Malaysiakini Letter

MRT2 - difficult to re-tender partially-completed contracts

Koon Yew Yin  |  Published:  |  Modified:

LETTER | I refer to the Malaysiakini article MRT2 not cancelled, workers can find jobs after fresh tender - Guan Eng.

Since MMC-Gamuda’s MRT contract announcement a couple of days ago, Gamuda’s share price has plunged from RM3.20 to close at RM2.38 per share. It has dropped 82 sen, nearly 11%. Its total issued shares are about 2,468 million shares.

Its market capitalisation has been reduced by RM2,023 million. MMC’s share price has also plunged from RM1.38 to close at RM1.14, a drop of 24 sen or 17%. Its market cap has been reduced by RM730 million.

Together with Gamuda’s loss of RM2,023 million, this equals RM2,732 million. You can imagine the number of shareholders who have lost a total of RM2,732 million.

I have not worked out the loss in value for Gamuda warrants. Many people have asked me if I am affected. Although I was a co-founder of Gamuda, I do not own any Gamuda shares. I am writing this article with good intentions and I do not have any ulterior motive.

Besides this termination of Gamuda’s MRT contract, the government has also terminated several other contracts. Obviously, Finance Minister Lim Guan Eng does not realise the shareholders of MMC and Gamuda have lost a total of RM1 billion.

He also does not know the complexity of terminating and re-tendering partially completed contracts. Lim must be super-efficient to get the successful new tenderer to commence work after six months from the termination date.

In the meantime, will Lim provide food on the table for all the workers and their families while waiting for the new contractor to start work? In addition, what will Lim do if the new tendered sum is higher than MMC-Gamuda's price?

The Pakatan Harapan government is handling all the multi-billion lopsided contacts wrongly by picking on local/foreign contractors instead of directing the previous law-makers (who executed these lopsided contracts) to explain why were the prices were exceptionally high and the contract terms and conditions lopsided.

Of course, the multi-million ringgit contract termination pleases all the people who voted for Harapan in the last general election. But the Harapan government must also realise the complexity and seriousness of the matter.

I hope the Harapan government and Lim realise that their promise to rule by law is not just hot air but must respect all the terms and conditions of multi-billion contracts in Malaysia.

Moreover, the Harapan government must bear in mind that if you can simply terminate the contracts signed by the BN government, no respectable contractors would dare to sign contracts with the Harrapan government for fear that the next government can also terminate these duly signed contracts.

The views expressed here are those of the author/contributor and do not necessarily represent the views of Malaysiakini.

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