A-G’s report: ECER development audit reveals missed targets, unfilled industrial plots due to management weakness

KUALA LUMPUR, July 4 — The 2024 Auditor-General’s Report tabled at the Dewan Rakyat today revealed a total of 109 projects and programmes in the East Coast Economic Region (ECER) spanning Malaysia Plans 9 to 12 were scrutinised, revealing that 99 initiatives (90.8 per cent) were continued, while 10 (9.2 per cent) were not implemented as planned.

According to the report, among those continued, 77 projects and programmes (77.8 per cent) have been successfully completed, while 22 (22.2 per cent) are still in progress.

“Of the completed projects, 67 (87 per cent) met their designated timelines, underscoring effective project management, although 10 projects (13 per cent) faced delays,” the report said.

Further analysis of the audit on 10 projects worth RM1.699 billion, which were completed late, revealed that 39 extensions of time (EOT) were granted, ranging from 12 to 178 days.

Additionally, specific liquidated and ascertained damages (LAD) amounting to RM3.87 million were imposed.

“The audit analysis also found that three out of 22 projects and programmes are in the planning stage, 11 projects are in the design phase, and eight projects are in the construction phase, with construction progress ranging from 4.6 per cent to 93.7 per cent,” it said.

The report then revealed that five projects have been granted 16 (EOT), ranging from 17 to 734 days, while five projects incurred specific liquidated and ascertained damages (LAD) totalling RM0.81 million from the 22 projects.

“10 out of 109 projects were not implemented after initial assessment, involving expenditures amounting to RM30.44 million. The initial assessment was conducted to determine whether these projects could be continued or discontinued by the East Coast Economic Region Development Council (ECERDC).

“Reasons for discontinuation included unsuitable locations, investor-related issues, budget constraints, and project cancellation,” it added.

As for the implementation status for 17 sampled projects and programmes until December 31, 2022, the report found that eight projects and programmes were completed within their designated implementation periods, accounting for 47.1 per cent of the total.

Six projects are currently in various stages of implementation, including one in consultation, four in design, and one in construction, totalling 35.3 per cent.

Additionally, three projects, with a combined cost of RM4.13 million, were not continued, constituting 17.6 per cent of the sampled projects and programmes.

The government has allocated a total of RM8.015 billion to ECERDC for implementing projects and programmes under 9MP to 12MP. Out of this approved amount, RM6.762 billion (84 per cent) had been received as of December 31, 2022.

Of the received funds, RM6.557 billion (97 cent) has already been spent, while a balance of RM204.11 million (3 per cent) remains unspent.

“These funds are allocated for projects still in planning, ongoing implementation, or where final accounts are being finalised despite project completion,” it said.

The report also revealed that while both phases of Phase 1A and 1B were planned for the Integrated Fisheries Park Project at Tok Bali, only one plot is currently in use, with the other 13 plots vacant since their transfer to Malaysian Fisheries Development Authority (LKIM) in 2017.

As of 2017, only one plot is occupied in the Malaysia-China Kuantan Industrial Park (MCKIP 3) project covering 1,786.20 acres costing RM178.76 million while the remaining 18 plots remain vacant out of 19 industrial plots.

“An audit found that revenue generated by MCKIP 3 until February 2023 was RM2.54 million (1.4 per cent of the total allocation), with maintenance costs reaching RM28.39 million from 2019 to September 2023,” it said.

The report also revealed that the Biopolymer Park Kertih (KBP) Phase 1 to 3 development project, spanning 619.15 acres with a total cost of RM608.07 million as of December 31, 2022, has only four occupied industrial plots, with six plots remaining vacant since 2022 out 10 industrial plot.

Further audit findings revealed that revenue generated from the KBP project as of February 2023 amounted to RM2.20 million (0.4 per cent) of the total allocation.

The report recommends that the economy ministry, ECERDC, and related parties review ECERDC’s objectives, functions, and roles to ensure that planned projects and programmes prioritise current needs, effectively benefit target groups, and maintain government returns.

Additionally, it also suggests establishing measurement methods and creating a socio-economic achievement database to assess poverty rates and income levels in ECER, thereby ensuring ECERDC achieves its establishment objectives.

“Conducting engagement sessions with all stakeholders to develop strategies and boost promotional activities is advised to attract investors to industrial plots and Parent Companies for the Agropolitan project,” the report added.