had been completed and listed out the same criteria that had been said before. He added that 8 companies had met these criteria and that a final decision will be announced soon.
The reply shows that all is clearly not going to plans with the re-bidding process of Bandar Malaysia.
When the RFP was first announced in May, the new Bandar Malaysia chairman and MoF Secretary-General Irwan Serigar Abdullah said that the RFP deadline would close on June 30 and the final decision would be made by July 14.
The RFP was finally launched on July 5, with a deadline on July 20. The Singapore Straits Times had reported on July 25 that 7 Chinese state-controlled entities and two Japanese firms were in competition for the project. They included China State Construction Engineering Co Ltd, China Communications Construction Company (CCCC) from China and Daiwa House Industry Group and Mitsui Fudosan Co Ltd from Japan.
Then on August 23, Tan Sri Irwan Serigar updated Malaysians with his announcement that “6 companies have shown interest and visited the Bandar Malaysia project site”.
“We took them for a site visit and they need to submit their proposal by the end of this month,” he said. However, Irwan said the government does not know how many companies, out of the six, will actually submit their proposals based on the RFP for the project.
Now, it is now 4 months after the RFP was announced and we have had no further updates as to who might become the master developer for the Bandar Malaysia. All we have from the media and parliamentary responses is there are 6 to 8 companies who were perhaps interested in the project.
The delay and inconsistent announcements made however, points to a simple conclusion. The Bandar Malaysia is no nearer to finding a new suitor than it did when it terminated the failed agreement with the IWH-led consortium. The so-called interested parties were either not that interested, or were not willing to offer anything close to MoF’s over-priced valuation of Bandar Malaysia.
The MoF should stop daydreaming and start getting real. The previous Bandar Malaysia “open tender” resulted only with the IWH-consortium winning the bid but failing to secure the necessary financing for the valuation to complete the transaction. It follows to ask why would any global company in the right mind, offer anything more for Bandar Malaysia especially when they also know that MoF is rather desperate to make the sale?
Thursday, May 18, 2017
Why is Dato’ Seri Najib Razak making up the plans for Bandar Malaysia as he goes along?
Over the past 2 weeks, the Prime Minister and the Ministry of Finance have been making a whole series of announcements, varying them along the way.
First, the Ministry of Finance surprised the markets with the sudden temination of the sale of 60% interest in Bandar Malaysia to the consortium led by Iskandar Waterfront Holdings (IWH) for RM7.41 billion. According to MoF, IWH and it’s partner, China Rail Engineering Corporation (CREC) failed to fulfil their financial obligations under the agreement despite more than 10 extensions granted.
However, despite the purported breach of contract by the IWH consortium which should have led to an event of default requiring the forfeit of the 10% deposit paid, the MoF decided to refund the RM741 million deposit paid in full.
Then the markets were fed “rumours” from official sources that the agreement was terminated as the Prime Minister, Dato’ Seri Najib Razak was expected to sign an agree with China’s Dalian Wanda, owned by China’s richest man, Wang Jianlin for Bandar Malaysia. The expected agreement was purportedly worth more than US$8 billion.
However, during the Beijing meet between Dato’ Seri Najib and Wang on 13th May, the latter offered nothing other than polite, diplomatic and measured praise for Malaysia. The Prime Minister had to return home empty-handed, not even with a perfunctory, non-committal Memorandum of Understanding (MoU) as is typically signed during such high-profile events.
Suddenly with the embarrassing failure by the Prime Minister to secure any deal with Wanda, The Star reported on 15th May that according to a government source in Beijing, “Chinese Prime Minister Li Keqiang told Najib that China hopes the deal on Bandar Malaysia stays unchanged. Najib may have to take the Chinese wishes into consideration.”
It was further reported that Najib said then that the formula for equity stakes in Bandar Malaysia would be changed and that foreign participants would not be just Dalian Wanda Group alone. “We will take into account the position of CREC and other groups that are interested, including Wanda,” he said.
However, yesterday, back in Malaysia, the Prime Minister appeared to have changed his tune again. He said, contrary to some erroneous reports, the termination of the previous agreement with IWH CREC Sdn Bhd is final, and will not be reinstated.
"The selection process for the master developer will involve very strict criteria, including a proven track record, speed of delivery, content creation, and the financial capability to deliver a project of this scale. The highest possible value will be sought to ensure the best deal for the taxpayer is obtained," he added.
It appears very clear that the Bandar Malaysia development lacked any direction, and Dato’ Seri Najib Razak is making up plans has he goes along. And as policies got varied by the day, the market reaction can only be best encapsulated by the wild gyrations of the Iskandar Waterfront City Bhd over the past two weeks.
Such ad-hoc policy making pronouncements are completely detrimental to the MoF’s objective of snaring a new investor for the project. Instead, potential buyers will only be frightened off by the policy flip-flops which can take place in Malaysia, providing them with little confidence and certainty over their investment in the country.
We call upon the Ministry of Finance to deliberate in-depth the developments over the past 2 weeks carefully before making any more vacuous decision announcements. Dato’ Seri Najib Razak must not forget the fact that the original sale to the IWH consortium was finalised only after a 6-month global hunt for investors by C H Williams, Talhar & Wong, the 1MDB-appointed real estate brokers, in 2015.
The offer by IWH consortium, despite their apparent inability to fulfil their financial obligations was the then highest offer on the table. Instead of making empty promises of selling Bandar Malaysia at substantially higher prices which may in turn cripple the viability of the proposed economically beneficial projects, the MoF must study in-depth the types of development in Bandar Malaysia which will generate the most economic multiplier effects for the country, with an emphasis of supporting competent local developers and businesses.
First, the Ministry of Finance surprised the markets with the sudden temination of the sale of 60% interest in Bandar Malaysia to the consortium led by Iskandar Waterfront Holdings (IWH) for RM7.41 billion. According to MoF, IWH and it’s partner, China Rail Engineering Corporation (CREC) failed to fulfil their financial obligations under the agreement despite more than 10 extensions granted.
However, despite the purported breach of contract by the IWH consortium which should have led to an event of default requiring the forfeit of the 10% deposit paid, the MoF decided to refund the RM741 million deposit paid in full.
Then the markets were fed “rumours” from official sources that the agreement was terminated as the Prime Minister, Dato’ Seri Najib Razak was expected to sign an agree with China’s Dalian Wanda, owned by China’s richest man, Wang Jianlin for Bandar Malaysia. The expected agreement was purportedly worth more than US$8 billion.
However, during the Beijing meet between Dato’ Seri Najib and Wang on 13th May, the latter offered nothing other than polite, diplomatic and measured praise for Malaysia. The Prime Minister had to return home empty-handed, not even with a perfunctory, non-committal Memorandum of Understanding (MoU) as is typically signed during such high-profile events.
Suddenly with the embarrassing failure by the Prime Minister to secure any deal with Wanda, The Star reported on 15th May that according to a government source in Beijing, “Chinese Prime Minister Li Keqiang told Najib that China hopes the deal on Bandar Malaysia stays unchanged. Najib may have to take the Chinese wishes into consideration.”
