Sunday, March 30, 2008
From 5 years ago - Has anything changed in Sarawak?
In some parts of Malaysia, business and politics are inextricably linked, writes Michael Backman.
The Sarawak State Government gave two road construction contracts worth a combined $M79.86 million ($A32.59 million) to the Malaysian company CMS Group last week. Last month, it gave CMS an even bigger contract, worth at least $M1332 million over 15 years, to maintain all of Sarawak's roads. The group's most recent annual report says it is the largest and fastest-growing conglomerate in the state.
As well it might. It is, you might say, well connected. CMS Group chairman is Sulaiman Abdul Rahman Taib. His younger brother Mahmud Abu Bekir Taib is deputy chairman. Their father is Abdul Taib Mahmud. He is the Chief Minister of Sarawak and has been since 1981.
The Chief Minister's brother Onn bin Mahmud also sits on the board of CMS. Not only is Abdul Taib Mahmud Chief Minister, he's also the Resource Management and Planning Minister. That means he's also the Forestry Minister. And that's lucky because another brother, Mohd Tufail bin Mahmud, is co-owner of Sanyan Group, one of Sarawak's biggest timber companies. Sanyan Group recently completed the 22-storey Wisma Sanyan in the Sarawak town of Sibu. There is an office space glut in Sibu but, fortunately, the Sarawak Government took up eight floors.
One of Abdul Taib's biggest supporters is the Deputy Chief Minister and Finance Minister George Chan. Chan's daughter is married to Abdul Taib's son Sulaiman Abdul Rahman.
Sarawak is one of the richest states in Malaysia. It earns about $M6 billion a year from timber and timber products. It earns that again from crude oil, and double that from natural gas. It is one of the world's major pepper exporters too. Even this earns almost $M200 million annually.
CMS Group originally was a monopoly cement producer established to feed the building boom then under way in both states. In 1989, the Sabah Government sold its stake and the Sarawak Government decided that the company should list on the Kuala Lumpur Stock Exchange. Abdul Taib's family emerged as its controlling shareholders.
The cement company was transformed into a conglomerate as a result of a host of government contracts.
CMS now encompasses more than 40 subsidiaries that operate in banking, securities and derivatives, cement and construction materials, steel, construction and road maintenance, property development, and services. Other recent government contracts include CMS's appointment in mid-1997 as joint developer of a $US1.5 billion ($A2.4 billion) low-cost housing project in Kuching.
In 2001, Malaysia's Federal Government awarded CMS a $M581 million contract to build a 178 kilometre road in the state. In January this year, CMS was given a five-year contract to supply roofing materials to a state-owned company for the construction of almost 11,000 low-cost housing units. CMS also has a $M150 million government contract to ease tidal flooding along the Sarawak River, a $M47 million government contract to upgrade a local airport, and other contracts to build hospitals.
Abdul Taib has a special place in Malaysian politics. His party is a component of Prime Minister Mahathir's ruling coalition and, come election time, Abdul Taib consistently delivers all or most of Sarawak's seats in the national Parliament to Mahathir's coalition.
In 2001, the Federal Government allowed CMS Group's banking unit Bank Utama to acquire RHB Bank to become one of Malaysia's 10 core banks. A past chairman of Bank Utama is Mahathir's Agriculture Minister, Effendi Norwawi. He also serves as vice-president of Abdul Taib's United Sarawak Bumiputera Party.
Last year, CMS missed out on a contract to build Sarawak's $M9 billion Bakun Dam. But it was not a total miss. The main component of any large dam is concrete, for which CMS has a near monopoly in Sarawak.
Posted by Al Tugauw at 12:50 PM