OVER the last one week, a number of public-listed companies have announced contract wins. The surge is noticeable, considering that things had seemingly slowed down since the formation of the new government.
The contracts are worth a total of RM4.65bil and are a mixture of government, Petroliam Nasional Bhd and private-sector contracts.
The contract announcements can be divided into two broad categories. The first is by those who have won private-sector contracts so it could be a contractor to a private developer working on its own project.
The other category is government contracts, which is the more controversial one.
Consider the case of the Gemas-Johor Baru electrified double-track rail contract. The RM12.4bil contract had been awarded in October 2016 to a Chinese consortium.
The contract is now being undertaken by Syarikat Pembenaan Yeoh Tiong Lay Sdn Bhd (YTL), under a consortium between SIPP Rail Sdn Bhd and YTL.
The Gemas-Johor Baru electrified double-track rail project is one project that the new government has not hinted at cancelling and downsizing, unlike the East Coast Rail Link, mass rapid transit two and the light rail transit three.
This is evident since the SIPP-YTL consortium has been awarding sub-contract jobs a few months post-the 14th general election (GE14).
For example, Pestech International Bhd bagged a RM399mil job as a sub-contractor for the Gemas-Johor Baru contract back in September 2018, within four months of the Pakatan Harapan government coming into power.
Hence, the question is whether the many contracts being issued by the Gemas-Johor Baru rail project is something that will be secure, going forward?
For now, the entire project involves the construction of 197km of double tracks, stations, electric trains, depots, land viaducts, bridges, and electrification, signalling and communication systems. This project is for the final stretch of the West Coast KTMB line to be double-tracked and electrified.
Another company that was one of the first construction companies to garner a contract post-GE14 is TRC Synergy Bhd.
On Dec 4, TRC Synergy won a rather sizeable contract worth RM498.7mil from Putrajaya Holdings Sdn Bhd, the master developer of Putrajaya, for the construction and completion of an integrated development project at Precinct 8, Putrajaya.
This job, won by TRC’s wholly owned subsidiary Trans Resources Corp Sdn Bhd, swelled the construction company’s order book to RM3bil.
One contract that is seen as controversial is the RM1.9bil Mesiniaga Bhd contract.
On Jan 18, out of nowhere, Mesiniaga told Bursa Malaysia that it had won a RM1.9bil contract from Xiddig Cellular Communications Sdn Bhd for the commissioning of the core, metro distribution and access network for the Malaysia International Internet Gateway (EM-IIG) project.
The contract will be effective immediately and will end on March 31, 2020.
There were barely any details on the contract. Not surprisingly, Mesiniaga hit limit-up to RM1.50 on Monday within the first few seconds of the opening bell. There is currently plenty of skepticism on Xiddig, particularly since it is a loss-making company without much track record.
With the exception of the contract given out by Xiddig, there have been other contracts which were recently dished out and appeared more legitimate in nature. All this is likely to create some excitement both for the market and the economy.
Other companies that have secured contracts recently are Heitech Padu Bhd and Muhibbah Engineering Bhd.
Heitech Padu created a huge ruckus starting Jan 17, following StarBiz’s report that the group’s 80%-owned unit, Dapat Vista (M) Sdn Bhd, would be making its foray into the government e-services space.
Dapat Vista is the developer of the MyPay portal, which is set to offer services including payment of summons, student loans and local taxes such as assessment and quit rent.
Dapat Vista is indirectly backed by Permodalan Nasional Bhd (PNB).
Coincidentally, PNB awarded a project to Muhibbah this week.
On Thursday, Muhibbah told Bursa Malaysia that it had accepted RM165mil in contracts from Turnpike Synergy Sdn Bhd. Turnpike Synergy is a wholly owned subsidiary of Projek Lintasan Kota Holdings Sdn Bhd, which, in turn, is wholly owned by PNB.
“I think the days of cronyism are fading. It cannot be done as obviously as it was done in the previous regime. Companies that win contracts in this new environment will need to have some capability of their own,” remarks one fund manager.
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