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Ali Baba deals undermine Bumiputera contractors, says Malay contractors association

KUALA LUMPUR: The Malaysian Malay Contractors Association (PKMM) president, Datuk Mokhtar Samad, has expressed disappointment over some quarters still resorting to the ‘Ali Baba’ system of awarding construction contracts because such deals undermine bumiputera contractors who genuinely want to succeed in the construction business.

While this did not contravene the law, he said it was "morally" wrong because the award process was not transparent.
The ‘Ali Baba’ method of awarding contracts, in which bumiputera contractors were used as fronts for non-bumiputera contractors, came to light recently during the Commission of Inquiry into the death of Teoh Beng Hock, a political aide to a Selangor state assemblyman, where the politician had allegedly parcelled out the bulk of his constituency’s contracting work to two non-bumiputera-owned companies.

"This Ali Baba method of awarding contracts deprives bumiputera contractors who have the expertise and knowledge of the opportunity to participate in projects. It is especially prevalent with the award of Class F jobs," he said.

The idea of Class F contractors began in 1972 to allow bumiputera contractors to gain a foothold in the contracting business. It is aimed to help them gain experience, and slowly climb up the skill and value chain, especially in the areas of maintenance and repairs that amount to less than RM200,000.

"While Ali Baba schemes are not new, the existence of Class F contractors was meant to address the imbalance of skills of bumiputeras in the construction business, especially in smaller contracting deals," Mokhtar explained.

While he did not view “Ali Baba” deals favourably, Mokhtar said this did not mean that bumiputeras could not co-operate with non-bumiputeras, especially in deals that had greater transparency.

"For example, it’s a win-win situation when genuine bumiputera contractors buy their building materials from non-bumiputeras since most hardware companies are owned by non-bumiputeras," he added.- Bernama

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