LETTER: I refer to the FMT article saying: “Lim Guan Eng today played down concerns of potential job loss following Putrajaya’s termination of MMC-Gamuda’s contract to build the underground portion of the MRT Line 2 (MRT2).”
The finance minister said a majority of those affected by the contract termination could be re-hired by the new contractor.
Yesterday, MMC-Gamuda said the termination would result in “immediate job losses” to over 20,000 people involved in the project from a supply chain of over 600 Malaysian companies.
“If the project continues, many of these workers can be employed when the contract is awarded,” Lim told reporters when met on the sidelines of the “Malaysia A New Dawn” forum.
On Sunday, after announcing the termination of MMC-Gamuda’s contract, Lim said all unfinished underground work would be re-tendered via an international open tender process.
Putrajaya terminated MMC-Gamuda’s contract after the two parties failed to reach an agreement over cost reduction and related issues.
Lim said the decision was made after the government felt it could achieve “further significant savings”, compared with the offer made by MMC-Gamuda, through re-tendering the underground work package.
MMC-Gamuda said the termination would unjustifiably expose MMC-Gamuda to “a flood of lawsuits for compensation from terminated employees, sub-contractors, suppliers, manufacturers, and so on, whose contracts will similarly be terminated due to no fault of theirs”.
Since the announcement of MMC-Gamuda’s MRT contract cancellation 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 is about 2,468 million. 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 makes 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 of value in 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 the termination of Gamuda’s MRT contract, the government has also terminated several other contracts.
Obviously, Lim does not realise the shareholders of MMC and Gamuda have lost a total of RM2,732 million. 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 renderer to commence work after six months from termination date.
In the meantime, will he provide food on the table for all 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 (PH) government is handling all lopsided multi-billion contacts wrongly by picking on local/foreign contractors instead of MACC directing the previous lawmakers (who executed the lopsided contracts) to explain why the prices were exceptionally high and the contract terms and conditions lopsided.
Of course, the multi-million ringgit contract terminations please the people who voted for PH in the last general election. But the PH government must also realise the complexity and seriousness of the matter.
I hope the PH government and Lim realise that their promise to rule by law is not just hot air but must include respect for all the terms and conditions of multi-billion contracts in Malaysia.
Moreover, the PH government must bear in mind that if you can simply terminate the contracts signed by the Barisan Nasional government, no respectable contractors would dare sign contracts with the PH government for fear that the next government can also terminate the duly signed contracts.
(Koon Yew Yin is a retired chartered civil engineer and one of the founders of IJM Corporation Bhd and Gamuda Bhd) – FMT