Now it’s ‘high-stakes contract’ grabs in Sabah

Queville To

Sabah oil and gas contractors association claim foreign companies are targeting the industry and hampering the growth of local firms.

KOTA KINABALU: There is a new phenomenon in Sabah – high stakes contract grabs. After enduring land grabs by major plantation companies and jobs taken away by hundreds of thousands of illegal immigrants in Sabah that has strangled local productivity, the state is now experiencing another level of ‘attack’.

Unable or unwilling to stem the tide of illegal immigrants, the state government is now paying the price for the joblessness of its own citizens in several sectors of the economy.

The abundance of cheap and illegal foreign labour in Sabah has always proved too tempting for contractors in the state.

But now a “high-stakes contract grabs” as they are called is threatening to upset the Sabah gravy train.

Experienced foreign companies are now targeting Sabah’s lucrative oil and gas industry hampering the growth of local companies, according to the Sabah Oil and Gas Contractors Association (Sogca).

Speaking at a news conference held here yesterday, Sogca president Iskandar Malik laid the blame for this sorry state of affairs on the ‘unpatriotic’ policy of Petronas, which he claimed is giving preference to foreign companies over Sabah companies.

He cited Samsung, one of Petronas’s foreign contractors, in the implementation of Petronas’s Alliance Integrated Team (AIT) Concept in the Sabah Oil and Gas Terminal (SOGT) project in Kimanis as an
example.

Iskandar claimed that the company gave 70% of jobs secured from Petronas to sub-contractors from Korea before considering local contractors.

Cheap foreign labour

The inevitable problems that have followed due to language, cultural and religious differences have alienated such contractors from locals, he said.

“We are being flooded with cheap labourers from India, Thailand and Philippines. That’s probably the reason why they (Korean contractors) refuse to engage the locals.

“By right, we should be protecting our own skilled workers as this is also in line with our Prime Minister’s aspiration to transform Malaysia into a high-income nation.

“We cannot have a high-income nation if we keep paying low wages to our local people,” he said.

He opined that the ongoing gas pipelines project in SOGT, Kimanis, has only brought short-term benefit to the state and its people.

“They (the Korean contractors) don’t buy the pipes from Sabah, they don’t get workers or contractors from Sabah, they are getting them from India and Thailand.

“And they don’t even eat our local food…there are 12 Korean restaurants in Kota Kinabalu alone. So, how does this benefit us in the long term?” he asked.

Iskandar also claimed that foreign contractors were squeezing the local contractors by offering them low contract prices besides delaying payments.

“Sogca hopes the problem in SOGT will not be repeated in the next Petronas project in SAMUR Sipitang,” he said adding that Petronas should award some of its contracts directly to the local contractors instead of through a foreign company.

“With the announcement by the Prime Minister on the rejuvenation of existing oil fields located offshore of Sabah amounting to RM28 billion, the biggest in the world, and also the existing project in Kimanis and SAMUR in Sipitang, Sogca hopes the oil and gas industry in Sabah will provide direct business opportunity to the people of Sabah,” he said.

Low value contracts for locals

He proposed that at least 30% of jobs in oil and gas industry be given to Sabah-based companies directly.
Iskandar complained that local contractors were only getting some low-value civil and infrastructure works and not the lucrative high-end works.

He dismissed claims that there were not enough local skilled workers to employ.

“That’s not true. There are a lot of Sabahans who are working in Peninsular Malaysia, Singapore and overseas, but how can they come back when there’s no guarantee of long-term employment for them?

“We have to guarantee these people that we have jobs for them for the next twenty years. Then they will come back. To say that the state has no expertise in the field is utter nonsense.

“The oil and gas industry has existed in east Malaysia for over a hundred years. Just look at Miri … if we look at the history of the oil and gas industry, the original workers are from Sabah one time.

“Most of them are from Penampang and Papar area,” he said.

Sogca treasurer Mohd Zulfikar B Ahmad, who was also present, urged Petronas to start giving Sabahans a chance to participate in its Vendors Programme as none of its 14 vendors are from Sabah.

“We have the capability and expertise but the opportunity is not given to us,” he said, adding that those who had applied to participate in the programme had been rejected by Petronas.

“The portion of low-value jobs given to the local contractors is very negligible. How can we achieve transfer of technology?” Iskandar asked.

The association is proposing that Petronas assign a senior officer, preferably a vice president, to look after its affairs in Sabah to avoid additional costs.

‘Behaving like warlords’

Currently local contractors facing administrative problems often had to fly over to Kuala Lumpur for a decision or solution to the problems.

“This had indirectly incurred many of us additional expenses since the airfares and the hotel charges are not cheap nowadays. Furthermore, the flight services too are not consistent.

Iskandar also proposed that Petronas rotate some of its senior personnel in Sabah in order to curb abuse of power by these “little Napoleons”.

“Otherwise they behave like warlords and that’s creating a lot of confusion and unnecessary tensions among the contractors and workers.

“This is happening now in the Samsung project site where people are hitting each other.

“It also tarnishes the image and credibility of Petronas,” he said.

The proposed construction of the 300MW power plant in Kimanis estimated to cost about RM2 billion also came in for criticism by the association.

The Taiwanese group that was selected to build the plant was supposed to start construction last year and complete it by 2014.

Foreign Minister cum Kimanis MP Anifah Aman has accepted the association’s invitation to be its patron and advisor.

There is no Sabahan on Petronas’ Board of Directors. The highest position currently held by a Sabahan is the general manager, who reports to Kuala Lumpur every week.