Investigation into controversial KTMB train purchase is welcomed by Minister of Transport

TRANSIT notes that the Minister of Transport has expressed his support for an investigation into the purchase of 38 units of Electric-Multiple Unit (EMU) trainsets for KTMB by the Finance Ministry.

This deal, made through direct negotiation with the Zuzhou electric rail company, became controversial after PAS MP Dr. Dzulkefly Ahmad protested about the increased cost of the trains. More information can be seen in his blog posts, “PAC wants MACC to investigate purchase of KTMB trains“, “Now Overpriced trains at RM500mil” and “Will PAC stop this deal before we are again shortchanged?” among other articles.

MACC probes purchase of Electric Multiple Units (The Star)
Friday August 6, 2010

By LOURDES CHARLES lourdes@thestar.com.my

KUALA LUMPUR: The Malaysian Anti-Corruption Commission (MACC) has started investigations into the purchase of 38 electric trains, allegedly overpriced by half a billion ringgit, from a company in China.

The investigations began several days ago after the Public Accounts Committee (PAC) handed a report to the MACC over the purchase of the six-car Electric Multiple Units (EMUs) by Keretapi Tanah Melayu Bhd for more than RM1.6bil.

The price had escalated to RM48mil per six-car train from the original cost of RM13.7mil per three-car train.

A tender was negotiated last November following the Government’s decision to improve public transportation under the National Key Results Areas initiative for urban transportation.

MACC director of investigations Mustapa Ali said his officers had started making inquiries into the case but declined to elaborate.

Sources close to the MACC said the team started the investigation last week and had obtained several documents related to the purchase.

They said several witnesses including top executives, ministry officials, those involved in the negotiations as well as the supplier would be questioned.

Transport Minister Datuk Seri Kong Cho Ha, who took over the ministry two months ago, said he welcomed investigations into any project under the ministry.

“I hope the investigation will be done transparently so that the public will have answers to all questions raised,” he said.

Kong welcomed the MACC’s decision to investigate all projects implemented by the ministry. and not just selected projects.

“The ministry will cooperate with all parties in investigations into projects under the ministry,” he said.

PAC chairman Datuk Seri Azmi Khalid said the committee had met on July 27 and discussed the issue raised by PAS MP Dzulkefly Ahmad during the 10th Malaysia Plan debate in the March parliamentary sitting.

Azmi said the PAC recommended that an investigation be conducted into the purchase of the EMUs from railway manufacturer, Zhuzhou Electric Locomotive Co Ltd of China.

He stated that the formal request to MACC was made through a letter last week and a copy of the MP’s speech in Parliament was attached.

Dzulkefly had questioned the purchase of the trains using the direct negotiation method, saying an investigation should be conducted as the price was exorbitant and that there were irregularities in the pricing.

He indicated that even if the six-car train cost twice as much as the three-car set, the price should only come to, at most, RM35mil each.

TRANSIT Says:

TRANSIT hopes to make it clear that KTMB does not actually buy the trains that they operate. Government purchases are made by the Finance Ministry, which owns KTMB. Also, it was the Finance Ministry which engaged in direct negotiations with the company.

This actually reflects one reason why the Minister of Transport is so welcoming of the investigation by the MACC – because it is the Finance Ministry that would be fingered, not the Ministry of Transport. And we all know who the Finance Minister is……..

Unfortunately, one of the reasons for the failure of the KTM Komuter service is that the Ministry of Finance has been slow to purchase new trains and has preferred to give funding to the Prasarana LRT expansion and other projects that might not be deemed as critical as keeping the Komuter service running.

This is also a reflection of KTMB’s strange position in Malaysia – it is a railway owned by the Ministry of Finance but run indirectly by the Ministry of Transport. KTMB was historically one goverment-owned company with multiple divisions (freight, intercity) that has been corporatized and converted to a holding company with divisions (intercity, freight) and as well as its own subsidiaries (KTM Komuter Sdn. Bhd., ETS Sdn. Bhd., KTM Park Sdn. Bhd. etc). 

This makes KTMB a very confused, semi-corporate, semi-government organization – and it becomes a political football for office battles between the Finance Ministry and the Transport Ministry – not to mention that these ministries are proxies in the ongoing “battles” between UMNO and MCA.

The irony is that the government which talks about improving public transport and mobility, has seen fit to starve the KTM Komuter service which links suburban and semi-urban towns (areas that often support the government) to the urban areas of Kuala Lumpur. Perhaps the government would receive more support if they invested in KTM Komuter services years ago.

Either way, we at TRANSIT appreciate the call for further investigation of the purchase of the 38 units of KTM trains by the PAC. We would also like to see further investigation into the claims by former Minister of Transport Ong Tee Keat that he had secured the transfer of intercity coaches from Japan Rail as well as 38 units of used Tokyo Metro trains for KTMB – all for “free”.