On Sept 27 our Prime Minister made this announcement: A specific facilitation fund for infrastructure projects will be established under the Public Private Partnership (PPP) 3.0 model, said Prime Minister Datuk Seri Ismail Sabri Yaakob.

The project implementation model will not involve any financial commitment from the government and will adopt the request for proposal (RFP) approach, he said when tabling the 12th Malaysian Plan (12MP) 2021-2025 in Parliament on Monday.

The implementation of the projects under the new model is expected to be announced in mid-2022, he said, adding that a special PPP committee chaired by the chief secretary to the government will be established to enable PPP project consultations to be completed within a year.

Ismail Sabri said quality and reliable basic infrastructure and utilities, such as roads, rail, water and electricity supply, are important for stimulating economic growth and bridging the development divide between regions, and thereby improving well-being of the people.

“An integrated rail and road network that connects airports and ports with industrial, urban and rural areas will be enhanced,” he added. 

My comment:

Our Prime Minister said that “The project implementation model will not involve any financial commitment from the government”. If the Government does not pay for the infrastructures, who will pay???

For example, to implement a request for proposal (RFP) for a toll road from point A to point B, the Government will have to invite a few contractors to submit their proposals. Each contractor will have his own design, his toll rate and duration for toll collection. There will be a few different proposals.

One contractor who wants to construct the shortest route, he will have to construct a few tunnels through hills and mountains.

Another contractor who wants to reduced construction cost he will construct a longer road by going round the hills and mountains.

Another contractor who is more conservative have fewer tunnels as construction of tunnel is relatively more expensive.

With due respite to the PPP Committee, they will have great difficulties to make a choice because they will have to consider so many factors.  

Length of the toll road, the toll rate and the duration for toll collection for each will be different. The PPP Committee will have great difficulties in the selection. It is like the selection of apple, orange, pineapple, banana, papaya etc. All these prices are so different. Moreover, PPP Committee must also consider road users’ time in travelling on the road. All road users would prefer to take the shortest route if the toll rate is reasonable. What toll rate is reasonable???  

The average construction cost for an interstate   highway is about Rm 20 million per kilometre. The construction cost for 100 kilometre will be Rm 2 billion. If the concession is for 20 years, the contractor must include interest charges for 20 years, plus maintenance cost, plus profit and money for bribe.

The contractor who offers the biggest bribe will secure the concession. For example, if the concession is worth Rm 3 billion, the contractor would quote Rm 4 billion and use Rm one billion to bribe the PPP Committee. No one would not be tempted to accept Rm one billion bribe.

My proposal:

The Government must not request for proposal as announced by our Prime Minister. 

The best way is to follow the system required by ADB and World Bank to avoid corruption.

The ADB and the World Bank give out low interest loans to help poor countries to improve their economy. They insist all the borrowers to follow their guidelines for calling open competitive tenders to avoid corruptions.

A few years ago, Perak Academy invited me to talk on the subject. I am proud to mention that our Ipoh born Dr Lee Ming Tai who is a senior manager of ADB came to listen to my talk. He is now posted in Beijing.

Employ engineering consultant  

First employ a reputable engineering consultant firm with the necessary expertise to produce the design drawings, specifications and bill of quantities for the project. 

Pre-qualifying contractors

All the contractors must be pre-qualified  before they are allowed to submit their tenders. 

All the tenders are open publicly to show all the tendered prices and award the contract to the contractor who submitted the lowest price. 

However, contractors are allowed to submit alternative designs provided they are cheaper than the original design. In this case, the consultant would have to examine the alternative design to make his recommendation. Unless the saving is quite substantial, the consultant should not recommend acceptance of the alternate offer.

My opinion:

The shortest route will save travelling time. The most important factor to consider is road users’ time. If they can arrive earlier, the can be more productive which will eventually benefit everyone including the Government.

The Government must not privatize any of the public essential utilities such as highway, water and electricity supply.