It was further reported that Najib said then that the formula for equity stakes in Bandar Malaysia would be changed and that foreign participants would not be just Dalian Wanda Group alone. “We will take into account the position of CREC and other groups that are interested, including Wanda,” he said.
However, yesterday, back in Malaysia, the Prime Minister appeared to have changed his tune again. He said, contrary to some erroneous reports, the termination of the previous agreement with IWH CREC Sdn Bhd is final, and will not be reinstated.
"The selection process for the master developer will involve very strict criteria, including a proven track record, speed of delivery, content creation, and the financial capability to deliver a project of this scale. The highest possible value will be sought to ensure the best deal for the taxpayer is obtained," he added.
It appears very clear that the Bandar Malaysia development lacked any direction, and Dato’ Seri Najib Razak is making up plans has he goes along. And as policies got varied by the day, the market reaction can only be best encapsulated by the wild gyrations of the Iskandar Waterfront City Bhd over the past two weeks.
Such ad-hoc policy making pronouncements are completely detrimental to the MoF’s objective of snaring a new investor for the project. Instead, potential buyers will only be frightened off by the policy flip-flops which can take place in Malaysia, providing them with little confidence and certainty over their investment in the country.
We call upon the Ministry of Finance to deliberate in-depth the developments over the past 2 weeks carefully before making any more vacuous decision announcements. Dato’ Seri Najib Razak must not forget the fact that the original sale to the IWH consortium was finalised only after a 6-month global hunt for investors by C H Williams, Talhar & Wong, the 1MDB-appointed real estate brokers, in 2015.
The offer by IWH consortium, despite their apparent inability to fulfil their financial obligations was the then highest offer on the table. Instead of making empty promises of selling Bandar Malaysia at substantially higher prices which may in turn cripple the viability of the proposed economically beneficial projects, the MoF must study in-depth the types of development in Bandar Malaysia which will generate the most economic multiplier effects for the country, with an emphasis of supporting competent local developers and businesses.
Monday, May 15, 2017
Malaysia has some of the top property development companies in the world – why is Dato’ Seri Najib Razak practically begging for Chinese developers to develop Bandar Malaysia?
The failure by Dato’ Seri Najib Razak to secure even any form of non-binding commitment from Dalian Wanda to acquire Bandar Malaysia brings the Ministry of Finance plans for the 495 acres of prime land back to square one.
The Prime Minister needs perhaps a lesson in sales strategy. An evidently desperate salesman trying to sell his family heirlooms is never going to succeed in closing a deal at inflated prices. While these Chinese developers may be cash rich, they are not stupid.
They know that the previous buyer – the Iskandar Waterfront Holdings (IWH) Consortium who had put it the purportedly best bid in December 2015 could not pay up the full RM7.41 billion it agreed to pay for a 60% stake in Bandar Malaysia.
And if Wanda knew that, why would they be so silly as to offer more than what was previously already the best bid Bandar Malaysia could solicit? What can Bandar Malaysia offer – other than being a sizeable piece of prime land in the middle of Kuala Lumpur, that would make it such an ‘irresistable buy’ for a foreign Chinese developer?
The answer which isn’t music to Dato’ Seri Najib Razak’s ears, is really “not much”. Hence the only reason why these Chinese developers would acquire Bandar Malaysia is if, they got a bargain price or if they are able to extract all sorts of financial incentives and tax exemptions from the Malaysian government to make their venture worth the while.
This then begs the question – what makes these Chinese developers so special that we should bend over backwards to grant them exclusive financial incentives and generous tax exemptions?
We are not talking about Huawei setting up a reseach and design centre in Malaysia. Or for that matter setting up a manufacturing plant to produce world-class electronic gadgets. We would bend over backwards for Huawei in this case because we have no expertise in the sector.
On the other hand, our experience with Chinese developers have left a bad taste in the mouth. They have not only single-handedly placed the Johor property development industry on life-support, they have brought with them their entire supply chain of contractors and sub-contractors from China.
Worse, investigations by Malaysiakini recently have proven the Chinese construction projects to have engaged thousands of illegal workers from China. They have demonstrated utter contempt for our laws.
Therefore, as the Ministry of Finance re-think the entire Bandar Malaysia development – the most important question to ask is, “why can’t Malaysian developers do the job?”
For example, a consortium comprising of SP Setia, Sime Darby and EPF stunned the global property markets with a winning bid for the London icon, Battersea Power Station in 2012. It is now a project with gross development value in excess of GBP8 billion and have won the prestigious London “Developer of the Year Award” in 2015. Last year, the development also won the London “Deal of the Year Award” after successfully snagging Apple as the largest office tenant which will take up 5,000 sq ft of space.
Malaysian developers are also regular winners at the International Real Estate Federation (FIABCI) World Prix D’Excellence Awards. They have included Sunway, IJM, YTL, UEM-Sunrise and many more. These developers are now expanding their portfolios not only in the regional countries such as Vietnam, China and Indonesia, but also to developed cities such London and Melbourne.
Why are our own developers not given a chance? Even if in the event that there is no one developer who is able to digest the entire 495 acres of land in Bandar Malaysia – the Ministry of Finance could always parcel out the development into multiple parts and phases. This will provide the perfect opportunity for the local players to compete to create the best value and designs for the respective carved segments.
The projects will be a massive boost to our local property development industry, stimulate demand for local construction and related-services and most importantly provide thousands of new job opportunities for ordinary Malaysians.
Sometimes we think too hard, travel far and wide in the pursuit for solutions, when really, the
answer is right in front of our very eyes.
The Prime Minister needs perhaps a lesson in sales strategy. An evidently desperate salesman trying to sell his family heirlooms is never going to succeed in closing a deal at inflated prices. While these Chinese developers may be cash rich, they are not stupid.
They know that the previous buyer – the Iskandar Waterfront Holdings (IWH) Consortium who had put it the purportedly best bid in December 2015 could not pay up the full RM7.41 billion it agreed to pay for a 60% stake in Bandar Malaysia.
And if Wanda knew that, why would they be so silly as to offer more than what was previously already the best bid Bandar Malaysia could solicit? What can Bandar Malaysia offer – other than being a sizeable piece of prime land in the middle of Kuala Lumpur, that would make it such an ‘irresistable buy’ for a foreign Chinese developer?
The answer which isn’t music to Dato’ Seri Najib Razak’s ears, is really “not much”. Hence the only reason why these Chinese developers would acquire Bandar Malaysia is if, they got a bargain price or if they are able to extract all sorts of financial incentives and tax exemptions from the Malaysian government to make their venture worth the while.
This then begs the question – what makes these Chinese developers so special that we should bend over backwards to grant them exclusive financial incentives and generous tax exemptions?
We are not talking about Huawei setting up a reseach and design centre in Malaysia. Or for that matter setting up a manufacturing plant to produce world-class electronic gadgets. We would bend over backwards for Huawei in this case because we have no expertise in the sector.
On the other hand, our experience with Chinese developers have left a bad taste in the mouth. They have not only single-handedly placed the Johor property development industry on life-support, they have brought with them their entire supply chain of contractors and sub-contractors from China.
Worse, investigations by Malaysiakini recently have proven the Chinese construction projects to have engaged thousands of illegal workers from China. They have demonstrated utter contempt for our laws.
