Hail to Dr. Zainal Aznam for standing up against short-sighted politicians!
The Malaysian government has set up a special purpose vehicle to provide manufacturers related to the implementation of the Ninth Malaysia Plan with reliable supply of resources, hopefully, cheaply:
THE government has set up a special purpose vehicle to directly bulk-buy building materials from manufacturers at fair prices so as to facilitate timely implementation of Ninth Malaysia Plan (9MP) projects.
This is in response to the repeated appeals by contractors that rising prices in steel bars and cement are hampering execution of government construction jobs.
To be launched this Friday by Finance Minister II Tan Sri Nor Mohamed Yakcop, Mavtrac Sdn Bhd will deal with steel bars, cement, diesel, bitumen, sand, agregrates, copper and aluminium. Mavtrac is parked under UEM Group Bhd and is wholly owned by Khazanah Nasional Bhd. [Mavtrac to help smoothen path for 9th Plan projects. Business Times. October 31 2007]
This sounds like a good idea; it is very much like the Australian model to provide discounted drugs to Australians which I have suggested for adoption by the Malaysian health system in hope of avoiding inefficient subsidies. Perhaps it is not too much to identity such entity as a benevolent monopoly. There is however one major difference between the former and the latter models — the latter is not an SPV.
One issue looms though: the goal of bulk-discount may encourage oversupply of resources in the local economy. The bias of buy, buy, buy is clearly visible. That however may not be the greatest danger: if ever, prices are to fall in the face of growing unsold inventories, who are going to purchase those inventories?
But with the Chinese economy at high speed moving forward, maybe one does not have to be overly worried. Mavtrac could always offer those resources to someone outside of the scope of the Ninth Malaysia Plan.
Or maybe, because Khazanah Nasional is behind it, one does not need to worry at all…
As far as I know, this is the second wholly-owned subsidiary of Khazanah. The first is an entity responsible to improve the local agricultural supply chain, which, I will leave to you to find out by yourselves.