Prasarana aiming to reduce cost by 20%

PETALING JAYA: Prasarana Malaysia Bhd is targeting to reduce its operating cost by 20% in the next five years by appointing more local companies to be its partners in the rail operation and maintenance (O&M) business.

According to president and group chief executive officer Masnizam Hashim, Prasarana’s annual cost for its rail operation is about RM350mil.

Prasarana is the operator of the light rail transit (LRT) lines, mass rapid transit (MRT) line, and the monorail line in the Klang Valley.

She said foreign companies accounted for about 80% of Prasarana’s O&M contracts, while the remaining 20% are local suppliers.

“We are highly dependent on foreign companies in maintaining the rail system. This needs to be changed because the current system has been in operation for more than 20 years.

“Many parts in the system need to be maintained and replaced,” Masnizam told reporters after the signing of a landmark collaboration agreement between Prasarana and local rail service providers, namely, Amantronic Sdn Bhd and LCE Resources Sdn Bhd, as part of the former’s plan to increase local participation in the rail O&M sector here yesterday.

She pointed out that there are measures that have been introduced to encourage more local participants in railway projects, such as the requirement for all railway projects to have at least 30% of their input sourced locally.

For instance, the Industrial Collaboration Programme (ICP), initiated by the Finance Ministry’s Technology Depository Agency to encourage the localisation of foreign technologies which requires investment and transfer of knowhow or technology in return for procurement jobs awarded.

“Under the ICP, there is a 5% bond for players that are not able to satisfy the requirements, including the localisation of the technology, enabling market access for local players to market their products overseas, as well as training.

“If they don’t meet the requirements, they will have to pay 5% more, based on the total value of their contract,” Masnizam said.

The ICP, which was implemented in 2011, aimed to maximise value for money for government procurement by having a return to the country such as technology and knowledge transfer and development of local capacity and capability, via collaboration between suppliers and local industry.

This compulsory requirement applied to all railway projects, including the LRT and MRT as well as the high-speed rail project, Masnizam said.

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