Puspakom, the entity which inspects vehicles for road-worthiness, has been granted a 15-year extension of its concession by the government.
That’s not all. The government has also agreed to revise the company’s rates and to award it another concession for the mandatory inspection of second-hand vehicles prior to transfer of ownership.
The Edge business weekly has expressed concern about the 15-year extension. The paper said the government should have reviewed Puspakom’s track record in carrying out inspections since 1994 -and considered some of the bad press it has received – before granting the extension.
The government will only review the company’s performance at five-year intervals. Puspakom made a net profit of RM18 million from turnover of RM76 million for its 2007 financial year. By the time the government reviews its performance in five years’ time, the company could have raked in a further RM90 million or so, The Edge noted.
One of the main reasons for the concession extension is that the company had invested in 19 more inspection centres, largely in Sabah and Sarawak. “Awarding a money-spinning concession based on a company’s willingness to set up inspection centres in remote areas at a cost of RM3.1 million is not a move in the direction of good governance,” said the business weekly in its ‘Frankly Speaking’ column. Indeed.
Contrary to widespread perception, Puspakom is not a government entity, but a monopoly business 100% owned by DRB Hicom. The major shareholders of DRB Hicom (as at 24 July 2007) are Etika Strategi Sdn Bhd (Syed Mokhtar Shah Syed Nor deemed to have an indirect interest) (15%), EPF (17%), and Khazanah (10%).
The information about Puspakom being granted an additional concession to inspect second-hand vehicles is contained in DRB Hicom’s Annual Report for 2007. For the year ended 31 March 2007, Puspakom inspected 2.4 million vehicles. The additional concession would enable it to hit around 2.7 million inspections for the 2008 financial year. An instant increase in profits!
This report from Bernama:
Puspakom Gets 15 Year Contract Extension
KUALA LUMPUR, July 10 (Bernama) — The government has extended the concession contract of Puspakom Sdn Bhd for another 15 years effective Sept 1, 2009, the Dewan Rakyat was told today.
Deputy Transport Minister Datuk Seri Lajim Ukin said the decision was made after considering various factors including initiatives undertaken by Puspakom, the Computerised Vehicle Inspection Centre, to improve services.
“They include extending operating hours at several vehicle inspection centres and a customer friendly payment system via the drive-in counter.
“For the new contract, the government reserves the right to review Puspakom’s performance once every five years. The contract can be terminated if it fails to provide satisfactory service,” he said during winding-up debate on the Mid-term Review of the Ninth Malaysia Plan (9MP) here, Thursday.
Puspakom had also invested in 19 new inspection centres of which 18 were in the remote areas of Sabah and Sarawak with the other in Bukit Katil, Melaka.
The 18 inspection centres were built at a cost of RM3.1 million with operating cost of RM1.9 million annually….