The government should launch a fresh tender process for the double-tracking railway project so as to avoid a trade war with China and India over the controversial award to a local consortium, said DAP chairperson Lim Kit Siang.

In separate statements today, he and Kubang Kerian PAS member of Parliament Husam Musa said the government should mend fences with the two countries by withdrawing the award from Malaysian Mining Corporation Bhd and Gamuda Bhd (MMC-Gamuda).

Kit Siang said it was not sufficient for Primary Industries Minister Dr Lim Keng Yaik (photo) to admit that the Indian Railway Construction Co (Ircon) and the China Railway Engineering Corp (CREC) have been given a raw deal, as reported in local newspapers today.

"It is not enough for one minister to admit to the lack of transparency, uneven-handed treatment and unfairness in the award, as it has far-reaching international diplomatic and trade implications," Kit Siang said.

"Although Prime Minister Abdullah Ahmad Badawi has said that the government has no plans to review the contract, DAP reiterates its call to cancel the award to MMC-Gamuda an re-open bidding in the interests of fair play, competitive pricing, transparency and integrity."

Retaliatory moves

Kit Siang was referring to the unexpected warning by Keng Yaik yesterday that local palm oil exporters may already be facing "subtle" retaliation in India as a result of the botched railway deal.

The DAP leader said another indication of India's displeasure was the cancellation of a RM261 million road contract by the Maharashtra state government to local construction company Road Builder (M) Holdings Bhd.

The railway project was said to have been promised to the Ircon-CREC consortium as early as two years ago as part of a government-to-government deal in return for various other bilateral trade concessions. Among these were a barter deal for India and China to purchase Malaysian palm oil.

However, in a sudden announcement late last month, MMC-Gamuda announced that it had been awarded the contract.

This prompted protests from Ircon that it had not been given an opportunity to revise its bid according to terms stated under a Letter of Intent signed with the government.

Malaysia justified its decision by saying that the final bid by the Indian and Chinese contractors was still too high at RM24 billion, compared to the RM14.5 billion bid by MMC-Gamuda.

However, no reasons were given as to why Ircon was not given the right to challenge MMC-Gamuda's bid.

Abdullah's test

PAS MP Husam also expressed concern that Malaysia's palm oil exports may be affected by the cancellation of the memorandum of understanding with India and China.

"The government should handle this issue wisely, transparently and diplomatically. This is a test of Abdullah's ability to tackle economic issues faced by the country," he said.

Responding to Keng Yaik's remarks, Husam questioned if the minister had raised his concerns within the cabinet.

"Considering that the issue is of vital importance as well as the prime minister's new policy for people to tell him the truth, the minister must raise the matter at the next cabinet meeting," he said.

Last Wednesday, Abdullah said the railway project issue was raised during the cabinet meeting and that the consensus was for Malaysia to award the project to the lowest bidder.

The double-tracking is one of the country's largest infrastructure project, involving the laying and electrifying of 636km of track straddling the length of Peninsular Malaysia and forming part of a US$30 billion trans-Asia rail link.