Malays must pledge not to sell govt contracts

The Straits Times, February 17, 2007
By Carolyn Hong, Malaysia Correspondent


KL tries to plug loophole in policy to raise Malays' economic status

KUALA LUMPUR - MALAY contractors will have to sign pledges not to sell government projects to other races, in a move to curb massive leakages in a system set up to raise Malays' economic status.

Finance Ministry secretary-general Izzudin Dali was quoted in Berita Harian yesterday as saying that contractors who violated the declaration would lose their contracts and licences.

'Contractors must sign the official declaration that they will not sell the contracts or break them up into smaller contracts and distribute them to other parties,' he said.

Malay contractors get the bulk of government contracts under a 36-year-old policy to help the community catch up in economic terms with the other races.

However, it was revealed this week that an astounding 85 per cent of projects secured by Malay contractors ended up in the hands of other communities. This was discovered after a study was carried by the Works Ministry last year.

Such leakages have been blamed for the Malays' failure to achieve economic targets.

The revelation unleashed harsh criticism of the 'get rich quick' attitude of Malay contractors.

Universiti Teknologi Mara lecturer Ahmad Kamil Mohamed wrote in Utusan Malaysia yesterday that some contractors were more interested in making a quick buck by selling their contracts and licences than in fulfilling the contracts.

'Then they ask for fresh opportunities, and as a result, there are Malays who have made being a middleman into a profession,' he wrote.

He said the industry is seen as so lucrative that everyone wants to become a contractor, including those without the expertise or adequate capital.

There are now more than 40,000 Malay Class F contractors who hold licences to carry out small projects for the government.

Meanwhile, an editorial in Berita Harian called for closer monitoring of bumiputera contractors, including checks at their offices and worksites.

It said that merely blacklisting contractors may not be effective as they could set up other companies to bid for more projects.

However, some said the government should take a closer look at the way the industry is structured, as it makes it difficult for Malay contractors to survive or carry out their projects.

Datuk Seri Megat Najumuddin Khas, president of the Federation of Public Listed Companies, said the supply of building materials is controlled by non-Malays.

He said Malay contractors face difficulties getting supplies because of tight credit conditions and higher prices.

'What the Malay contractors face is daunting. It is very tough for them to get past the post because the odds are stacked against them, despite the best intentions of the government,' he told The Straits Times.

He said this forces many of them to sell their projects to non-Malay sub-contractors. And because of this, he doubts that the requirement for a pledge would be effective, or even possible, for a Malay contractor to uphold.

He believes the problem can be solved only by an overhaul of the system, but acknowledged that this would generate a political outcry.

Construction company TRC Synergy executive chairman Sufri Mohd Zin was also quoted in Bernama yesterday as saying that more than 80 per cent of the construction supply industry is controlled by non-Malays.

He said the government should help Malays break this dominance in order to stop the leakages.