Sunday, February 25, 2007

Sinking Funds or Social Action Funds?

Before any investors were to consider investing in the Iskandar Development Region in Southern Johor (IDR), they are slapped with contribution funds.

Any investors or companies who intend to participate in the IDR must first pay contributions to a social fund that would be set up by the government.

The fund would be called Social Action Fund and would be managed by the co-ruptors and the rationale is that the fund would be utilised for community development programmes. What community development programmes, it has yet to be identified and any programmed the co-ruptors would eventually design and implement is esoteric and mystified.

Take for example where contractors had to contribute 0.25% of their project value to Construction Industry Development Board (CIDB). The board was originally set up to develop the contruction industry, in particular, the main problem was the standard practices and quality of the skills and products. The CIDB was supposed to set up best practices and standards for the industry players and to progressively developed the industry players (that is, the contractors) to become world-class contractors, comparable with the multi-national corporations in terms of technology, skills, product quality, innovation and magnitude. That way, over a reasonable period of time, Malaysian contractors would be as good and competitive as the Japanese and Koreans, or to a higher level, the Americans and British or European contractors.

It is now more than 30 years since CIDB had existed and the only result they had paraded is the fact that a few Malaysian contractors had secured some projects in India and Sri Lanka, both Indian states of which Samy Vellu had played an influential role. But is that what CIDB is suppose to achieve?

Observed who are the workers in the industry? The Indonesians! 90% of the workers are Indonesians in our Malaysian construction industry? What happen to the vocational schools, Institute Kemahiran and all those skill training centres? Didn't they generate out skill workers and skillful supervisors? Take a survey and find out the skills of the supervisors and what had they gain or benefited from CIDB's role?

Over the decades, billions had been collected by CIDB and as the accounts of CIDB is not published for public knowledge, one could only guess what happened to the monies and where it was spent.

More unfortunately is the fact that the top management of CIDB are great leaders from the construction industry - ex-JKR Director-Generals and ex-Construction CEO. Did they ever considered the results, performance and achievements? What was and is their KPI? It's a far greater shame than the concessionaire agreements.

Wouldn't the Social Action Fund (SAF) be any different?

Why don't NST and The Star made some surveys at the various construction project sites and conduct some interviews with contractors or their managers and find out what the public had benefited?

Further, there are also more other funds such as development funds/sinking funds (ISF) collected by the authorities from property developers...what had they done with the monies?

In Selangor, property developers had to contribute to various other funds set up by the state government in the name of Social Action Funds or Infrastructure Funds, or whatever name they called it. Can the government let us know how they deal with the money? Would The Star and NST investigate and tell us?

It must be sinking sunk deep, deep down there!

Tuesday, February 20, 2007

NWSC Chairman: Zaini? Why not Omar?

Shocking News!

The government decided to appoint Tan Sri Zaini Omar to be the first chairman of the new National Water Service Commission (SPAN) from March 1, 2007.

Zaini had just retired as the Director-general of JKR.

But Zaini is a electrical engineer with a law degree. How much does he knows about water management? This poser isn't intended to be contemptuous to a former leader.

Tan Sri Omar, also a retired PWD Director-general and who was the former boss to Tan Sri Zaini is the former Water Board Chairman and a civil engineering specialist, specialising infrastructure and hydraulic engineering management. Tan Sri Omar had personally been involved in designing many water & hydrology projects and the most recent is the STORM drainage tunnel in KL, of which the engineering consultant is SMHB (former Binnie & Partners). Tan Sri Omar is the executive director of SMHB (Syed Mohamad, Hui & Binnie).

Without disrespect to Zaini, Tan Sri Omar should be far more appropriate person to manage the water commission based on his competency and expertise in water management. Omar has design capabilities and his civil engineering design knowledge is appropriate to set the system management of NWSC. This is not a commercial entity nor a legal soliciting institution. Electrical engineering and law has little to do with water engineering and project management.

