KINIBIZ Eyebrows were raised in September when a joint venture between Malaysian Resources Corp Bhd (MRCB) and George Kent was announced the project delivery partner (PDP) for the RM9 billion Light Rail Transit 3 (LRT3) project in the Klang Valley.

The joint venture beat other established players such as UEM Group, Gamuda and MMC, potentially netting a whopping RM540 million management fee (6 percent of the total project value). Even more mind-boggling was the fact that one-half of the consortium - George Kent - is better known for manufacturing water meters instead of building railways.

Is the PDP model an essential way forward in developing Malaysia’s infrastructure or is it just, as some critics would suggest, another potential gravy train for well-connected companies and individuals?

The LRT3 is not the only infrastructure project using the PDP business model. Arguably the biggest PDP in Malaysia currently is the 50:50 joint venture between MMC and Gamuda. MMC and Gamuda are engineering and construction companies of influential tycoons Syed Mokhtar Al-Bukhary and Lin Yun Ling respectively. Both are known to be politically well connected.

In 2011, the Malaysian government chose MMC-Gamuda as the PDP for the first phase of the RM23 billion mass rapid transit (MRT) line between Sungai Buloh and Kajang. At 6 percent of project cost, the PDP fees came up to a massive RM1.38 billion.

Subsequently, MMC-Gamuda also won the RM8.2 billion tunnelling job for this project which raises a conflict-of-interest situation of how the PDP is also overseeing its own project.

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