Ex-transport minister appears before PAC over Vehicle Entry Permit contract issues

Former transport minister Liow Tiong Lai says his ministry had “problems” in the past with open tenders.

KUALA LUMPUR: Former transport minister Liow Tiong Lai appeared before the Public Accounts Committee (PAC) today to answer questions over the Vehicle Entry Permit (VEP) system and Road Charge (RC) between Johor and Singapore.

This follows questions raised in the Auditor-General’s Report 2017 (second series) last year on the manner in which the system was awarded: through direct negotiations instead of open tender.

The report also said the VEP system had failed to recognise the plate numbers of 0.07% of the vehicles that went through during the audit period, leading to RM17,100 in losses.

The VEP is a permit issued by the Road Transport Department that allows the entry of foreign vehicles into Malaysia. The RC is a RM20 fee imposed on all foreign-registered private vehicles (excluding motorcycles) which enter Malaysia.

Speaking to reporters after attending the hearing, Liow said he answered questions put to him by those in the PAC and hoped he had cleared the air about why TCSens Sdn Bhd was awarded the VEP system contract via direct negotiation.

Liow said when he was appointed transport minister in June 2014, he was ordered by the then Cabinet to take over the VEP project and see it realised in the shortest time possible.

This was because, in mid-2014, Singapore had announced that it would increase its VEP from S$20 to S$35. Liow was then told Malaysia had to respond and collect a similar charge.

“So, we presented a proposal to the Economic Action Council on Aug 18 and after that, we got approval from the Cabinet in March 2015 (to carry out the VEP),” he told reporters when met at the Parliament building.

The Cabinet had also agreed to the VEP collecting a RM20 charge, RM5 of which would go to the Johor government, and with the use of Radio Frequency Identification (RFID) technology to collect the road charges, he said.

Liow said once the Cabinet greenlighted the VEP, transport ministry officials discussed how to quickly launch the system, with August that year (2015) as the target launch – although it all began in March.

Given the pressure, his ministry had to get the system running quickly, Liow said: “We could use a treasury circular guideline to carry out direct negotiations.”

He added that the ministry had “problems” in the past with open tenders.

“We had losses and problems (when an open tender was used) in finishing projects like the AFC, or Automatic Fare Collection for the KTM (Keretapi Tanah Melayu), meaning the system failed, although it was through an open tender.”

So, the idea of a direct negotiation was brought to the table, he said, with the condition that the contractor would not be paid unless the project was “finished and successful”.

Five contractors applied and two were shortlisted. The final company, TCSens Sdn Bhd, met with all criteria set by the transport ministry, and once their plans for the system was agreed upon, the system was presented to the finance ministry, to be approved by the Cabinet, he said.

“I would like to clarify that we did not hide anything in the direct negotiation process (for the VEP contract), as we abided by the guidelines provided by the government,” he added.

On why there was a little delay in executing the VEP, Liow said this was only for the second phase of the project – for vehicles entering Malaysia that were not Singapore-registered. (The first phase of the VEP was only for Singapore-registered vehicles).

The first phase was executed on Nov 1, 2016. But for the second phase, the system had to be integrated with the Touch ‘n Go e-wallet system. This led to a delay as the e-wallet system had yet to be launched in Malaysia. He said the whole project was finished this year.

On whether he was told that he would be called back to give additional statements, Liow said he was ready. He also said he expected more transport ministry officials to be called in.

“Some parties claimed this project was a failure and did not benefit the rakyat. The conclusion is that this was not the case. We can see that the project was a success – it has collected more than RM250 million,” he added.

After the hearing – which took almost two hours – PAC chairman Ronald Kiandee said all necessary information had been obtained from Liow, but that he could not reveal what had transpired right now.