What’s happening in LRT 3 project?
WHEN contractors are unable to do their work because of lockdowns to contain the Covid 19 infections, nobody is at fault. It is something that is beyond the control of anyone.
However, when contractors are hampered due to not being paid for work done, somebody has to be answerable. Especially, if it is work related to the government and involving public funds.
Towards this end, contractors and consultants for the Light Rail Transit 3 project from Bandar Utama in Damansara to Johan Setia in Klang have written to the key officials in the government seeking to be paid for RM700mil worth of work done.
They are claiming for work that is done and certified by the client, which is Prasarana. To date, the contractors claimed that the value of work done is to the tune of RM1bil.
What adds credence to the contractors’ claims is that it is supported by the government appointed consultant for the project. This means, there indeed is no dispute on the work being done.
The contractors and consultant contend that they have not been paid since July and have been using their internal funds to continue with the job. However, they are unable to continue for much longer if payment on the RM16bil project is delayed.
The LRT3 project that was awarded in 2017 has already had numerous delays. The main contractor, a joint venture of Malaysian Resources Corporation Bhd (MRCB)-George Kent (Malaysia) Bhd, had its terms revised and cost reduced when the Pakatan Harapan (PH) government came to power in May 2018.
The project resumed after a delay of more than six months, causing contractors to incur losses. Now, the contractors are crying out for help again because payments are not coming from Prasarana.
Why are there delays in the payments? Is there something amiss between Prasarana and MRCB-GK?
The LRT3 project is one of the few ongoing government jobs that is feeding the construction industry amidst the pandemic. The government cannot afford for it to slow down because of non-payments. If work is done and certified, contractors should be paid.
Top Glove’s suspension
ON Wednesday, Top Glove Corp Bhd suspended the trading of its shares for reasons that remain unknown until now.
The suspension lasted for a brief one hour period and all the company mentioned was that the action was related to its announcements a day before.
No further elaboration was given.
The announcements a day before the suspension was a stock exchange filing in which the company’s founder and executive chairman Tan Sri Lim Wee Chai had purchased an additional 3.29 million shares in the company.
Lim forked out an average price of RM6.07 per share, which amounts to a total average purchase cost of RM20mil.
With the additional shares, Lim’s total stake in Top Glove rose to 34.82%, comprising a direct and indirect equity interest of 26.2% and 8.62% respectively.
One possible reason for the share suspension could be related to the concern of whether Lim had triggered a mandatory takeover of Top Glove.
It should be noted that Lim has held more than 33% of Top Glove for some time, which means that the concern is not so much about triggering that 33% threshold but whether he had breached the creeping rule, which stipulates that such shareholders are not allowed to increase their stakes by more than 2% every six months.
Otherwise, why would the shares of Top Glove be suspended, albeit for a mere one hour?
Hopefully, more clarity on this matter will be revealed either by the company or the regulator so as to erase any doubts that market participants have on the suspension of the company’s shares.
Digital bank licences
WITH Hong Kong and Singapore having accelerated the issuance of their digital banks licences, is Malaysia’s foray into the space a bit slow?
Based on this week’s announcement by Bank Negara, digital bank licences will be issued only by the first quarter of 2022. The concern is would the Malaysian digital bank landscape have lost ground by then? Globally, digital banks are already in advance stages of operations.
To be sure, setting the rules right on the onset for digital banking is of utmost importance. It involves the main artery of the economy, namely the banking system. Perhaps this is why Malaysia’s central bank is not rushing the matter.
On Thursday, Bank Negara issued a policy document on licensing framework for digital banks following a six-month public consultation.
Bank Negara said the licensing framework for digital banks aims to enable the innovative application of technology to uplift the financial well-being of individuals and businesses and foster sustainable growth.
This includes expanding meaningful access to and promoting responsible usage of suitable financial solutions to the unserved and underserved segments.
The framework adopts a balanced approach to enable admission of digital banks with strong value propositions while safeguarding the integrity and stability of the financial system, as well as depositors’ interests.
To achieve these outcomes, a simplified regulatory framework will be applied to digital banks during the initial stage of operations, commensurate with an asset threshold of not more than RM3bil for three to five years.
Submission of applications to conduct digital banking business or Islamic digital banking business shall be made to the Bank no later than June 30,2021.
Up to five licences may be issued to qualified applicants. Notification on the grant of licence will be made by the first quarter of 2022, Bank Negara said.
It does seem that the central bank is on the right track with ensuring only the most qualified applicants get to run digital banks.
That said, one wonders how the digital banking space will grow globally and whether Malaysian licences could have lost any ground by 2022.