KUALA LUMPUR: SME Bank has allocated RM1 billion in financing especially for local contractors who have been awarded civil works packages of the East Coast Rail Link project.
“The facility is in the form of term and revolving financing and is capped at RM50 million for each applicant excluding bank guarantees,” Entrepreneur Development Ministry secretary-general Datuk Wan Suraya Wan Mohd Radzi said in her opening remarks delivered on behalf of the minister, Datuk Seri Mohd Redzuan Yusof, at the signing of a memorandum of understanding between SME Bank, Malaysia Rail Sdn Bhd (MRL), and China Communications Construction (ECRL) Sdn Bhd (CCC-ECRL).
“I am confident that with such financing support, local contractors can be at ease and concentrate on completing the projects assigned on time without undue anxiety or worry,” she added.
Speaking to reporters after the signing, Finance Minister Lim Guan Eng said the RM1 billion facility was just a start.
“This shows that both sides are willing to discuss for mutual benefit so that the interests of all parties can be taken into account. The timing of when SME Bank would disburse the first batch of financing will be up to them to decide.
“Around 300-400 SMEs are already applying for financing. They can always make comparisons against conventional banks, but I am sure that SME Bank will try to offer as competitive a rate as possible,” he said.
The interest rate for the financing could potentially be around 6.75%, although it is likely it will dependent on the company’s financial standing.
MRL CEO Datuk Seri Darwis Abdul Razak said the tripartite MoU would accelerate the commencement of civil works under the 40% local participation portion of the 640km rail infrastructure from Kota Baru to Port Klang.
He said the collaboration is timely as the initial award of the ECRL civil works packages to Malaysian subcontractors were already ongoing in stages for tunnels and temporary works within the Dungun-Mentakab section.
“There are various packages but at the moment there are three tunnelling works that are ongoing in Kuantan, Dungun and Pakar. Roughly RM1.7 billion in works packages have been awarded to contractors, subcontractors, suppliers and consultants,” he added.
As ECRL civil works packages continue to be awarded over the next one to two years, the collaboration would encourage local construction companies to play an active role in the project and ensure it is on track for completion by December 2026. Thus far, the project is about 13% complete.
CCC-ECRL managing director Bai Yinzhan reiterated the company’s promise to award at least 40% of the civil works to local contractors.
“As we are getting ready for full-scale civil works on multiple sites along the 223km Dungun to Mentakab stretch, this is indeed a timely announcement for our appointed and future sub-contractors,” he said.
In August this year, MRL said 70%, or 234, of the 331 short-listed companies as sub-contractors in a prequalification exercise for work on the ECRL project are bumiputra companies.
CCCC had received 1,321 submissions during the prequalification exercise to identify the potential subcontractors, held on May 29 and 30, for the 40% civil works portion of the ECRL.