Therefore, as the Ministry of Finance re-think the entire Bandar Malaysia development – the most important question to ask is, “why can’t Malaysian developers do the job?”
For example, a consortium comprising of SP Setia, Sime Darby and EPF stunned the global property markets with a winning bid for the London icon, Battersea Power Station in 2012. It is now a project with gross development value in excess of GBP8 billion and have won the prestigious London “Developer of the Year Award” in 2015. Last year, the development also won the London “Deal of the Year Award” after successfully snagging Apple as the largest office tenant which will take up 5,000 sq ft of space.
Malaysian developers are also regular winners at the International Real Estate Federation (FIABCI) World Prix D’Excellence Awards. They have included Sunway, IJM, YTL, UEM-Sunrise and many more. These developers are now expanding their portfolios not only in the regional countries such as Vietnam, China and Indonesia, but also to developed cities such London and Melbourne.
Why are our own developers not given a chance? Even if in the event that there is no one developer who is able to digest the entire 495 acres of land in Bandar Malaysia – the Ministry of Finance could always parcel out the development into multiple parts and phases. This will provide the perfect opportunity for the local players to compete to create the best value and designs for the respective carved segments.
The projects will be a massive boost to our local property development industry, stimulate demand for local construction and related-services and most importantly provide thousands of new job opportunities for ordinary Malaysians.
Sometimes we think too hard, travel far and wide in the pursuit for solutions, when really, the
answer is right in front of our very eyes.
Sunday, May 14, 2017
After more than a week of hyped-up brouhaha, Dato’ Seri Najib Razak’s magic Wanda failed to cast its spell
For more than a week after the Ministry of Finance the sale of a 60% Bandar Malaysia interest to a consortium led by Iskandar Waterfront Holdings (IWH) collapsed, the Prime Minister’s Department media strategists worked overtime to limit the damage caused by the negative publicity.
They fed unnamed and uncorroborated stories to key correspondents with news leaks that the real reason why the IWH deal will terminated was because a much bigger deal was to be signed.
It was The Star who first picked up the “rumour” quoting “some sources” saying “that entity could be Dalian Wanda Group Co Ltd, a Chinese multinational conglomerate corporation and the world’s biggest private property developer” on 6 May 2017.
But it was The Singapore Straits Times who was the first to flesh out the story on 9 May 2017 and created an unreal buzz that Dato’ Seri Najib Razak has all but tied up the deal with Dalian Wanda, hence the urgency to dump IWH.
The Singapore Straits Times wrote that “Government officials and financial executives close to the situation told The Straits Times that negotiations with the Dalian Wanda Group to take a central role as master developer have reached an advanced stage…”
“Malaysian government officials noted that the new deal would be substantially higher than the previous RM12.3 billion valuation tag for the entire project. According to financial executives familiar with ongoing talks, Wanda has proposed to use half of the development for tourism and entertainment-related ventures valued at roughly US$8 billion,” the Singapore paper added.
All media outlets, online and print, including The Star, quoted the Singapore report with expectations of an agreement to be signed with Wanda in Beijing this week hitting a feverish pitch.
However, with expectations set so high, the stage was set for a spectacular flop. The press conference announcement yesterday afternoon between Dato’ Seri Najib Razak and Wanda’s Chairman Wang Jianlin in Beijing turned up a damp squib.
Despite the Prime Minister’s over-the-top praise for Wanda, Wang’s brief response was measured in pure diplomatic speak.
"Today, I also talked to the Prime Minister about this project. It is a large project worth over US$10 billion and we have not finalised a deal yet. We are very optimistic about Malaysia's investment and commercial climate. We are willing and ready to contribute our share to Malaysia's economic development and to create the one and only unique commercial centre in Malaysia," he said.
Not even a face-saving, typically broadly-worded, non-committal Memorandum of Understanding was signed.
The reason is likely quite simple. Dalian Wanda might be one of the richest private companies in China, making them an attractive target to sell perhaps, a grossly overpriced piece of real estate. But in all likelihood, Dalian Wanda became one of the most profitable companies in the world precisely because it doesn’t pay over-the-top prices of real estate – even if it is indeed prime real estate, especially if the seller is way more desperate than Wanda is interested.
With the IWH deal dead and no super-wealthy knight-in-shining-armour in sight, the Ministry of Finance needs to go back to the drawing board on its plans for Bandar Malaysia. The priority must not be to sell the land at the highest possible price with the intended purpose for the funds to bailout 1MDB. The priority to the land must be a economically sustainable development which will not only empower the Malaysian business community, but also in turn create meaningful job opportunities for ordinary Malaysians.
They fed unnamed and uncorroborated stories to key correspondents with news leaks that the real reason why the IWH deal will terminated was because a much bigger deal was to be signed.
It was The Star who first picked up the “rumour” quoting “some sources” saying “that entity could be Dalian Wanda Group Co Ltd, a Chinese multinational conglomerate corporation and the world’s biggest private property developer” on 6 May 2017.
But it was The Singapore Straits Times who was the first to flesh out the story on 9 May 2017 and created an unreal buzz that Dato’ Seri Najib Razak has all but tied up the deal with Dalian Wanda, hence the urgency to dump IWH.
The Singapore Straits Times wrote that “Government officials and financial executives close to the situation told The Straits Times that negotiations with the Dalian Wanda Group to take a central role as master developer have reached an advanced stage…”
“Malaysian government officials noted that the new deal would be substantially higher than the previous RM12.3 billion valuation tag for the entire project. According to financial executives familiar with ongoing talks, Wanda has proposed to use half of the development for tourism and entertainment-related ventures valued at roughly US$8 billion,” the Singapore paper added.
All media outlets, online and print, including The Star, quoted the Singapore report with expectations of an agreement to be signed with Wanda in Beijing this week hitting a feverish pitch.
However, with expectations set so high, the stage was set for a spectacular flop. The press conference announcement yesterday afternoon between Dato’ Seri Najib Razak and Wanda’s Chairman Wang Jianlin in Beijing turned up a damp squib.
Despite the Prime Minister’s over-the-top praise for Wanda, Wang’s brief response was measured in pure diplomatic speak.
"Today, I also talked to the Prime Minister about this project. It is a large project worth over US$10 billion and we have not finalised a deal yet. We are very optimistic about Malaysia's investment and commercial climate. We are willing and ready to contribute our share to Malaysia's economic development and to create the one and only unique commercial centre in Malaysia," he said.
Not even a face-saving, typically broadly-worded, non-committal Memorandum of Understanding was signed.
The reason is likely quite simple. Dalian Wanda might be one of the richest private companies in China, making them an attractive target to sell perhaps, a grossly overpriced piece of real estate. But in all likelihood, Dalian Wanda became one of the most profitable companies in the world precisely because it doesn’t pay over-the-top prices of real estate – even if it is indeed prime real estate, especially if the seller is way more desperate than Wanda is interested.
With the IWH deal dead and no super-wealthy knight-in-shining-armour in sight, the Ministry of Finance needs to go back to the drawing board on its plans for Bandar Malaysia. The priority must not be to sell the land at the highest possible price with the intended purpose for the funds to bailout 1MDB. The priority to the land must be a economically sustainable development which will not only empower the Malaysian business community, but also in turn create meaningful job opportunities for ordinary Malaysians.
