For the first time, SMEs have collaborated with foreign companies in a public transportation project to bring innovation and progress to all, reports MEK ZHIN.
WITH big projects come big opportunities. This aptly describes Malaysia’s first Mass Rapid Transit project and its Industrial Collaboration Programme (ICP).
The federal government initiative has created unique opportunities for SMEs in various industries to move ahead of the competition. The basic idea of the programme is to increase the local industry standards, capabilities as well as competitiveness by helping them gain a new technology, product or knowledge via technology transfer and strategic knowledge development.
This could be anything within a wide scope of areas including training, human capital and capability development, research, commercialisation, foreign direct investment and global market access.
It also serves as the catalyst for global strategic cooperations, maximises the usage of local content to reduce dependency on imports as well as build a sustainable and competitive local industry.
MRT Corp Sdn Bhd’s procurement department head and also ICP unit head Azita Mohamed Tahir, said that prior to the MRT project, ICP only took place for the country’s defence-related purchases or counter trades.
“This is the first time it is applied in a public transportation project,” she said, adding that the Sungai Buloh – Kajang (SBK) line, also known as the MRT 1 line, produced a total of 40 ICP programmes with a total of RM3.3bil credit value generated. For MRT 1, only one of the three types of ICP, namely the offset programme, was applicable and had automatically kicked in when a contract worth more than RM50mil was awarded to a foreign company.
“From the outset, we had identified the work packages with offset specification, but what form it takes is something the companies propose to us. The only thing that is mandatory is that the ICP projected value equals or exceeds their main contract value,” she said.
These foreign companies are allowed to find and select their own local working partners for the programme, be it existing ones or a local branch of their own company.
“Sometimes, we do a bit of match-making too, but what’s more important ultimately, is that the two companies are able to work together well and have a successful partnership,” Azita said, adding that offset beneficiary companies sign their own separate supply agreements with MRT Corp.
One of the beneficiaries of the programme is Toyomi (M) Sdn Bhd, tasked with manufacturing and supplying the automated fare collection (AFC) gates for MRT 1. It is a subsidiary of MSM Group with more than 40 years experience in metal works.
Toyomi deals with precision sheet metal forming and pre-structure welding, among other things. It also has prior experience in manufacturing barrier gates, full-height turnstiles and even airport e-gates.
Group chief executive officer Charles Chan said that the group’s strong industry reputation in OEM metal engineering works was most likely what brought their foreign partner, Affiliated Computer Services Solutions France, to their doorstep and eventually landed them the job back in 2013.
For Toyomi, the AFC gates it produced demonstrated greater skill, particularly in shaping metal. The end product also displayed a higher standard of workmanship, such as the welding method which is accurate up to 0.1mm.
“We had to invest RM5mil in a robot laser precision welding machine as well as a clean room in order to achieve the specifications required. The end result was welded sheets which looked like a whole sheet; that was how fine the work we came up with,” Chan said.
Even something which might look simple to the layman, such as the symmetrical and gentle curve of the gate, was something that had to be learned on the job.
Toyomi may also be moving up the value chain, as Chan described how it now also has know-how to do automation and integrate software with hardware, as opposed to only focusing on hardware previously.
His sentiments were echoed by Christina Chia, project director at SPC Industries Sdn Bhd, also a programme beneficiary, charged with manufacturing steel fibre reinforced concrete (SFRC) tunnel linings.
SPC Industries is a specialist company, dealing in concrete products since 2002. It took over this business from Sri Pulai Granite Quarry, which was established in the 1970s. Currently, SPC Industries is a fully owned subsidiary of Kimlun Corp Bhd.
“We worked alongside MMC Gamuda to gain this knowledge from a foreign company. Research and development of the final product took us nine months to get the mix correct. It was a steep learning curve but like a cake recipe, once we got it right, production was smooth and quick to complete,” said Chia, adding that the aim for the product was to achieve that delicate balance between flexibility and rigidity for it to be effective.
This offset programme was triggered when MMC Gamuda purchased 10 tunnel boring machines from a German manufacturer, although the actual knowledge transfer was not from either companies. This is also a case which showcases how a matured industry can still produce innovation.
Chia said that they too invested in some machines, a vacuum lifting machine for demoulding the concrete pieces, as well as more accurate dosing machines, both of which were necessary to produce the new product.
Both companies expressed plenty of optimism in getting more business, including supplying the same for the MRT 2 line, thanks to the improvements and advantages they have gleaned from this. SPC Industries, in particular, recently secured a new contract from Singapore’s Land Transport Authority for the Thomson Line to supply SFRC products.
“They had very strict requirements, including the need for a project manager with 10 years experience working with SFRC products, but it is next to impossible to find someone like that in this region. But with some due diligence, we managed to get the job,” Chia said.
Azita said that the federal government had revised the guideline for ICP. For MRT Corp, this means that its latest project, the Sungai Buloh – Serdang – Putrajaya Line or MRT 2, would have two kinds of ICP, namely offset and Economic Enhancement Programme (EEP) which kicks in for projects worth more than RM100mil.
“There were some rumblings over this requirement during MRT 1, but then again, offset isn’t anything new. China had it as well. All our contractors were very cooperative and complied. For the second MRT line, already fewer questions asked,” she said.
Azita added that of the current 22 work packages awarded so far for MRT 2, one underground and four viaduct packages have triggered EEP and five system packages for offset.
“The project value has more than doubled. We have also not restricted the award winners to having to use the same SME company for their ICP partner,” Azita concluded.