This article first appeared in The Edge Malaysia Weekly on September 1, 2025 - September 7, 2025

IN an unexpected turn of events, bidders for the systems package of the Penang light rail transit (LRT) project were told to provide alternatives to their tender proposals, a move that has ruffled the feathers of contractors eyeing the biggest infrastructure job under the current administration.

In a notice to submit additional information on the bids, Malaysia Rapid Transit Corporation Sdn Bhd (MRT Corp) told bidders to come up with alternative proposals to cater for electric train (ET) sets that are smaller in size and with lower technological capabilities.

In addition, bidders were told that the local assembly and testing of the ET sets was no longer a priority.

According to industry sources, MRT Corp has told bidders to come up with alternative proposals to cater for ET sets with a maximum length of 46m. In the original tender document, the requirement was a maximum length of 70m. The maximum axle load of the ET sets has also been reduced to less than 12 tonnes from 13 tonnes previously.

“A shorter length and lower axle load mean that MRT Corp is looking at three-car train sets for the Penang LRT project as opposed to the four-car train sets initially proposed in the tender documents,” says a consultant.

A more significant change in MRT Corp’s latest requirements relates to the localisation of the ET sets.

When the tender documents were floated in December last year, one of the criteria was for bidders to incorporate in their submission a local assembly and testing plant for the ET sets.

“In the latest notice to bidders, the local assembly and testing of the train sets is no longer a priority. Bidders have the flexibility to choose [on] the manufacturing, assembly and testing of the train sets,” says an industry source.

The requirement for the local assembly and testing of the train sets was a unique feature in the Penang LRT project. It marked for the first time, MRT Corp seeking to develop local expertise and capabilities to build train sets for urban railway systems.

This was seen as a natural progression for the country — to move things locally. The first few LRT systems saw train sets that were assembled and tested overseas and brought in as completely built-up units.

In the mass rapid transit (MRT) project, the train sets were manufactured overseas. However, they were locally assembled and tested at the SMH Rail Sdn Bhd plant in Rawang, Selangor.

“The original contract document [for the Penang LRT] allowed bidders to assemble and test only the first two of the 27 train car sets overseas. The rest are to be done locally, which required the bidders to include the cost of setting up a plant locally.

“This would have built local capability in ET sets for urban rail systems. But now, that is no longer a priority,” says the industry official.

According to MRT Corp, the move to seek clarification from the bidders on the localisation of train sets was done to better understand the cost drivers of the bidders’ commitment to localise the assembly and testing of train sets.

“The current levels of commitment reflected in the submissions are minimal. Understanding their explanation and cost drivers is important to us so that the localisation cost is not passed back to the government in the form of higher contract prices,” MRT Corp says in response to questions from The Edge.

On its need for clarification from the bidders on the matter of medium-capacity ET sets and lower technical requirements, MRT Corp explains that in designing the Penang LRT Mutiara Line, it future-proofed the civil infrastructure to cater for growth in ridership well beyond 30 years, with station platforms built to accommodate trains of up to 70m in length.

“However, operations will not begin at this maximum capacity. Instead, the strategy is to begin operations with a medium-capacity system, at GOA (Grade of Automation) Level 3, which allows operational and cost efficiency while ensuring the flexibility to scale up capacity as demand increases over time,” it says. (See full statement by MRT Corp).

In the original tender document, the requirement was for bidders to come up with the cost of having ET sets operating at GOA Level 4 (GOA4), which means entirely driverless trains. At GOA4 levels, the requirements for signalling are also higher.

A GOA3 system is also driverless but requires an attendant to be on board the vehicle. In addition, the requirements for signalling are relatively lower than those for a GOA4 system.

There are three packages for the Penang LRT project, which spans 29.5km across 21 stations. The first package, covering 24km from the reclaimed island to Komtar on Penang island, was awarded to a consortium led by Gamuda Bhd (KL:GAMUDA) for RM7.93 billion.

Gamuda has a 60% stake in the consortium while the remaining 40% is shared equally between Loh Phoy Yen Holdings Sdn Bhd and Ideal Property Development Bhd (KL:IDEAL).

The second package is the civil works for which seven consortiums have submitted their bids. This package was put out to tender in December last year with the initial closing date of April. The tender was finally closed in mid-June, with seven bidders.

The seven are Gamuda, YTL Group, MMC Engineering together with MMC Corp, a joint venture between Lion Pacific Sdn Bhd and WCT Holdings Bhd (KL:WCT), Dhaya Maju Infrastructure (Asia) Sdn Bhd, Berjaya Rail Sdn Bhd and Malaysian Resources Corp Bhd (KL:MRCB).

Sources say the Lion Pacific-WCT joint venture has submitted the lowest bid of about RM2.7 billion.

“Their price is the lowest. But the commercial proposal makes up 30% of the evaluation exercise. Some 70% is based on the technical package proposed by the bidders,” says a source.

Gamuda, Berjaya Rail, MMC Engineering and YTL Group are said to have submitted bids of between RM3 billion and RM3.3 billion.

“The technical proposal is being evaluated by MRT Corp currently and the outcome was supposed to be out by end-August. Now, the outcome is only likely to be out in October or November. This is following the latest deadline for the bidders to come back with the additional information — by the third week of September,” says a source.

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