Malaysia: KL’s MRT tender raises questions on local bidders

  • A tender for the third phase of Malaysia’s MRT system has surprised industry analysts, with the government asking bidders to provide 90% upfront financing for the over MYR30bn project. The government also wants bidders to have handled urban projects costing MYR10bn in the past decade.
  • Another surprising feature is that the winning bidder would receive payment eight years later, with the payment spread out over 30 years.
  • This has led to analysts saying that Malaysian companies are unlikely to be able to take part as lead contractors, because of the hefty financing requirement.
  • Some critics have suggested that MRT 3, also called the Circle Line as it will encircle Kuala Lumpur, is clearly designed to allow for China’s deep-pocket government-linked contractors to win.
  • However, government agency Mass Rapid Transit Corp (MRT Corp) said it is changing the project model to save billions of ringgit in interest and project costs, as 80% of works involve expensive underground tunnelling and stations.
  • In response to queries from The Straits Times, MRT Corp admitted that is keen to attract overseas bidders.
  • Datuk Seri Shahril said MRT Corp may head back to DanaInfra for funding if no successful bidder emerges for MRT 3. Mr Shahril denied that the tender will sideline Malaysian firms, as they could form a consortium with local or foreign partners.
  • The MRT 3 tender deadline is on 29 Dec 17.

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