Rail players should work together and go abroad

by AFIQ AZIZ / graphic by MZUKRI MOHAMAD

IT IS paramount for local railway developers and contractors to not work in silo and push for more collaborations that could strengthen the supply chain within the industry and explore other markets beyond the Malaysian border.

Malaysian Rail Industry Corp (Maric) president Datuk Dr Mohd Yusoff Sulaiman said an integrated supply chain networking system could be the impetus for more local suppliers to tap into the export market.

He said currently local players are still conducting their export activity individually.

“Mitsui & Co Ltd, Hyundai Rotem, Mitsubishi Corp and China Railway Construction Corp Ltd all come here together with supply chains and funding.

“But when we go abroad, we never go with a funding plan, nor do we have large engineering, procurement, construction and commissioning (EPCC) to lead the activity. So, the industry needs to change their mentality and elevate their proposition,” Mohd Yusoff told The Malaysian Reserve in a telephone interview.

Maric, together with Universiti Tunku Abdul Rahman’s Faculty of Engineering and Science, recently held the second Symposium on Railway Infrastructure & Engineering virtually — officiated by Transport Minister Datuk Seri Dr Wee Ka Siong.

Mohd Yusoff said Malaysia External Trade Development Corp (Matrade) does offer assistance to companies to promote their products through its export acceleration programme, and individual firms are trying hard to sell their product and services abroad through the initiative.

In 2017, Malaysia’s exports of railway parts and components increased by 12% to RM257.7 million compared to RM230 million in 2016, according to Matrade.

Most of the products were exported mainly to Panama, the US and Singapore, while imports decreased by 64.8% to RM431.8 million compared to RM1.23 billion in 2016. Imports were mainly from China, Austria and Canada.

The exports of rail transport products and accessories including rolling stocks increased by 72% to RM74 million in 2018, compared to RM43 million in 2017.

However, imports also rose by 170% for a total of RM1.16 billion compared to only RM430 million in 2017. The surge was due to the development of several high-profile projects such as the Bandar Utama-Klang LRT3, Sg Buloh-Serdang-Putrajaya MRT2 and the East Coast Rail Link.

With a strong value proposition through the local firms’ collaborations, Mohd Yusoff said this will not only help local players to find a better footing in the export market, but also instil confidence among the local firms in sourcing their parts locally.

“The time has come for large EPCC such as Sapura Group of Cos, Malaysian Resources Corp Bhd or YTL Corp Bhd to take up large rail contracts as a whole and use maximum Malaysian content and funding when going abroad.”

According to Maric, local competencies of EPCC for rail construction are high, led by automated fare collection at 95% competency, followed by communications (85%), as well as track works and consultancy (both at 75%).

There is still room to improve in other areas such as power and electrification (45%), as well as signalling and rolling stocks (35%).

Typically, half of a rail project involves civil and infra works, while the rest comprises systems and rolling stocks (15%), systems engineering (25%), as well as maintenance, repair and overhaul (5%).

In his presentation at the symposium, Mohd Yusoff proposed the establishment of a revolving fund which can be used to elevate the competencies of local players.

The fund can also be used for research and development to spearhead the growth of rail exports.

He also suggested that 1.5% of the amount awarded to each project related to the rail sector be contributed to a revolving fund that can be used to support any collaboration.

Read our previous report here