KUALA LUMPUR, Nov 18 — The Small Medium Enterprise Development Bank Malaysia Bhd (SME Bank), an agency under the Entrepreneur Development Ministry has signed a tripartite memorandum of understanding (MoU) with the Malaysia Rail Link Sdn Bhd (MRL) and China Communications Construction (ECRL) Sdn Bhd (CCC-ECRL) to facilitate financial solutions to Malaysian subcontractors in the East Coast Rail Link (ECRL project).
Entrepreneur Development Ministry secretary-general Datuk Wan Suraya Wan Mohd Radzi said under the MoU, SME Bank has allocated RM1 billion in financing for appointed sub-contractors of the ECRL project.
“The facility is in the form of Term and Revolving financing and is capped at RM50 million for each applicant excluding Bank Guarantees.
“However, if the amount required is above RM50 million, it will be considered on a case-to-case basis,” she said during her address at the signing ceremony of the MoU today at the Hilton Hotel here.
Wan Suraya added that the financing tenure would vary in accordance with the contract period as stipulated in the Letter of Award.
“This facility can be used for contract financing, working capital and purchase of equipment.
“I am confident that with such financing support, local contractors can be at ease and concentrate on completing the projects assigned on time without undue anxiety or worry,” she said.
Currently, the ECRL civil works packaged to Malaysian subcontractors is ongoing in stages for tunnels and temporary works within the Dungun-Mentakab section.
Finance Minister Lim Guan Eng who was also present at the MoU signing added that the collaboration serves as an endorsement to the ECRL project under the improved deal between Malaysian and China — a ‘win-win’ deal — which among others increased local participation for civil works from 30 per cent to 40 per cent.
“The ECRL project will also provide new jobs for local vendors and contractors.
“The signing of the revised EPCC (engineering, procurement, construction and commissioning contract) 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 71per cent are Bumiputera companies,” said Lim.
He added that ECRL will also provide a platform for knowledge sharing and technology transfer.
“This is crucial as Malaysian companies, especially the smaller ones, must urgently raise their competitiveness and improve their work and service quality.
“This is where SME Bank can play an important role,” he said.
The ECRL project was first launched on August 9, 2017, however, it was suspended on July 3, 2018, for renegotiation.
Comprehensive value engineering was carried out to ensure the project would give a win-win outcome for both Malaysia and China.
The project cost was reduced from RM66.78 billion to RM44 billion.