Gemas-Johor Bahru Electrified Double-Tracking Project (G-JB)

As of June 2020, the expected cost of the project was estimated to be around RM9.5 billion (US$2.26 billion), including RM400 million for coaches and staff quarters and RM200 million for consultation fees. This project is entirely funded by the federal government budget.

The ultimate owner of the Gemas–Johor Bahru rail track is the Railway Asset Corporation (RAC), a statutory body established under Article 89 of the Railways Act (1991) that owns and manages railway assets in Malaysia.

The contract for the project was awarded to the Chinese consortium of CRCC, CREC, and CCCC in 2016, three companies that together established the local vehicle CRCC-CREC-CCCC Consortium Sdn. Bhd. on March 24, 2016. CRCC holds a 40 percent stake in the consortium, while CREC and CCCC each own 30 percent. SIPP Railway Sdn Bhd and Syarikat Pembenaan Yeoh Tiong Lay Sdn Bhd are the main local subcontractors for the project.

Opaque procurement evaluations

There was a lack of transparency regarding the project’s opaque procurement evaluations. The Malaysian government had favored or even reserved the project to Chinese contractors to begin with, even though procurement was conducted through a competitive tender and open to foreign firms. Tendering regulations insist that the tender can be made open to local firms or foreign firms, but only if domestic firms do not have the capacity, expertise, or capabilities to undertake the proposed works. No records were made publicly available over the specific tender method, including tender specifications or tender documents from the tendering period. Although the tender process seemed to be open, reports also suggest that the subject of the contract’s award often came up during bilateral engagements between Malaysian and Chinese officials. Company media statements by CCCC mentions that the project award further strengthened the government’s relationship between China and Malaysia, enhanced the economic and trade cooperation between the two countries, and accelerated the development of the “Belt and Road” initiatives.

Lack of transparency regarding the feasibility study, impact assessments, contract details, and external auditing

Transparency is lacking regarding the project’s feasibility study, impacts assessments, contract details and external auditing. Key project documents such as the environmental impact assessment and the social impact assessment are not available to the public even though the project claims to bring environmental benefits arising from electric locomotives, which reduce the emission of pollutants and reduce fuel consumption. This makes it difficult to question the project’s credibility from a third-party point standpoint since there is no publicly available information on the project. In addition, the project’s benefits are questioned, as they remain limited due to the potential underutilization of the railway and structural challenges with the Malaysian rail network. Information regarding the acquisition of land was publicly available during the public display exercise; however, this transparency only lasted for the required three months. The records up for display are no longer publicly accessible. In addition to the preparatory reports, there is generally a lack of transparency on the contracting terms between the government and Chinese consortium, and a lack of transparency on the terms around the consortium and local subcontractor.

Cost Overruns and Project Delays

The project had one of the highest costs per kilometer of rail, thus increasing the risk of potential cost overruns compared to other double-tracking projects in Malaysia. In addition, the project faced delays regarding the land acquisition processes as squatters refused to move out, disputes with the state authorities, and the COVID-19 pandemic momentarily halted the project. These have resulted in a delay time for revisiting the construction plan and additional costs from the exercise. The project’s breaking ground ceremony was scheduled for December 2016, but was delayed due to issues with state authorities. The project completion deadline is now slated for October 2022. Opposition state members noted that cost overruns had occurred earlier in the project. The project cost continued to report a total of RM9.55 billion in total costs to the government as opposed to the RM8.9 billion stipulated in the contract. However, the clarification was that the estimated RM9.55 billion in total cost was a combination of the contract value, RM400 million for coaches, and RM200 million for consultation fees. Construction activities are still underway. Therefore, it remains to be seen whether the project delays or additional costs for the project will result in cost overruns.