SME Bank allocates RM1b to local ECRL contractors


  • Business
  • Tuesday, 19 Nov 2019

ECRL funding: MoU signing ceremony to provide access to financing for local ECRL contractors. (From left) SME Bank chief banking officer Mohammad Hardee Ibrahim, MRL CEO Datuk Seri Darwis Abdul Razak, Ambassador of The People’s Republic China His Excellency Bai Tian, SME Bank group president Aria Putera Ismail, Lim, ECRL Sdn Bhd project director Fang Zhenru andEntrepreneur Development Ministry secretary-general Datuk Wan Suraya Wan Mohd Radzi.

KUALA LUMPUR: SME Bank has earmarked RM1bil in financing specially for local contractors appointed for the civil works packages of the East Coast Rail Link (ECRL) project.

The facility is for the appointed sub-contractors of the local portion, or 40% of the mega-project.

Each qualified contractor will have access of up to a cap of RM50mil through a combination of term financing and revolving credit.

Anything above the cap will be considered on a case-by-case basis.

Finance Minister Lim Guan Eng, who witnessed the inking of a memorandum of understanding (MoU) between SME Bank, Malaysia Rail Link Sdn Bhd (MRL) and China Communications (ECRL) Sdn Bhd, said the bank played an important role not only in providing financial facilities to the qualified companies, but also in ensuring that the companies are managed sustainably.

It is learnt that around 300 to 400 SME companies have applied for the financing.

“The ECRL project will provide new jobs for local vendors and contractors.

“The signing of the revised engineering, procurement, construction and commissioning (EPCC) has increased the portion of local participation from 30% to 40%.

“The pre-qualification exercise for the ECRL civil works for qualified local contractors, which was carried out in May, has shortlisted 331 companies as potential tenderers. Out of this, 234 companies or 71% are bumiputra companies,” he said in his speech.

Lim added that the project would also provide the platform for knowledge-sharing and technology transfer, which is crucial as Malaysian companies, especially the smaller ones, must urgently raise their competitiveness and improve their work and service quality.

He stressed that this is where SME Bank can play an important role.

On the resumption of the ECRL, Lim said it symbolised the strong bilateral ties between Malaysia and China amid the changing global environment dominated by trade tensions.

“Malaysia and China are showing the world that international cooperation is still possible in the current climate,” he said.

The renegotiated ECRL now comes with a price tag of RM44bil instead of the earlier RM66.78bil and its operational risks and costs are also shared 50:50 between China Communications Construction Company and MRL.

Speaking to reporters after the ceremony, Lim said the progress of the ECRL construction was now at 12.86% and was proceeding as scheduled towards its completion in December 2026.

MRL CEO Datuk Seri Darwis Abdul Razak said preliminary works had begun, including three ongoing tunnelling works - 2.8km in Kuantan, 871m in Dungun and 1.1km in Paka.

“At the same time, we also have works ongoing in 17 locations within Section B from Dungun to Mentakab, which is roughly 123km.

“The total amount awarded to contractors at the moment is roughly RM1.7bil,” said Darwis.

Commenting on the financing facility, he said the collaboration was timely, as the initial award of civil works packages was already ongoing in stages.

Meanwhile, China’s ambassador to Malaysia Bai Tian, who was also present at the ceremony, congratulated SME Bank for its support and that the rebooting of the ECRL had strengthened the confidence of Chinese investors in Malaysia.

He added that the total trade between China and Malaysia for the first three quarters stood at US$19bil (RM78.95bil), an 11.4% jump year-on-year.

SME Bank group president and chief executive officer Aria Putera Ismail said the bank was proud to be one of the key players to contribute to the success of an impactful project for nation-building.

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East Coast Rail Link , ECRL , SME Bank

   

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