On December 31, Domestic Trade and Consumer Affairs Minister Datuk Seri Saifuddin Nasution Ismail confirmed a media report that the government is looking to appoint a company to supply vehicles for ministers and senior government officials. — Istock.com pic via AFP

KUALA LUMPUR, Jan 7 — The Pakatan Harapan (PH) administration revealed recently that it would soon deliberate over the procurement of official cars for ministers and senior government officers.

This comes after the expiry of the 25-year concession with supplier Spanco Sdn Bhd last year.

The disclosure drew a mixed reaction from the public, but most viewed the process with suspicion.

Some have pointed to allegations of preferential treatment, although the government said it has yet to decide the next concession, while others griped about the cost to replace the concession, leading to calls for transparency in the tender award.

Nevertheless, the debate around the new procurement remains for the most part speculative.

In this article, Malay Mail tries to explain some of the issue’s key questions:

What is all this about?

On December 31, Domestic Trade and Consumer Affairs Minister Datuk Seri Saifuddin Nasution Ismail confirmed a media report that the government is looking to appoint a company to supply vehicles for ministers and senior government officials.

The New Straits Times reported Saifuddin as saying that the deliberation for the new procurement followed the end of a 25-year government concession with Spanco Sdn Bhd as of 2019.

Ending Spanco’s concession was meant to cut operating costs, Saifuddin explained.

How much will the new concession cost?

This deal, among the other options, will reportedly involve 32 units of luxury minivan Toyota Vellfire and up to 3,000 Honda Accord sedans to replace the existing fleet of Proton Perdana and Toyota Camry.

The same news report also suggested the government is considering the addition of 8,000 units of the mid-range Proton Persona and low-cost Proton Saga to the new fleet.

The Toyota Vellfire, assuming the procurement involves the latest model, is priced at RM362,000 each, according to car retail website carlist.my.

The luxury people-carrier will be reserved for ministers and deputy ministers, while the Honda Accord (RM148,512 each) will be designated for senior government officers.

Should it push through with the concession, the deal involving some 12,500 vehicles over 15 years could cost Putrajaya as much as RM300 million annually in management fees after the fifth year.

When will the new concession be in place?

Not yet. Finance Minister Lim Guan Eng said on January 1, that the decision for the procurement rests with the Cabinet, which is expected to discuss the matter at its first meeting for the new year next week.

The clarification came after confusion arose over Saifuddin’s statement that the Finance Ministry will determine the winning bidder.

Lim confirmed in February last year that Spanco's contract had not been extended to allow open tenders from other companies for the deal.

Where will the money be spent?

The cost will involve the supply, repairs, maintenance and management of the new fleet.

The Star reported last year that the SUVs will be replaced every four years along with the 3,000 Honda Accord. Malay Mail could not independently verify the claim.

Who’s in the running for the contract?

Media reports from last year suggested seven companies are in the running for the lucrative contract.

Among them are Naza Group, Berjaya, Sime Darby, DRB-Hicom, Samling Group, Comos and Go Auto, the distributor of Haval, and current concessionaire Spanco itself.

Spanco is expected to bank on the influence of Tan Sri Robert Tan, who according to senior press officials, wields some political clout.

Tan, a self-made tycoon who built an empire on a wide range of businesses including manufacturing, marketing, banking, shipping, property development and trading, is known as the ‘small cap king’ because of the substantial stakes he has built up in small listed companies.

Other influential bidders are Naza Group and Tan Sri Vincent Tan’s Berjaya. Talk within the business fraternity has it that the two have forged a partnership for this specific contract.

Why the controversy?

On social media, critics have zeroed in on the cost. Many feel the concession fee is exorbitant, with some alleging excess by pointing to PH’s pledge to cut the kind of wastage that plagued the previous ruling coalition.

But government leaders said the decision not to extend Spanco’s contract and grant the next concession through an open tender is evidently a cost-cutting move.

Saifuddin said on December 31 that the Cabinet had previously discussed options that would save the government more money, such as a vehicle allowance instead of an official vehicle.

Critics have also lambasted Putrajaya for short-listing Japanese marques, instead of the local Proton, especially since Prime Minister Tun Dr Mahathir Mohamad is insistent on having a third national car project.