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An Open Letter to MMC-Gamuda By Tony Pua
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Publish date: Wed, 10 Oct 2018, 09:31 AM
An Open Letter to MMC-Gamuda
By Tony Pua
Political Secretary to Minister of Finance
Member of Parliament for Damansara
10 Oct 2018
Dear Directors of MMC-Gamuda,
Let me applaud you for putting up a great show since the Minister of Finance, Lim Guan Eng announced the Cabinet decision to
(i) accept the offer from MMC-Gamuda to reduce the cost of the MRT2 Above Ground works by RM5.2 billion to RM17.4 billion (23% reduction) in the form of a turnkey contract and
(ii) terminate the Underground contract as both parties could not reach an agreement on the required price reduction.
You have issued a letter proclaiming innocence, claiming that you were awaiting for an offer from the Ministry of Finance (MoF). You questioned the qualifications of the independent engineering consultant we have engaged. You implied that the decision to terminate was hasty and ill-conceived. You sought sympathy claiming the loss of jobs for no less than 20,000 people (wow!). Your social media actively promoted a campaign to “Save 20,000 Jobs” asking Malaysians to sign the petition. There are viral Whatsapp letters from first class honours engineers regretting support for Pakatan Harapan in the last general election.
The performance and mobilisation of the above campaign are nothing short of impressive. The question of cost of the project to the Government was conveniently ignored.
We had no intention of engaging with you in a public war of words. We tend to reserve that for our political opponents. And after all, we wanted to continue the good working relationship to complete the RM17.42 billion worth of Above Ground works.
However, the obvious brazen attempt to paint yourself an innocent victim to an unjust Harapan government required a response to set the facts right and record straight.
1. The original Underground contract was awarded for RM15.49 billion. MRT Corp awarded additional RM1.2 billion of variation orders which resulted in the revised contract value of RM16.71 billion.
2. After numerous meetings and discussions, you wrote to the Minister on 15 August to offer a revised price of RM15.1 billion. This was mostly a result of shelving the 2 underground stations at Bandar Malaysia North and South.
3. Subsequently on 7 Sep, you offered to reduce the price further to RM14.58 billion for the Underground contract (making it RM32 billion for the entire MRT2 project). This represented a cost saving of RM2.13 billion or a 12.7% reduction. In the words of the Gamuda director at the meeting with the Minister on 4 Sep – “we offer what we can offer, but anything beyond that will be meaningless to continue”.
4. However, based on the study by the independent engineering consultant, MRT Corp should expect total savings between RM4.19 to RM5.79 billion for the estimated remaining 60% portion of works yet to be completed. Yes, this potential savings is just for the balance of works to be completed. Imagine the potential savings if it was for the entire contract.
So the question to be deliberated upon by this new Pakatan Harapan government is very simple.
A. Do we say, “it’s OK la, let’s just accept the RM2.13 billion reduction offered by MMC Gamuda”? After all, we can take this figure and boast to Malaysians of our ‘magnificent’ achievement, for they would know no better that we might have left another RM2 billion of potential savings on the table. Furthermore, it will certainly save us the trouble of having to deal with the negative publicity and the new international tender exercise which has to be carried out. Too much work... Or
B. Do we honour the mandate and trust the people has given us and maximise the savings we can reasonably derive from the project? RM2 billion can pay for 5 hospitals, or 50 schools. RM2 billion is hell of a lot of money when I see my MoF colleagues who are struggling and scrimping to find RM50 million savings here, and RM80 million cuts there for the upcoming Budget.
The Cabinet obviously made the decision to pick the latter. And you seriously telling Malaysians to blame the Cabinet for the termination?
Or would you then pick a different target, as you implied in your media statement, that the independent consulting engineers aren’t sufficiently qualified – despite employing more than 500 staff with a track record of having completed more than 80 projects in 24 countries outside of Malaysia?
Or was it because the government-appointed independent consulting engineer exposed the frequently expounded lie that the cost of MRT1 and MRT2 are well-below the average cost of construction of various Asian Metros, because no one was actually able to substantiate the data provided?
Should we instead question why MMC Gamuda had initially agreed to, but subsequently refused to share costing data with the independent consulting engineer to justify its cost, claiming “trade secrets”?
To the 26 year old first-class honours engineering graduate, I empathize the turbulence you are facing in your life today which is due to no fault of yours. However, should Gamuda decides not to retain your services, it would only be their loss, because you would build an equally successful career in many other companies.