Thursday, March 30, 2017
Is our national interest now subjected to foreign terms and conditions?
Last week, I had asked the Finance Minister to justify the award of the RM55 billion East Coast Rail Link project to China Communications and Construction Company (CCCC) and why Malaysian companies were not given the opportunity to tender for the project.
In the Finance Ministry’s reply, it said "to qualify for this financing offered by China Exim Bank, the project had to be executed by CCCC".
The Minister said that the Export Import Bank of China (China Exim Bank) offered a soft loan to Malaysia for the project at low interest rates. He added that the loan, for a period of 20 years, also allows for a grace period of seven years where the government does not need to repay the principal.
In addition, "the government has, in principle, agreed at least 30 percent of the infrastructure work will involve local companies and contractors".
If studied carefully, the reply carried very sinister undertones.
Malaysia now appears so desperate for foreign financing for its so-called national interest projects that it is willing to subject itself to terms and conditions of foreign powers.
Just because somebody is willing to lend you the money at seemingly favourable terms does not mean that you should accept the condition to select the product that will cost nearly double the estimated price.
This is no different from unscrupulous retailers to duped Malaysian shoppers into “zero-interest” financing schemes on products costing significantly higher than if you have paid for it in cash. Any financial consultant will educate you that the real cost of financing is already built into the jacked-up price of the product.
Worse, the real cost of funds for the project is now opaque because we do not know the real cost of the project as it was awarded without any open and competitive tender. We do know however, that the Government’s own appointed consultants, HSS Integrated has estimated that the cost of the 600km railway project will cost less than RM30 billion.
Therefore, to pay for the project at RM55 billion just because China Exim Bank offered an “attractive financing package” is absolutely scandalous!
Worse, only 30% of the project will involve local companies and contractors, despite an abundance of experience and expertise which are already widely available in Malaysia. We have now got many companies who have built double tracking railway projects, dug award-winning tunnels systems and constructed the MRT. And yet, the Government is awarding a standard rail link project at substantially higher cost to a foreign company with minimal local participation.
The irony is, the Finance Ministry has advised or even instructed our Government-Link Companies to halt their investments abroad and repartriate its foreign funds from overseas to check the drastic decline of the ringgit. Bank Negara even put in harsh measures to force private companies to convert their foreign currency receipts into ringgit. However, the Government clearly doesn’t practise what it preaches because the overwhelming bulk of the inflated RM55 billion cost will be paid to China despite available local options.
There can be no better example of the English saying, “penny wise but pound foolish”. What boggles the mind is, the Finance Ministry doesn’t comprise of idiots – they should know that we are paying well above what is a fair price for the project. What is the ‘real’ reason why the project has been awarded to CCCC – is the real ‘quid pro quo’ the fact that CCCC will help launder part of the astronomical profits to pay off 1MDB debts as widely speculated?
Tuesday, November 15, 2016
We challenge EPU Minister, Datuk Seri Abdul Rahman Dahlan to make public the feasibility study conducted by HSS Engineering Group which was commissioned by the East Coast Economic Region Development Council (ECERDC)
In our research over the controversy surrounding the 600km East Coast Rail Link (ECRL), we have discovered that the East Coast Economic Region Development Council (ECERDC) has appointed HSS Integrated Sdn Bhd to conduct a feasibility study including engineering studies, ridership studies, systems and rail operation studies, environmental screning, land use and socio-economic impact studies and most importantly, a economic and financial evaluation.
HSS Integrated is part of HSS Engineers Bhd, an engineering company which is listed on Bursa Malaysia who have been involved in some of the biggest engineering projects in Malaysia. Their rail experience would include the Electrified Double-Tracking from Ipoh to Padang Besar, the Sungai-Buloh to Kajang MRT I Line, the Ampang Line LRT Extension Project and the KLIA Express Rail Link.
They were appointed to carry out the ECRL feasibility study in December 2009 and completed their work in December 2015 and were paid RM8.7 million for their services. As disclosed in the HSS Group’s Corporate Profile and Capability statement, the proposed route was approximately 545km in length from Kuala Lumpur to Tumpat, passing through Mentakab, Kuantan, Kuala Terengganu and Kota Bahru.
The full HSS Group profile and capability statement can be downloaded here: http://www.hssbim.com/docs/HSS_Company_Profile.pdf
Most importantly, HSS stated that the project value for the project was RM29 billion (pg 21), or approximately RM53.2 million per kilometer. The study hence supports ECERDC CEO, Datuk Jebasingam Issac John who has previously been quoted by news reports in April 2014 that the ECRL will cost approximately RM30 billion.
Hence Pakatan Harapan elected representatives are absolutely right to heavily criticise the award of the East Coast Rail Link (ECRL) project to China-owned China Communications Construction Company as excessively expensive RM55 billion or RM91.7 million per kilometer.
The Edge Financial Weekly had labelled the project as “the world’s most expensive” when compared to similar railway projects in Bangladesh and Kenya which were also being constructed by CCCC for only RM68.1 million and RM61.4 million respectively. Another project in Ethiopia of which 40% of the 375km project to be built by a Turkish contractor, Yapi Merkezi on challenging terrain cost only RM18.1 million per kilometer.
The EPU Minister in-charge of the project, Datuk Seri Abdul Rahman Dahlan tried to dismiss the “world’s most expensive” railway allegations by citing the Golthard rail project in Switzerland, the Madrid-Valladoid and the Barcelona lines in Spain costing significantly more per kilometer.
We have since debunked the EPU Minister’s comparison because those were nearly 100% rail tunnel projects and they were all High Speed Rail travelling up to 300km per hour, which we all know, cost substantially higher than conventional rail like the ECRL travelling up to 170km per hour.
In fact, the Golthard rail tunnel had to cut through the Swiss Alps and was as deep as 2.3 kilometers below surface. As a comparison, even the most expensive tunnelling project in Malaysia to date, carried out for the MRT was only 45 meters at its deepest.
After being caught trying to sell ATP turboprops at Boeing 747 prices, the EPU Minister has changed his argument to insist that “all infrastructure projects cannot be compared directly”. He is now trying to avoid the now-established claim that the ECRL at RM55 billion will indeed be the world’s most expensive in its class.
Of course it is a given that every rail project will be different. However, the EPU Minister cannot claim that the ECRL has to pass through the Titiwangsa range which will require numerous tunnels and viaducts – as if it is the only such project in the world facing such “challenges”.
Hence, to end the “world’s most expensive” railway debate once and for all, we call upon Dato’ Seri Rahman Dahlan to make public the feasibility study carried out by HSS which would already have included the cost of having to cut through the Titiwangsa range with tunnels and viaducts.
The EPU Minister will then have to justify to Malaysians why did the Prime Minister award the contract to CCCC at RM91.7 million per kilometer which is 72.4% more expensive than the HSS study of RM53.2 million.
The failure to do so will only confirm Malaysians’ worst fears, that the RM55 billion ECRL over-priced project is an attempt to siphon up to RM25 billion to pay off 1MDB’s debts, to cover up for the tens of billions of ringgit which have been stolen and laundered overseas.
