Chinese companies may bid for MRT job

KUALA LUMPUR: Apart from its political significance, the two-day visit by Chinese Premier Wen Jiabao is expected to see some groundbreaking deals for the business sector.

On the cards is the RM5 billion double tracking job from Gemas to Johor Bahru that is expected to be firmed up during the visit. During President Hu Jintao's visit last year, Malaysia agreed to award the project to a company from China.

Among the front-runners for the project are said to be China Communications Construction Group and China Railway Construction Corp.

The local partner for China Communications is believed to be shareholders related to George Kent Bhd, which is linked to Tan Sri Tan Kay Hock, according to those involved in the construction industry.

The dark horse is China Railway Construction Corp. Who China Railway's local partner is, is not clear but among the names that have surfaced are Datuk Shafiq Sit Abdullah and Datuk Desmond Lim.

While Lim is well-known in corporate circles as the person behind Malton Bhd, the Pavilion and Farenheit 88, Shafiq is formerly from Sime Darby Bhd and has had shareholdings in several listed and unlisted companies.

But while the Gemas-JB job is expected to be firmed up, a major breakthrough for Chinese companies is that Wen's visit is expected to pave the way for them to participate in the RM40 billion Mass Rapid Transit (MRT) project.

The Chinese are expected to be invited to bid for the tunnelling portions of the MRT project, which is scheduled to take off in July.

Based on initial estimates, the tunnelling section stretches about 7km and is expected to cost around RM14 billion. The entire project is set to cost RM40 billion.

The government has appointed a joint venture comprising Gamuda Bhd and MMC Corp Bhd as the project delivery partner (PDP), effectively the project manager. As the PDP, the Gamuda-MMC JV is to ensure that the project is completed on time and within budget.

The Gamuda-MMC JV will only participate in the underground tunnelling portion of the job on a Swiss challenge basis. It will not participate in any of the above-ground portions of the jobs.

Under the Swiss challenge, the Gamuda-MMC JV will be given the right to match any competing bid for the tunnelling portion. Local construction industry players have shied away from putting in a bid because they feel that as the PDP, the JV will have the upper hand.

"Nobody is going to spend money and time to put in a bid on a Swiss challenge basis. But the Chinese may be able to with their financial muscle," said an industry source.

China is home to some of the most advanced railway systems in the world, said industry players.

Beijing has an extensive rapid rail transit system that serves the urban and suburban districts. Its subway track length is ranked fourth in the world after Shanghai, London and New York with 14 lines, 172 stations and 336km of tracks.