KUALA LUMPUR: SME Bank has set aside a RM1 billion fund for local contractors involved in the civil works packages of the East Coast Rail Link (ECRL) project.
The allocation will provide local contractors with the necessary financing facilities they need to complete the project by Dec 2026.
It was made available through a memorandum of understanding (MoU) which was inked between SME Bank, Malaysia Rail Link Sdn Bhd (MRL) and China Communications Construction Sdn Bhd (CCC-ECRL), here, today.
Finance Minister Lim Guan Eng said each qualified local contractor would have access to up to RM50 million in funds through a combination of term financing and revolving credit.
He said anything above the RM50 million limit would be evaluated on a case-by-case basis.
“The ECRL project will provide new jobs for local vendors and contractors.
“The signing of the revised EPCC (engineering, procurement, construction and commissioning contract has increased the portion for local participation of the ECRL civil works from 30 per cent to 40 per cent.
“Pre-qualification exercise for the ECRL civil works for qualified local contractors, which was carried out in May 2019, has shortlisted 331 local construction companies as potential tenderers.
“Out of this, 234 companies or 71 per cent are Bumiputera companies,” he said before witnessing the MoU signing between SME Bank, MRL and CCC-ECRL.
Signing on behalf of SME Bank was its chief executive officer (CEO), Aria Putera Ismail, MRL by its CEO Datuk Seri Darwis Abdul Razak, and CCC-ECRL was represented by its project director Fang Zhenru.
Present was Entrepreneur Development Ministry secretary-general Datuk Wan Suraya Wan Mohd Radzi and China’s Ambassador to Malaysia Bai Tian.
Lim said ECRL would also provide the platform for knowledge sharing and technology transfer.
“This is crucial as Malaysian companies, especially the smaller ones, who must urgently raise their competitiveness and improve their work and service quality.
“This is where the SME Bank can play an important role.
“SME Bank does not merely provide financial facilities to qualified companies. It also offers services beyond financing to ensure companies are managed sustainbly,” he said.
The ECRL project kicked-off on Aug 9, 2017, but was suspended on July 3 last year for renegotiation.
The project cost was reduced from the initial RM66.78 billion to RM44 billion, RM22.78 billion or saw a 34 per cent reduction from its original figure.
The new ECRL’s rail link was also re-routed through Negri Sembilan after taking into take into account the objection from the Selangor state government over the rail link having to cut through the Klang Gate Quartz Ridge.
The ECRL now spans across five states and Putrajaya for a distance of 640km.
To seal the new renegotiated deal, a supplementary agreement to the EPCC contract was signed on Apr 12 which gave the ECRL project the green light to resume.
As part of the improved deal, CCC-ECRL had agreed to participate in the operation and maintenance of the ECRL through a 50:50 joint venture with MRL which will ease the operational risk and costs expected be borne by MRL and the government to operate the ECRL.