Rafizi Ramli
MP Pandan
Tony Pua
MP Petaling Jaya Utara
Dr Hatta Ramli
MP Kuala Krai
HSS Integrated is part of HSS Engineers Bhd, an engineering company which is listed on Bursa Malaysia who have been involved in some of the biggest engineering projects in Malaysia. Their rail experience would include the Electrified Double-Tracking from Ipoh to Padang Besar, the Sungai-Buloh to Kajang MRT I Line, the Ampang Line LRT Extension Project and the KLIA Express Rail Link.
They were appointed to carry out the ECRL feasibility study in December 2009 and completed their work in December 2015 and were paid RM8.7 million for their services. As disclosed in the HSS Group’s Corporate Profile and Capability statement, the proposed route was approximately 545km in length from Kuala Lumpur to Tumpat, passing through Mentakab, Kuantan, Kuala Terengganu and Kota Bahru.
The full HSS Group profile and capability statement can be downloaded here: http://www.hssbim.com/docs/HSS_Company_Profile.pdf
Most importantly, HSS stated that the project value for the project was RM29 billion (pg 21), or approximately RM53.2 million per kilometer. The study hence supports ECERDC CEO, Datuk Jebasingam Issac John who has previously been quoted by news reports in April 2014 that the ECRL will cost approximately RM30 billion.
Hence Pakatan Harapan elected representatives are absolutely right to heavily criticise the award of the East Coast Rail Link (ECRL) project to China-owned China Communications Construction Company as excessively expensive RM55 billion or RM91.7 million per kilometer.
The Edge Financial Weekly had labelled the project as “the world’s most expensive” when compared to similar railway projects in Bangladesh and Kenya which were also being constructed by CCCC for only RM68.1 million and RM61.4 million respectively. Another project in Ethiopia of which 40% of the 375km project to be built by a Turkish contractor, Yapi Merkezi on challenging terrain cost only RM18.1 million per kilometer.
The EPU Minister in-charge of the project, Datuk Seri Abdul Rahman Dahlan tried to dismiss the “world’s most expensive” railway allegations by citing the Golthard rail project in Switzerland, the Madrid-Valladoid and the Barcelona lines in Spain costing significantly more per kilometer.
We have since debunked the EPU Minister’s comparison because those were nearly 100% rail tunnel projects and they were all High Speed Rail travelling up to 300km per hour, which we all know, cost substantially higher than conventional rail like the ECRL travelling up to 170km per hour.
In fact, the Golthard rail tunnel had to cut through the Swiss Alps and was as deep as 2.3 kilometers below surface. As a comparison, even the most expensive tunnelling project in Malaysia to date, carried out for the MRT was only 45 meters at its deepest.
After being caught trying to sell ATP turboprops at Boeing 747 prices, the EPU Minister has changed his argument to insist that “all infrastructure projects cannot be compared directly”. He is now trying to avoid the now-established claim that the ECRL at RM55 billion will indeed be the world’s most expensive in its class.
Of course it is a given that every rail project will be different. However, the EPU Minister cannot claim that the ECRL has to pass through the Titiwangsa range which will require numerous tunnels and viaducts – as if it is the only such project in the world facing such “challenges”.
Hence, to end the “world’s most expensive” railway debate once and for all, we call upon Dato’ Seri Rahman Dahlan to make public the feasibility study carried out by HSS which would already have included the cost of having to cut through the Titiwangsa range with tunnels and viaducts.
The EPU Minister will then have to justify to Malaysians why did the Prime Minister award the contract to CCCC at RM91.7 million per kilometer which is 72.4% more expensive than the HSS study of RM53.2 million.
The failure to do so will only confirm Malaysians’ worst fears, that the RM55 billion ECRL over-priced project is an attempt to siphon up to RM25 billion to pay off 1MDB’s debts, to cover up for the tens of billions of ringgit which have been stolen and laundered overseas.
Rafizi Ramli
MP Pandan
Tony Pua
MP Petaling Jaya Utara
Dr Hatta Ramli
MP Kuala Krai
Saturday, November 12, 2016
Minister in Prime Minister’s Department, Dato’ Seri Abdul Rahman Dahlan tried to pull a fast one by comparing the exorbitant cost of the East Coast Rail Link with complex High Speed Rail in Europe
Three days ago, Dato’ Seri Abdul Rahman Dahlan, the Minister in-charge of Economic Planning Unit (EPU) responsible for the East Coast Rail Link (ECRL) tried to deflect the allegations that the cost of ECRL was the most expensive in the world.
Unlike his fellow Cabinet Minister, Datuk Seri Liow Tiong Lai who denied that the ECRL was to cost RM55 billion or approximately RM91.7 million per kilometer, the EPU Minister pretty much confirmed the cost of the project. Instead he argued that it was not the most expensive in the world.
Dato’ Seri Rahman Dahlan gave the examples of a 57km rail project in Switzerland costing US$11.9 billion (RM50bn) or US$209 million (RM860 mil) per km to build; a 177km rail line in Madrid-Valladolid, Spain, costing US$5.48 billion (RM22.46bn) or about US$30 million (RM123 mil) a km; and a 48km rail project in Barcelona costing about US$8.12 billion (RM33.3bn) or US$170 million (RM697 mil) per km.
It is disastrous for Malaysia that the EPU Minister actually cited these projects as comparison to our own proposed ECRL.
Dato’ Seri Rahman Dahlan perhaps didn’t realise that the 57km Swiss Golthard rail project costing a whopping RM50 billion actually involved the building of the world’s longest tunnel as deep as 2.3km below the surface! The neighbouring 56km Brenner rail project which is currently under construction costing just a shade less than Golthard, will be the second longest tunnel in the world when it’s completed in 2025.
Is the Minister telling us that the 600km ECRL link from Port Klang to Kota Bahru via Kuantan will be, if not completely, substantially underground to compare with the Swiss rail lines underneath the Alps?
Similarly, the Barcelona line costing US$8.12 billion has a length of 47.8 km, of which 43.71 km is underground and 4.9 km is on viaducts.
At the same time, the 177km Madrid-Valladoid line was only the first phase of the two-phase Madrid-Leon 342km rail line costing a total of US$6.34 billion. That actually works out to only US$18.54 million (RM76 mil) per kilometer which is cheaper than the ECRL’s RM91.7 million per kilometer!
Most of all, all of the examples cited by Dato’ Seri Rahman Dahlan are not only tunnel-intensive, they are all High Speed Rail (HSR) projects which, as we know cost significantly more than conventional rail projects like ECRL. These European HSRs travels up to a top speed of 300km per hour compared to the ECRL project proposed at 170km per hour.
Hence what the ignorant Dato’ Seri Rahman Dahlan attempted to do, intentionally or otherwise, is to try to sell Malaysians a ATP turboprop at the price of a Boeing 747. Unfortunately for him, Malaysians are not that stupid.
The EPU Minister shouldn’t have to go around to world to try justifying the exorbitant cost of the ECRL project. After all, this isn’t our first and only rail project. He should very well know that the 329km Ipoh-Padang Besar and 179km Gemas-Johor Bahru double-tracking link cost RM44.0 million and RM39.8 million per kilometre respectively. Amazingly, these projects such as the Ipoh-Padang Besar and Rawang-Ipoh links were all completed by local engineering and construction companies!
