MoT clarifies new vehicle inspection appointments – chosen based on financial stability, not age/experience

The ministry of transport’s (MoT) appointment of three new non-Puspakom vehicle inspection companies on Friday led to lots of speculation on why those specific firms – which apparently had either only been recently incorporated or had no experience in vehicle inspections – were awarded contracts. The said ministry has now come out to explain its selection process, insisting that it was based on financial stability.

As previously reported, 12 companies sent proposals for becoming motor vehicle inspection service (PPKM) suppliers before the October 31 deadline. All applications were evaluated according to procedures outlined in the Treasury Circular 2.8 – Procurement Procedures through Requests for Proposals (RFP) that has been in effect since November 29, 2022, MoT said.

It added that the selection of companies were based on the guidelines set under the Road Transport Act 1987 (Act 333), including eligibility requirements, procedures, regulations and standards that can be found on the MoT and road transport department’s (JPJ) websites since April 23.

Among the main requirements for the companies entering the RFP process included being registered and licensed with the companies commission of Malaysia (SSM) and local authorities, having a minimum paid-up capital of RM10 million throughout the length of service, and having a minimum working capital of RM5 million per year.

They must also obtain a standards compliance certificate from the standards department within two years of the offer date, provide a minimum five per cent deposit or bond from their working capital, obtain an approved facility certificate from the environmental department before licensing, and be registered as a member of the International Motor Vehicle Inspection Committee (CITA) within two years of the date of licensing.

Their shareholders, owners and board of directors also cannot have any pending court proceedings or actions or be blacklisted by any authorities. The evaluation and licensing committee found that the three selected companies – Wawasan Bintang, Pakatan Petroleum and Beriman Gold – fully met the stated criteria.

The ministry said that neither it nor JPJ set the period of the companies being registered with SSM as a requirement, instead giving priority to their financial stability based on their ability to provide sufficient paid-up capital and working capital.

It added that since 1994, Puspakom had hitherto been the only company mandated to conduct vehicle inspections under the Road Transport Act 1987. As such, no other companies could have had the experience in carrying out Puspakom’s functions before.

As for the locations of the service providers, MoT said it determined those based on a “cross subsidy” concept, whereby companies were delegated both low- and high-capacity areas. This prevents any company from only choosing locations with high volume and ensures all users nationwide get access to vehicle inspection services. It also stressed that the locations were distributed to the companies by MoT and JPJ; they were not selected by the companies themselves.

The ministry reiterated that the offer letters awarded to the selected companies on Friday were conditional approvals. This requires each firm to ready the necessary infrastructure, equipment, manpower and other requirements within 24 months (two years) before the MoT and JPJ will even issue operating licenses.

As such, the government will not be financially burdened by this approach, it said; it will not grant the operating licence if the companies fail to meet the conditions within the specified period. The procurement process, MoT added, was carried out based on the procurement and financial procedures in force to ensure quality, transparent, and competitive vehicle inspection services for the benefit of the rakyat.

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