Friday, February 16, 2007

Declaring Ali Baba Contractors

The Finance Ministry has now made it compulsory for Bumiputra contractors awarded government contracts to sign an official declaration not to sell the project or subcontract the works to others.

Treasury secretary-general Tan Sri Izzuddin Dali said their contracts and registration would be terminated if they flout the rule.

Why don't the treasury and ministry start the process now? They can begin the survey from all the DB/T contracts awarded by JKR and the Ministry of Defence. Every DB/T contractors are registered Bumiputera PKK class A contractors and each and every project, so far in the history of JKR, has been subcontracted to others. Even my good friend Pak Adib did subcontract some of the works to Others (non-Bumi). Abu Sahid of Maju Holding subcontracted the Dedicated Highway to Leighton of Australia who in turn subcontracted the works to Chinese subcontractors. Ahmad Zaki Resources subcontracted their projects along Jalan Kuching-Kepong-Jln Segambut to non-Bumis. MMC subcontracted most, if not all their works to Others (mostly non-Bumis). Perangsang, a state-govt incorporated subcontracted the Matrade project to Lee Fook Sang, Ranhill subcontracted all their works to non-Bumis, in fact, all Bumiputera contrators and suppliers subcontract their works to Others. The Secretary-general used the word: "to Others". That's interesting. The project to procure the Sukhois was awarded to a Bumiputera contractor and was subcontracted to others too. That's how the undertable was paid. If not, the Muslim contractor will have to undertake the undertable transaction which is sinful and against Islam.

It will be interesting to see how the ministry is going to monitor this instruction and declaration. The fact remains that it is impossible for Bumiputera contrators not to subcontract the Works to Others. Even for a Chinese or Mat Salleh organization, they too had to subcontract to others because it is about risk transfer, and it is about ensuring that the right expertise is procured to do a competent job and to ensure the success of the project. No organization is able to do all the works themselves or to engage all the experts and skill workers and professionals as employees. This is the business philosophy called Outsourcing - acquiring skills and expertise from outside the organization to mitigate or transfer the risks and to ensure profitability and growth.

In the world of competitive trade and commerce, no one single race or creed can survive on its own without the service of the others. Even the Saudis, the UAE, Iran, Indonesia, and all other Muslim countries awarded contracts to Others or subcontract projects to Others. Pak Lah should visit the projects at Dubai and Qatar which are all Bumiputera projects and all of which are subcontracted to Others.

I will be excited to see how the ministry will monitor and control the implementation of this instruction and when and what chaos will erupt and destroy the nation's economy. It's tsunamic and it's against the rule of law including Islamic law to issue such an instruction and "Surat Sumpah" as it goes against the principles of justice and good government.

Stupid government and stupid servants!

Monday, February 12, 2007

Samy said: Go Fly Kite

Samy: "You fellas think I am a bad boy as if I decide on the tolls, as if I put you fellas in trouble, that I suck your blood and all that. I didn't! I am a minister and I implement the cabinet's decision; it's not and had never been my decision and it's surely not my own."

"Privatisation was purely EPU's decision - they made all those decisions such that I am blamed - and EPU is controlled by the PM's department; not me; go and check. That decision was then approved by the cabinet and then my ministry only carry out instruction. My ministry then is forced to make the announcement to increase the toll... it was a burden for me, and you all just scold me; not fair, not fair! Where is justice? You fellas are not mature enough to understand what is happening."

"You want the toll rates to come down, if you don't travel on those roads and the user capacity comes down, then the government will look into alternatives."

[emphasis added]

Source: NSTP, Monday, Feb 12, 2007, page 14, Prime News.

Sunday, February 11, 2007

Samy Vellu Shocking Revelation

Samy Vellu revealed that the government will need the consent from the toll-road concessionaires before the agreement can be made public.

It's the greatest shock anyone can apprehend.