We challenge Dato’ Seri Rahman Dahlan to show proof that a conventional railway project would cost anything more than the above or that there are no local companies with the necessary expertise who are able to complete the ECRL project for far less than the RM55 billion awarded to China Communications Construction Company.
Rafizi Ramli
MP Pandan
Tony Pua
MP Petaling Jaya Utara
Dr Hatta Ramli
MP Kuala Krai
Unlike his fellow Cabinet Minister, Datuk Seri Liow Tiong Lai who denied that the ECRL was to cost RM55 billion or approximately RM91.7 million per kilometer, the EPU Minister pretty much confirmed the cost of the project. Instead he argued that it was not the most expensive in the world.
Dato’ Seri Rahman Dahlan gave the examples of a 57km rail project in Switzerland costing US$11.9 billion (RM50bn) or US$209 million (RM860 mil) per km to build; a 177km rail line in Madrid-Valladolid, Spain, costing US$5.48 billion (RM22.46bn) or about US$30 million (RM123 mil) a km; and a 48km rail project in Barcelona costing about US$8.12 billion (RM33.3bn) or US$170 million (RM697 mil) per km.
It is disastrous for Malaysia that the EPU Minister actually cited these projects as comparison to our own proposed ECRL.
Dato’ Seri Rahman Dahlan perhaps didn’t realise that the 57km Swiss Golthard rail project costing a whopping RM50 billion actually involved the building of the world’s longest tunnel as deep as 2.3km below the surface! The neighbouring 56km Brenner rail project which is currently under construction costing just a shade less than Golthard, will be the second longest tunnel in the world when it’s completed in 2025.
Is the Minister telling us that the 600km ECRL link from Port Klang to Kota Bahru via Kuantan will be, if not completely, substantially underground to compare with the Swiss rail lines underneath the Alps?
Similarly, the Barcelona line costing US$8.12 billion has a length of 47.8 km, of which 43.71 km is underground and 4.9 km is on viaducts.
At the same time, the 177km Madrid-Valladoid line was only the first phase of the two-phase Madrid-Leon 342km rail line costing a total of US$6.34 billion. That actually works out to only US$18.54 million (RM76 mil) per kilometer which is cheaper than the ECRL’s RM91.7 million per kilometer!
Most of all, all of the examples cited by Dato’ Seri Rahman Dahlan are not only tunnel-intensive, they are all High Speed Rail (HSR) projects which, as we know cost significantly more than conventional rail projects like ECRL. These European HSRs travels up to a top speed of 300km per hour compared to the ECRL project proposed at 170km per hour.
Hence what the ignorant Dato’ Seri Rahman Dahlan attempted to do, intentionally or otherwise, is to try to sell Malaysians a ATP turboprop at the price of a Boeing 747. Unfortunately for him, Malaysians are not that stupid.
The EPU Minister shouldn’t have to go around to world to try justifying the exorbitant cost of the ECRL project. After all, this isn’t our first and only rail project. He should very well know that the 329km Ipoh-Padang Besar and 179km Gemas-Johor Bahru double-tracking link cost RM44.0 million and RM39.8 million per kilometre respectively. Amazingly, these projects such as the Ipoh-Padang Besar and Rawang-Ipoh links were all completed by local engineering and construction companies!
We challenge Dato’ Seri Rahman Dahlan to show proof that a conventional railway project would cost anything more than the above or that there are no local companies with the necessary expertise who are able to complete the ECRL project for far less than the RM55 billion awarded to China Communications Construction Company.
Rafizi Ramli
MP Pandan
Tony Pua
MP Petaling Jaya Utara
Dr Hatta Ramli
MP Kuala Krai
Thursday, November 03, 2016
Has Malaysia become the new rogue nation of this world?
Malaysia has always prided itself to be a progressive nation which built its foundations the principles of justice and moderation. Even before our own independence, we have always been on the on the right side of history, fighting the Axis powers during the World War II and was part of the coalition to halt the rise of communism in Southeast Asia.
Even during the worst of times during the Mahathir’s era of an authoritarian regime, we have never been regarded as a basket case like Cambodia, Burma, Iraq or God-forbid, North Korea.
Our leaders have been reasonably well-educated and speak with the right tones to ingratiate ourselves well in a world led by the United States, Europe and Japan. Even our current Prime Minister, Dato’ Seri Najib Razak had tried extremely hard to be part of international elite fraternity with his constant, albeit rhetorical preaching of the “global movement of moderates”.
Who can forget, how hard our Prime Minister tried to be buddies with President Obama and how proud he was when he had the rare opportunity to have a round of golf with the American President in Hawaii not too long ago in December 2014?
How quickly things have changed in less than 2 years.
In July this year, the United States Department of Justice (DOJ) has labelled Malaysia a kleptocracy, with the single largest seizure of assets purchased with funds laundered in the United States which were misappropriated from 1MDB. While Dato’ Seri Najib Razak was not an owner of the assets to be seized, the DOJ explicitly disclosed that he received US$731 million of these misappropriated funds in his personal bank account in Malaysia.
Despite the severity of the accusation by the US Attorney-General, Dato' Seri Najib has refused to deny the allegations and has chosen to remain silent.
Instead today, Dato’ Seri Najib Razak has decided that it is now in his best interest to pucker up to mighty China. After all, China doesn’t pass judgement on who they deal with, regardless of whether it’s a rogue nation like North Korea or a Western counterpart like United States. China’s investments for influence policy reaches out far and wide to third world countries all around the world, especially in Africa like, Nigeria, Sudan and Angola.
After the much-hyped promise of Middle-Eastern petrodollars-led investment boom in Malaysia failed to materialise, the Prime Minister is turning to Beijing to not only jumpstart our economy, but also to help him clean up his multi-billion dollar 1MDB mess.
It is one thing eschewing open tenders for mega-projects in the past to local Malaysian cronies of the ruling parties. Now, the Prime Minister has decided that we should eschew open tenders and award mega-projects at inflated prices like the RM55 billion East Coast Rail Link to Chinese state-owned companies without any tender, or even the pretence of one.
Dato’ Seri Najib has decided to award of the above project to China Communications Construction Company Limited at a price more than double the price per kilometer of rail ever awarded in Malaysia with borrowings from China’s Export-Import Bank. It is a clear attempt to siphon cash to payoff 1MDB’s outstanding debts, especially those embroiled with Abu Dhabi’s International Petroleum Investment Corporation.
In exchange, Dato’ Seri Najib yields to Chinese geo-political and economic supremacy. When the United Nations Arbitral Tribunal ruled that “there was no legal basis for China to claim historic rights to resources within the sea areas falling within the ‘nine-dash line” in South China Sea, Malaysia has strangely refused to endorse the ruling despite the fact that we are ourselves laying claims on parts of the Spratlys archipelago in the area.
Worse, Malaysia together with Cambodia, has frustrated the attempts by ASEAN nations to recognise the ruling which had resulted in a meaningless water-down statement with regards to the disputes in South China Sea.