To the purported 20,000 workers who, according to MMC Gamuda, would lose their jobs as a result of the underground contract termination, let me emphasize that the Malaysian government is not terminating the project. You will find plenty of opportunities when the new project is awarded at a lower cost, while the savings generated would mean even more projects for the future.
But perhaps, instead of starting a petition on Change.org to seek the Government to reverse its decision on the termination, it might be more productive to start a petition to ask your bosses at MMC Gamuda to make the Malaysian government an offer they cannot refuse.
Thank you.
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Discussions
1 person likes this. Showing 48 of 48 comments
Crux of Tony Pua's argument sits on this statement:
"However, based on the study by the independent engineering consultant, MRT Corp should expect total savings between RM4.19 to RM5.79 billion for the estimated remaining 60% portion of works yet to be completed."
but Gamuda disagrees with the qualification of this engineering consultant...
how sure we are they are "independent"?
................................................................
1. The original Underground contract was awarded for RM15.49 billion. MRT Corp awarded additional RM1.2 billion of variation orders which resulted in the revised contract value of RM16.71 billion.
2. After numerous meetings and discussions, you wrote to the Minister on 15 August to offer a revised price of RM15.1 billion. This was mostly a result of shelving the 2 underground stations at Bandar Malaysia North and South.
3. Subsequently on 7 Sep, you offered to reduce the price further to RM14.58 billion for the Underground contract (making it RM32 billion for the entire MRT2 project). This represented a cost saving of RM2.13 billion or a 12.7% reduction. In the words of the Gamuda director at the meeting with the Minister on 4 Sep – “we offer what we can offer, but anything beyond that will be meaningless to continue”.
4. However, based on the study by the independent engineering consultant, MRT Corp should expect total savings between RM4.19 to RM5.79 billion for the estimated remaining 60% portion of works yet to be completed. Yes, this potential savings is just for the balance of works to be completed. Imagine the potential savings if it was for the entire contract.
2018-10-10 10:37
support PH...but things should be done in fair & reasonable manner....
if they lose integrity..and tend to show biased decision making (just to go against previous BN cronies) instead of looking other sources of money...
PH may lose votes...
2018-10-10 10:43
die Gamuda now in open war of words with the PH govt. Why so stupid? PH just won a bitterly fought election with majority votes to overthrow a 61 years old kleptocratic govt. Threatening 20,000 job loss on PH is unfair and un-Malaysian. Good luck to all the Board of Directors. What a bunch of numbskull! The Head of Investor Relations should resign for their ill-advised decision.
2018-10-10 11:36
actually Gamuda is left with being a property company with most of its profits overseas. what is fair value?
2018-10-10 11:40
I believe there have been a lot of profits previously..... means what? means Gamuda should take
2018-10-10 11:51
Gamuda bunch of idiots... BOD...Must Resign straight away...No shame may...???
2018-10-10 12:10
Gamuda really got the nerve to use multimedia to blackmail the government with the 20,000 jobs at stake. There must be goons inside that think they are still all powerful like in pre GE14 days. Time to put a stop to the feeding of taxpayers' money.
2018-10-10 13:17
why not terminate the toll concessaire contract also..rakyat lgi happy n pray to you like tokong
2018-10-10 13:27
we vote PAKATAN HARAPAN, now they tell us to continue suffer in coming budget....i just pray personal tax lower lah.
2018-10-10 13:35
btw, how many malaysians actually play the stock market? U go to m'kini u see many there but here????? Of course sore loser in gamuda@those who bought gamuda must be feeling the sting very deeply. Well, u rolled your head in knowing the risk, u don't blame gomen when u lose money.
2018-10-10 13:38
Haiyah..only banglas use mrt2 larrr...most prefer to buy 3rd national car now
2018-10-10 13:40
Gamuda is only the starting point to recession. By the time whole country affected, want to blame also too late.
2018-10-10 13:41
Well. Im OK. I'm down 4% more in the last 3 days.
But I'm fine with the recuperative actions of the government causing some volatility in markets.
I can just keep buying. I just hope it stays low for a couple more months.
At the end of the day, malaysia is getting better. Just need some bitter medicine first.
Luckily, i like bitter taste. Haha
2018-10-10 13:43
Just know how to cut cost. Foreigner no confidence in out nation, how to improve our economic.
2018-10-10 13:52
Its about efficiency. The lowest cost, highest quality manufacturer / service provider should always produce the product / provide the service to its maximum. That is how maximum economic benefit is obtained. Economics, my dear Watson.
