Why has the government allowed four companies - all bumiputera manufacturers - to monopolise the RM20 million per year 'lighting supply' for all government agencies?

This question has been asked by other industry players for the past two years.

Based on two circulars from the Treasury, the four politically well-connected manufacturers have an iron grip on government contracts, federal and state agencies, local governments and even the biggest customer of all, Tenaga Nasional Bhd (TNB).

The business is estimated to be between RM15 million and RM20 million per annum.

Prior to September 2005, the government practised an open-market policy in lighting procurement. Those who wanted to participate in the tender process had to only register with the Treasury and comply with certain procurement policies.

Although some of the tenders were only opened to companies with bumiputera status, there was no monopoly.

However, the lights dimmed for the other players on Sept 1, 2005.

The Treasury, via a circular, directed all government agencies and government linked companies to purchase street lights, decorative lighting and external building lighting from only three local bumiputera manufacturers.

According to the circular, signed by the then Treasury secretary-general Izzuddin Dali, the three manufacturers were Amat Sinar Sdn Bhd in Rawang, Selangor, Permintex Electronic Sdn Bhd in Jitra, Kedah and Muarlite Industries Sdn Bhd in Muar, Johor.

This was follow-up with another directive a year later in which another company was added to the list.

Local products

The reason listed in the circular was that government agencies did not comply with the Treasury directive in 2005 which required contractors to use local products and materials.

"Currently there are government projects and semi-government projects that use imported products/materials although they (these materials) are also produced locally," read the circular.

"For example, along roads, in buildings and new town construction projects, there are government agencies and appointed contractors who obtained imported street lanterns, decorative lighting, external building lighting and accessories from foreign countries," it added.

The circular stated that this went against the government's 'buy local products' policy and was not in line with the Bumiputera Community Trade and Industry Scheme (MPPB).

In view of this, the circular stated that by appointing the three manufacturers, all agencies would adhere to the official procurement policies.

It also warned that any government officer who failed to fulfill the directive would be fined and the contractors and project management consultant involved, blacklisted.

The circular had raised the ire of other manufacturers, both with and without bumiputera status, and they vented their protests through trade associations and business chambers.

A second circular was issued in May 2006 and another company - Maxlane Sdn Bhd in Shah Alam, Selangor was included.

However, Maxlane was only allowed to supply certain accessories to the government agencies.

The circular, signed by head of the government procurement management department Awang Che Saman, made it clear that all agencies were not allowed to obtain products from other channels unless authorised by the Treasury or the respective state treasury departments.

It also stated that the supplier list could be expanded from time to time.

According to the estimation of the Electrical and Electronics Association of Malaysia (TEEAM) which has some 1,400 members, some 1,100 manufacturers, distributors, suppliers and other supporting industry operators have been affected.

Politician-owned

Following a check, Malaysiakini discovered that one of the four companies listed is owned by an Umno politician and another is the subsidiary of a major corporation.

A search with the Companies Commission of Malaysia (CCM) showed that Muarlite Industries Sdn Bhd was established in 1989 with a paid-up capital of RM2.5 million.

The major shareholder is Mohd Ismail Mohd Shah (left), who holds nearly all of the 4,000,000 shares. He is also the Umno state assemblyperson of Maharani in Johor.

Another appointed panel supplier, Permintex Electronic Sdn Bhd, is a subsidiary of Permintex Holdings Sdn Bhd. It has a paid-up capital of RM985,000.

According to the company website, one of Permintex's directors is Ahmad Tajuddin Ali (right), the former executive chairperson of TNB. He left TNB in 2000.

Meanwhile, CCM listed the names of Permitex's two other directors as Md Zin Baharom and Ahmad Umar Alisan. The duo are also the only directors of Permintex Electronic.

Permintex Holdings, which has 17 subsidiaries, is involved in a wide-range of business interests covering electrical and electronic engineering, oil and gas as well as biotechnology.

It has also established joint ventures with Japanese companies Furukawa Electric and Sanko Gosei Group.

Its website stated that Permitex was established in 1986 and since then, it has been obtaining business opportunities from government agencies and government-linked companies.

During its participation in the Perbadanan Usahawanan Nasional Berhad (PUNB) entrepreneur development programme from 1993 to 2001, the company was appointed as the vendor for Perodua (1994) and Modenas (1995).

Following this, it was appointed as Proton Edar's vendor in 2004.

One of it subsidiaries, Permixtex R&D, was appointed as vendor for Telekom and TNB, and designer for Proton in 2004.

Permintex Electronic has also been appointed as TNB vendor since November 2000, according to a memorandum submitted to the government.

(PUNB is a national organisation responsible for the development of bumiputera entrepreneurs. Perodua, Modenas, Proton Edar, Telekom, TNB are all government-linked companies.)

Meanwhile, the third panel supplier Amat Sinar Sdn Bhd is a company with a paid-up capital of RM4.5 million. It is owned by Yuhyi Azizan, who also serves as the company's managing director.

According to other industry players, Amat Sinar secured most of the government lighting business. However, Malaysiakini was unable to confirm this.

The fourth panel supplier Maxlane Sdn Bhd is owned by Ani Mawar Abdullah and has a paid-up capital of RM350,000.

Part 2 will be published tomorrow