I thought the parliament is the highest authority in any country and that parliament is always supreme and no one can, not even the past legislators can bind the future legislators, that is to say, no law can bind the parliament - Parliament can make any law or change any law as they so wished. That's the doctrine of parliamentary supremacy.

What Samy is saying is that, a term in the contract betwen the parties to an agreement, governed by the Act of Parliament, ie Contracts Act 1950, can be binding absolutely, could even bind the parliament, ie the legislations. Parliament have the power even to change the constitution, what more a term in a contract between a private entity and the ministry of work.

If we Malaysians are asked to accept this statement, then we are either so stupid or incapable to understand the rule or law, or that the country is now ruled under a new set of laws reflecting the feudal system or tartan system.

Dear Samy, no one and no law can bind the parliament. So long as the parliament decides on what they wanted to make as law or to unmake a law, it can be done. Please don't treat us as oxymoron illiterate asses.

Monday, February 5, 2007

Designed to Fail!

Some shocking facts about contractors who were awarded government projects:
  • They lack expertise. Incompetent.
  • Too ready to make a quick buck.

Projects in the spotlight recently:

  • Middle Ring Road 2: Cost - RM120m (it actually cost RM238.8mil); an extra RM70m to pay for repair work paid by the govt even though it was contractor's fault.
  • Navy Recruit Training Centre (Pularek): Cost - RM198m; extra RM13m needed, 7,032 defects and paid by govt even though it was contractor's fault.
  • Matrade Building: Cost - RM287m; the cost kept rising until it reached that amount. Original contract value is RM167m. The extra RM120 mil is paid by govt.

It may sound astonishing; even ridiculous. But it is true.

Reasons for these blunders was revealed by Second Finance Minister:

(1) Projects were awarded to contractors who do not have the expertise whatsoever.

(2) Projects given to those who do not have the financial means to complete the projects.

(3) Bumi contractors sold the project for quick bucks.

(4) Consultants' grossly incompetent.

(5) The actual builder is ultimately the sub-sub-sub-sub-sui contractor. (A $200m award to the maincon becomes $80mil when it was passed down to the ultimate builder.)

Incompetent contractors, delays, cost overruns, failed projects: Lessons learnt?

The government has put in place mechanisms to avoid delays in project completion and ensure cost effectiveness. Referring to the New Sunday Times report yesterday on cost overruns in projects due to the incompetence of contractors and consultants, Minister in the Prime Minister’s Department Datuk Seri Mohd Effendi Norwawi said the mechanisms
would ensure only competent contractors were given government jobs.

He said the government had drawn valuable lessons from case studies of failed projects, as well as the successful ones.

“We have put in place new initiatives to streamline our procurement processes and to ensure projects are delivered efficiently and cost effectively.”

These, he said, included:
• Ensuring projects are awarded to competent contractors; and,
• Installing systems to monitor projects on near real-time basis to spot any delivery problems early and resolve problems immediately.

Read more HERE

Thursday, February 1, 2007

MRR2 Repair: RM70 mil

Repairs to MRR2 flyover cost RM70m

1st February 2007, The Star

THE Public Accounts Committee (PAC) has revealed that repairs to the MRR2 flyover in Kepong cost more than RM70mil, Utusan Malaysia reported.

PAC chairman Datuk Shahrir Abdul Samad said the figure was high compared with its construction cost – RM120mil.

He was quoted as saying that this reflected “shoddy design and construction concepts” that were approved by the Government when projects were given to contractors.

“There is no point in spending more and not being able to use it,” he said, adding that it was difficult to pinpoint who was responsible for the mistakes in such a project.

“As an example, the MRR2 project has the contractor and concessionaire constantly pointing fingers at each other. The problems were with the design and construction.”

Shocking? It was originally estimated to be RM20 million.

More shocks? The government is paying the bills. The MRR2 is a Design-Built-Turnkey contract and the contractor has to give an absolute guarantee to the government for the design and construction.

Much more shocks? Wait!!!!