In the end, the needs of the many, outweigh the needs of the few
2018-10-10 13:55
Did you mean Gamuda is not efficient. Besides Gamuda, any local companies have the skill to carry out this underground job. Think so easy. Cost can be discussed internally but open letter is bad method to scare all investors.
2018-10-10 14:01
Haiyah...my neighbor can do cheap than Gamuda larrr..wat so hard to drill hole leh? Use bulldozer also can mah
2018-10-10 14:03
Gamuda Geng! A local construction company dared to fight back with the government. If the company were located in US then it might not have to worry much in government intervention. This is Boleh Land man....is it smart enough to mess up with the government?
2018-10-10 14:06
I will vote out HP in GE15 if gov continue with Gamuda without achieving targeted saving
2018-10-10 14:08
Gamuda-MMC contract termination is just the beginning, Capital gain tax to squeeze all stock traders & investors will kill all of you! Hidup PH! haha..
2018-10-10 14:23
Why would i cry?
If Mcdonald got 30% discount tmr, i wil be damn happy loh!
======
Posted by TrippleZ > Oct 10, 2018 01:47 PM | Report Abuse
Jon Choivo, keep laughing for now. Cry quietly later.
2018-10-10 14:24
Let see whether Gamuda costing expensive for their underground MRT line 2 construction or not. Just take a look of Spore Thomson Line, a fully underground MRT line to be connected to JB in 2019. Thomson Line cost of construction estimated to be S$18b (MYR54b) with length of 43km. Our MRT Line 2 Sg Buloh-Pjy with the underground portion, total length is 9.5km with estimated cost of construction MYR16.7b....If u apportion the with Spore line, total cost for the 9.5km underground 18*/43*9.5=S$3.98b=MYR12b...Why Gamuda charging MYR16.7? Don tell me our land cost and labour cost both are more expensive than Spore? The difference of 4.7b is what Tony Pua is looking at...
https://en.wikipedia.org/wiki/Thomson%E2%80%93East_Coast_MRT_line
2018-10-10 14:24
Our LGE doing great job. Independent consultants did stringent costing. Gamuda, mmc must reduce more the balance of the project to help msia to be on right footing again. Great job PH gomen..Syabas
2018-10-10 15:52
Everyone, look.at the big picture. You paperplane, you suffer a few thousand paperless, BUT we don't want our treasury to be raped which belongs to msian rakyat. All the looting by all, MUST stop. PH gomen doing great job. Msia will fly line Asian Tiger again, once all the looting of our treasury stops.
2018-10-10 15:59
May I konw how much the salary for Directory and high management of GAMUDA?? Recently I saw many people drive Mercedes, BMW, Porsche, I believe most of them are high management level company worker.. .
2018-10-10 16:05
Manager- Salary RM 20k
Free CAR-BMW
Free Toll-Up to RM1k
Free Petro- Up to RM1k
Free car Insurance
Free Telco-RM1k
FREE FREE FREE FREE....First week of salary announcement =RM 20k in bank
Normal executive- Salary RM3k
LOAN CAR
LOAN HOUSE
LOAN PHONE
LOAN TOLL
LOAN PETRO
LOAN LOAN LOAN LOAN -----First week of annoucement =RM 0 in bank account
2018-10-10 16:11
Dressed for success: Deputy Home Minister Datuk Mohd Azis Jamman (centre) together with Mohammad Razin (right) unveiling the new department uniform in Putrajaya. Also present is ministry secretary-general Datuk Seri Alwi Ibrahim.
Read more at https://www.thestar.com.my/news/nation/2018/10/05/girl-with-12word-name-is-on-fire-on-social-media-various-reactions-on-fb-and-twitter/#pafT2yPFxLswxOpK.99
THIS MONEY COMES FROM WHERE????
2018-10-10 16:53
having high salary is very typical in their specialist job market, if thats the concerned many mnc have very high salary la
2018-10-10 17:36
PH government is doing right thing. MMC-Gamuda dont threat with the jobless issue...
But no Capital Gain Tax plssss....if not i will be very disappointed
2018-10-10 23:51
Wonder which Giant will later come out to take over the project?? Any Idea? Mudajaya?? (<<<Just kidding....)
2018-10-11 11:23
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How many support Pakatan actually for your RM 5.2 billion? 100? How abt those against BN GST?
2018-10-10 09:52