CCCC begins local lay-offs after ECRL suspension order

KUALA LUMPUR (July 11): China Communications Construction (ECRL) Sdn Bhd has begun laying off Malaysian staff less than a week after the finance ministry ordered the East Coast Rail Link (ECRL) project suspended.

The company, a unit of China Communications Construction Company Ltd (CCCC), has put as many as half a dozen of its local employees on a one-week termination notice beginning yesterday, sources told The Edge Financial Daily.

The termination letters, issued on Monday, do not include almost a dozen industrial trainees being dismissed due to the suspension. More job cuts are expected, the sources said.

When contacted, the company said it is currently looking into the matter to clarify what has happened.

Chinese state-owned CCCC is the main contractor for the 688km rail project, planned to connect Port Klang in Selangor through Pahang and Terengganu, all the way to Pengkalan Kubor near the Kelantan-Thailand border.

The Edge Financial Daily understands that the contracts of some CCCC employees contain a clause that provides for automatic termination should the ECRL project be suspended, completed or unable to continue due to unspecified reasons.

Such a clause is not unusual in project-based employments, especially at companies created for a specific purpose or to execute a specific project, according to a legal expert who declined to be identified.

The finance ministry issued work suspension notices on several megaprojects, including the ECRL last Tuesday on the grounds of national interest.

The CCCC unit, in a statement last Wednesday, expressed its regret over the ministry’s decision, stating the project was otherwise “progressing well”.

The company is also concerned that the suspension, which is indefinite until further notice, would lead to additional costs, damages and losses on its end.

It also hopes that Malaysia Rail Link Sdn Bhd (MRL), the ECRL project owner, will honour and respect the contract signed with CCCC.

In a statement last week, Finance Minister Lim Guan Eng said the actual total cost “is expected to reach RM81 billion, which includes land acquisition cost and loan interest during the project’s construction”.

Other projects slapped with work suspension notices are the Multi-Product Pipeline (MPP) and the Trans-Sabah Gas Pipeline (TSGP).

The MPP and TSGP, managed by Suria Strategic Energy Resources Sdn Bhd (SSER), were also awarded to a Chinese entity — the China Petroleum Pipeline Bureau — in November 2016.

SSER and MRL are wholly-owned by the Minister of Finance Inc.

Notably, SSER’s two projects and the ECRL are financed by the Export-Import Bank of China, on top of having Chinese state-owned players as main contractors.

Guan Eng in his statement said SSER had paid out RM8.3 billion or 88% of the collective project value of the MPP and TSGP despite unaudited work completion at only 13%.

The minister will lead a delegation to China later this month, to renegotiate the costs of the ECRL project, the MPP and TSGP.

Prime Minister Tun Dr Mahathir Mohamad is also expected to visit Beijing in August.

This article first appeared in The Edge Financial Daily, on July 11, 2018.

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