KUALA LUMPUR – The Transport Ministry is finalising the renewal of a multibillion-ringgit deal with Integrated Marine Works Sdn Bhd (IMW), despite the company being a subsidiary of financially troubled Inai Kiara Sdn Bhd.
A source familiar with the matter said the controversial port dredging contract with IMW, estimated to be at around RM2.2 billion, is expected to be inked this week.
The new concession, according to the source, is for 15 years, with the agreement covering dredging and reclamation works at almost all of the nation’s major ports, among others.
While the deal will be considered a windfall for IMW through the development of new federal ports and related terminals, the company may also be carrying out dredging works in major estuaries that host ferry services, among others.
“The concession is also an exclusive deal, meaning other competitors will have no stakes in the contract which came about with no open tender or bidding,” another source said.
“This means that all the dredging works in the major ports are at the behest of IMW, although they are able to provide good rates for the services upon negotiation due to their past contracts with the government.”
During the recent parliamentary session in March, former transport minister Anthony Loke pressed his successor Datuk Seri Wee Ka Siong to confirm whether the government has awarded the 15-year concession to IMW, while the parent company was facing receivership.
Loke had brought up Inai Kiara’s bankruptcy status following a legal suit by the government for evading Inland Revenue Board taxes in 2014.
The DAP secretary-general told The Vibes that he was concerned about the dredging work because it affects navigation safety for both commercial vessels and passenger ferries.
Loke, who is also Seremban MP, said dredging is key to the safety of marine vessels that call at the ports, and therefore also vital for the ports’ standing and competitiveness.
“When long-term dredging concession contracts are given without open tender to handpicked contractors, the industry is worried that the quality of work will be subpar and the costs incurred will be inflated above market rate,” he said.
“It’s a double whammy situation.”
Loke added that it was “absolutely crucial” that the government does not repeat the “mistake” of giving out contracts via direct awards.
In early March, the ministry confirmed that IMW had been appointed as contractor for a period of another 15 years beginning July 7, 2021.
However, it is understood that the appointment was an initial memorandum of understanding between the ministry and IMW, while the deal to be inked this Friday would reaffirm the agreement as a binding contract.
The company was the concession holder for maintenance dredging works at federal ports for 15 years between 2004 and 2019.
It is also understood that it was granted “extensions” to carry out the port dredging works over the following two years, while the government was under the Pakatan Harapan and Perikatan Nasional coalitions.
The Vibes has reached out to Wee for comment on the matter but had yet to receive a response at press time.
In January, The Edge, quoting industry players, lamented the possibility of capital dredging and reclamation works becoming more expensive than needed, as the concession was awarded to IMW without other competitive bids.
The federal ports involved in the concession include Port Klang, Port of Tg Pelepas, Johor Port, Penang Port, Teluk Ewa Port in Langkawi, Tg Bruas Port in Melaka, Kemaman Port, Kuantan Port, Bintulu Port and Labuan Port.
Questionable record
While acknowledging the “financial problems” of Inai Kiara, Wee also noted IMW’s achievements during its previous concession, where it had completed 247 projects worth RM2.28 billion.
A day after the issue was raised in Parliament, Inai Kiara’s chief executive Quzaim Mohamad Guljar Mohamad acknowledged that the company was put under receivership by Maybank in late 2016, but said the status was lifted in late 2017 upon servicing overdue payments for loans to build six dredges.
According to Malaysiakini, Quzaim also explained Inai Kiara paid its debts on schedule, under the supervision of appointed accountant Ernst & Young, adding that IMW was now solvent and completed 14 dredging contracts amounting to RM700 million.
Yet despite Wee and Quazaim’s explanations, Inai Kiara has had to deal with reputational issues.
For example, three of its directors – including Hisham Mohamad Hashim who is still listed as a shareholder – were charged with conspiring to bribe a former Sarawak Public Works quantity survey assistant director.
For the case, former assistant director Ismail Ahim received a fine of RM5,000 for each count of a total of seven charges.
On August 1, 2019, Inai Kiara was fined RM30,000 by the Shah Alam magistrates’ court for failing to make Social Security Organisation contributions. – The Vibes, May 25, 2022
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