Yesterday, as if to hammer the nail into the coffin, the Prime Minister wrote in his special column in China Daily chastising the West including the “former colonial powers”, that “it is not for them to lecture countries they once exploited on how to conduct their own internal affairs today.”
It is a not so subtle statement to tell these Western powers that how Malaysia is a kleptocracy today isn’t any of their business. If they are not happy with him, he is more than happy to embrace China, who couldn’t care less about how the Malaysian government leaders plunder the nation.
Dato’ Seri Najib Razak’s stand has much bigger implications to Malaysia than merely an attempt to play off one Superpower against another. The Prime Minister’s brazen foreign policy switch will lead Malaysia, intentionally or inadvertently, down the road of becoming a rogue nation, globally snubbed and internationally derided.
As basket cases like Burma, Vietnam or even Iran redeems themselves with greater rapprochement with the international communities, it is frightening that a Prime Minister, consumed with the need to save himself is taking actions which will lead us down the slippery slope.
Even during the worst of times during the Mahathir’s era of an authoritarian regime, we have never been regarded as a basket case like Cambodia, Burma, Iraq or God-forbid, North Korea.
Our leaders have been reasonably well-educated and speak with the right tones to ingratiate ourselves well in a world led by the United States, Europe and Japan. Even our current Prime Minister, Dato’ Seri Najib Razak had tried extremely hard to be part of international elite fraternity with his constant, albeit rhetorical preaching of the “global movement of moderates”.
Who can forget, how hard our Prime Minister tried to be buddies with President Obama and how proud he was when he had the rare opportunity to have a round of golf with the American President in Hawaii not too long ago in December 2014?
How quickly things have changed in less than 2 years.
In July this year, the United States Department of Justice (DOJ) has labelled Malaysia a kleptocracy, with the single largest seizure of assets purchased with funds laundered in the United States which were misappropriated from 1MDB. While Dato’ Seri Najib Razak was not an owner of the assets to be seized, the DOJ explicitly disclosed that he received US$731 million of these misappropriated funds in his personal bank account in Malaysia.
Despite the severity of the accusation by the US Attorney-General, Dato' Seri Najib has refused to deny the allegations and has chosen to remain silent.
Instead today, Dato’ Seri Najib Razak has decided that it is now in his best interest to pucker up to mighty China. After all, China doesn’t pass judgement on who they deal with, regardless of whether it’s a rogue nation like North Korea or a Western counterpart like United States. China’s investments for influence policy reaches out far and wide to third world countries all around the world, especially in Africa like, Nigeria, Sudan and Angola.
After the much-hyped promise of Middle-Eastern petrodollars-led investment boom in Malaysia failed to materialise, the Prime Minister is turning to Beijing to not only jumpstart our economy, but also to help him clean up his multi-billion dollar 1MDB mess.
It is one thing eschewing open tenders for mega-projects in the past to local Malaysian cronies of the ruling parties. Now, the Prime Minister has decided that we should eschew open tenders and award mega-projects at inflated prices like the RM55 billion East Coast Rail Link to Chinese state-owned companies without any tender, or even the pretence of one.
Dato’ Seri Najib has decided to award of the above project to China Communications Construction Company Limited at a price more than double the price per kilometer of rail ever awarded in Malaysia with borrowings from China’s Export-Import Bank. It is a clear attempt to siphon cash to payoff 1MDB’s outstanding debts, especially those embroiled with Abu Dhabi’s International Petroleum Investment Corporation.
In exchange, Dato’ Seri Najib yields to Chinese geo-political and economic supremacy. When the United Nations Arbitral Tribunal ruled that “there was no legal basis for China to claim historic rights to resources within the sea areas falling within the ‘nine-dash line” in South China Sea, Malaysia has strangely refused to endorse the ruling despite the fact that we are ourselves laying claims on parts of the Spratlys archipelago in the area.
Worse, Malaysia together with Cambodia, has frustrated the attempts by ASEAN nations to recognise the ruling which had resulted in a meaningless water-down statement with regards to the disputes in South China Sea.
Yesterday, as if to hammer the nail into the coffin, the Prime Minister wrote in his special column in China Daily chastising the West including the “former colonial powers”, that “it is not for them to lecture countries they once exploited on how to conduct their own internal affairs today.”
It is a not so subtle statement to tell these Western powers that how Malaysia is a kleptocracy today isn’t any of their business. If they are not happy with him, he is more than happy to embrace China, who couldn’t care less about how the Malaysian government leaders plunder the nation.
Dato’ Seri Najib Razak’s stand has much bigger implications to Malaysia than merely an attempt to play off one Superpower against another. The Prime Minister’s brazen foreign policy switch will lead Malaysia, intentionally or inadvertently, down the road of becoming a rogue nation, globally snubbed and internationally derided.
As basket cases like Burma, Vietnam or even Iran redeems themselves with greater rapprochement with the international communities, it is frightening that a Prime Minister, consumed with the need to save himself is taking actions which will lead us down the slippery slope.
Sunday, July 31, 2016
A second international money laundering scam designed to cover up the first will cement Malaysia’s notoriety as the kleptocratic capital of the world
The Sarawak Report has exposed an alleged plan to double the price tag of the East Coast Rail Link (ECRL) to RM60 billion. The “extra” RM30 billion is meant to be channelled to a nominated Chinese company to pay off 1MDB’s bad debts channelled via behind the scenes company.
The massively inflated alleged cost of the ECRL to be awarded to China Communications Construction Company (CCCC) lends credence to the Sarawak Report documents which detailed how the “excess” was to bailout the debt-stricken 1MDB.
The nominated company by CCCC will then pay 1MDB the sum of US$850 million (RM3.4bn) for the purposes of repayment for International Petroleum Investment Corporation (IPIC) advances, and assume the debt of 1MDB subsidiaries amounting to US$4.78 billion (RM19.4bn) inclusive of interest which had been guaranteed by IPIC.
These payments are clearly meant to go towards the settlement with IPIC which has taken 1MDB to the London arbitration court for the amount of US$6.5 billion.
I have since demanded that Dato’ Seri Najib Razak confirm or deny the alleged plan. However, the Prime Minister has remained conspicuously silent on the exposé. His silence on the matter will no doubt leave Malaysians believing another bailout is underway. However, this is no ordinary bailout.
When the Parliament approved a special bill to allocate RM6 billion for Khazanah Nasional to rescue Malaysian Airlines System, that was a bailout. When the Ministry of Finance approved a RM4.5 billion soft loan for the Port Klang Free Zone, that was a bailout.
However, in this case, the Najib administration will be attempting a secret bailout of 1MDB via fraud and deceit. If true, the Prime Minister will be engineering another multi-billion-dollar international money laundering exercise to cover up the first one by 1MDB.
Has Najib not learnt his lesson with the first 1MDB money-laundering scam? The purportedly “legal” transactions such as “investment” in an ostensibly legal joint venture like “1MDB-Petrosaudi International Limited” did not in any way legitimise the attempts to siphon money for unrelated purposes.
Hence similarly, a purportedly “legal” ECRL contract does not in any way legitimise the attempt to siphon money out for the purposes of covering up another crime.
Furthermore, as the second “cover up” bailout will once again involve international cross-border transactions, any bank carrying out the multi-billion-dollar money-laundering exercise for them will be risking their reputation and survival.
