Bumi quota may bloat MRT project cost, say experts


By Boo Su-Lyn, The Malaysian Insider

KUALA LUMPUR, Aug 24 — A 30 per cent Bumiputera quota for the Klang Valley Mass Rapid Transit (MRT) construction packages may swell the cost of the multi-billion ringgit rail project, say experts.

RAM Holdings chief economist Dr Yeah Kim Leng said some small Bumiputera contractors may not be able to leverage on economy of scale in terms of equipment and resources.

“The smaller ones don’t have that scale economy. Costs will be higher,” Yeah told The Malaysian Insider.

He said six out of the 16 packages for elevated civil works and stations, as well as the Kajang depot work package, were reserved for Bumiputeras.

Twenty-eight firms including heavyweights such as Sunway Bhd, IJM Bhd and MRCB have been shortlisted for the construction of the first phase of the MRT project.

Political analyst James Chin pointed out that the Bumiputera quota would increase costs due to a smaller pool of competitors.

“The Bumiputera portion will be confined to Bumiputeras only. If you know that the competition is for Bumiputeras only, they’ll increase prices because they (the government) cannot buy from anyone else,” Chin told The Malaysian Insider.