After all, the previous banks who have facilitated the 1MDB money-laundering scam are now all in hot soup – including UBS Bank, DBS Bank and Standard Chartered Bank. 143-year-old Swiss bank, BSI not only found itself investigated by the Switzerland authorities but had its operating license terminated by the Monetary Authority of Singapore. Even Goldman Sachs who assisted 1MDB in raising US$6.5 billion of bonds is being probed.
Finally, if CCCC were to accept the fraudulently inflated contract to carry out the money laundering on behalf of the Najib administration, then the US$24 billion company listed on the Hong Kong Stock Exchange will itself be party to the money-laundering scam and subjecting itself to prosecution in jurisdictions around the world.
Malaysia does not need another money-laundering scandal investigated by authorities all around the world to further sully our rapidly diminishing reputation while making Malaysia the kleptocratic capital of the world. The Cabinet must put a stop to this RM60 billion ECRL contract immediately so that the long-suffering Malaysian people will not be scammed again for multi-billion dollars to cover up another scam.
The massively inflated alleged cost of the ECRL to be awarded to China Communications Construction Company (CCCC) lends credence to the Sarawak Report documents which detailed how the “excess” was to bailout the debt-stricken 1MDB.
The nominated company by CCCC will then pay 1MDB the sum of US$850 million (RM3.4bn) for the purposes of repayment for International Petroleum Investment Corporation (IPIC) advances, and assume the debt of 1MDB subsidiaries amounting to US$4.78 billion (RM19.4bn) inclusive of interest which had been guaranteed by IPIC.
These payments are clearly meant to go towards the settlement with IPIC which has taken 1MDB to the London arbitration court for the amount of US$6.5 billion.
I have since demanded that Dato’ Seri Najib Razak confirm or deny the alleged plan. However, the Prime Minister has remained conspicuously silent on the exposé. His silence on the matter will no doubt leave Malaysians believing another bailout is underway. However, this is no ordinary bailout.
When the Parliament approved a special bill to allocate RM6 billion for Khazanah Nasional to rescue Malaysian Airlines System, that was a bailout. When the Ministry of Finance approved a RM4.5 billion soft loan for the Port Klang Free Zone, that was a bailout.
However, in this case, the Najib administration will be attempting a secret bailout of 1MDB via fraud and deceit. If true, the Prime Minister will be engineering another multi-billion-dollar international money laundering exercise to cover up the first one by 1MDB.
Has Najib not learnt his lesson with the first 1MDB money-laundering scam? The purportedly “legal” transactions such as “investment” in an ostensibly legal joint venture like “1MDB-Petrosaudi International Limited” did not in any way legitimise the attempts to siphon money for unrelated purposes.
Hence similarly, a purportedly “legal” ECRL contract does not in any way legitimise the attempt to siphon money out for the purposes of covering up another crime.
Furthermore, as the second “cover up” bailout will once again involve international cross-border transactions, any bank carrying out the multi-billion-dollar money-laundering exercise for them will be risking their reputation and survival.
After all, the previous banks who have facilitated the 1MDB money-laundering scam are now all in hot soup – including UBS Bank, DBS Bank and Standard Chartered Bank. 143-year-old Swiss bank, BSI not only found itself investigated by the Switzerland authorities but had its operating license terminated by the Monetary Authority of Singapore. Even Goldman Sachs who assisted 1MDB in raising US$6.5 billion of bonds is being probed.
Finally, if CCCC were to accept the fraudulently inflated contract to carry out the money laundering on behalf of the Najib administration, then the US$24 billion company listed on the Hong Kong Stock Exchange will itself be party to the money-laundering scam and subjecting itself to prosecution in jurisdictions around the world.
Malaysia does not need another money-laundering scandal investigated by authorities all around the world to further sully our rapidly diminishing reputation while making Malaysia the kleptocratic capital of the world. The Cabinet must put a stop to this RM60 billion ECRL contract immediately so that the long-suffering Malaysian people will not be scammed again for multi-billion dollars to cover up another scam.
Thursday, July 28, 2016
Has the PM’s Department decided to award the East Coast Rail Link to China Communications Construction Company (CCCC) for an inflated cost of RM60 billion without any tender?
The Sarawak Report has exposed new documents which alleged that the Malaysian Government is in the midst of finalising a new contract to award China Communications Construction Company (CCCC) for a whopping sum of RM60 billion. The East Coast Economic Region Development Council had previously expected the cost of the project to be ‘only’ RM30 billion.
Malaysians are taken aback by the speculated cost for the project and cannot be blamed for giving Sarawak Report the benefit of the doubt because the whistle-blower website has been proven right time and again, especially with regards to its reporting of the multi-billion dollar 1MDB scandal.
As a measure of comparison, the 329km Ipoh-Padang Besar double-tracking project was awarded to MMC-Gamuda consortium for RM14.5 billion in 2003. More recently in December 2015, the 179km Gemas-Johor Bahru link was awarded to China Railway Engineering Corporation for the sum of RM7.1 billion. On average, the railway projects cost RM44.0 million and RM39.8 million per kilometre respectively.
However, at the cost of RM60 billion, the 620km ECRL will cost a monstrous RM96.8 billion per kilometre to construct. That would mean that the ECRL will cost 120% and 143% more than northern and southern double-tracking projects respectively!
The massively inflated alleged cost of the ECRL without a tender exercise lends credence to the Sarawak Report documents which detailed how the “excess” was to bailout the debt-stricken 1MDB.
The documents reveal that CCCC, upon the award of the inflated contract, will via a nominated “credit-worthy” company pay 1MDB the sum of US$850 million (RM3.4bn) for the purposes of repayment for International Petroleum Investment Corporation (IPIC) advances, and assume the debt of 1MDB subsidiaries amounting to US$4.78 billion (RM19.4bn) inclusive of interest which had been guaranteed by IPIC.
These payments are clearly meant to go towards the settlement with IPIC which has taken 1MDB to the London arbitration court for the amount of US$6.5 billion.
More interestingly, part of the sum from the inflated cost will go towards acquiring substantial stakes in fugitive Low Taek Jho-linked companies, Putrajaya Perdana Bhd and Loh & Loh Corporation Bhd for US$244 million and US$71 million respectively.
In addition, there is a proposed payment by CCCC to a “consultancy/strategic/comms services” company and another “nominated company” for the amounts of US$65 million and US$200 million respectively. The payment for the unnamed mysterious “nominated company” was to be made upon the official signing of the ECRL contract expected in December this year. Hence, it appears that even in the exercise of a desperate bailout, generous commissions will be paid to certain parties, perhaps to continue their lifestyles of luxury and debauchery.
In effect, the Najib administration is merely ECRL as an excuse and an outrageous cover up to mask additional borrowings of RM30 billion in order to repay the billions embezzled from 1MDB. Most tragically, it means that ordinary Malaysians as the Government will finance the entire ECRL project with more crippling debt. We are merely covering up a gigantic hole by digging ourselves an even bigger hole.
We call upon Dato’ Seri Najib Razak to confirm or deny that the award of the contract to CCCC is in the works, and provide transparent and accountable justifications for the award in the absence of any competitive tender exercise.
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