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Prestariang Seek a Contract Payment of RM732M for the Unilateral Termination of SKIN by Government of Malaysia
15 Apr 2019
Corporate Communications
Press Release

Kuala Lumpur, April 15, 2019 – Prestariang SKIN Sdn Bhd (PSKIN), a subsidiary of Prestariang Berhad today filed a legal claim totalling RM732 million against the Government of Malaysia (GOM) for the GOM’s unilateral termination of the Sistem Kawalan Imigresen Nasional or SKIN project by way of expropriation. This sum payable is calculated based on the contractual formula provided in the CA which had been agreed to by the GOM.

Parties had engaged in a few rounds of negotiations but were unable to reach an amicable settlement on the quantum. As a last resort, the Board of Prestariang is now fiducially obligated and compelled to litigate for its contractual payment.

PSKIN secured a 15-year concession on August 9, 2017 to design, deliver, continuously maintain and provide scheduled upgrades for a new and much improved immigration and border control system for Jabatan Imigresen Malaysia. This would replace the existing Malaysian Immigration System (MyIMMS) but with added functionalities.

Under the Concession Agreement (CA), PSKIN was to receive approximately RM3.5 billion over the 15-year concession period, subject to the entire capital expenditure being privately funded by PSKIN. Payment to PSKIN by the GOM would only commence after SKIN is completely operational.

PSKIN had undertaken extensive technical studies and works on the project since 2014 and substantial amount of expenses have been incurred. PSKIN had also entered into numerous third-party contracts for the purpose of executing the SKIN project.

In its legal claim, PSKIN highlights that the CA clearly spells out the GOM’s obligations in the event the project is unilaterally terminated by way of expropriation. Prestariang wish to reiterate PSKIN has never defaulted on the CA. Despite the agreement for a 15-year concession, the GOM unilaterally terminated the CA by way of expropriation, which took effect on January 22, 2019. PSKIN strongly believes that the CA was fair and reasonable.

 

Backgrounder

1. In August 2017, Prestariang SKIN Sdn Bhd (PSKIN) signed a 15-year concession agreement (CA) with the Government of Malaysia (GOM) to implement a RM3.5 billion Sistem Kawalan Imigresen Nasional (SKIN) or border protection project.

2. Prior to being awarded the contract, PSKIN had to undergo three years of comprehensive technical, commercial and legal evaluation by Ministry of Home Affairs and other relevant Government agencies including Jabatan Imigresen Malaysia (JIM), Malaysian Administrative Modernisation and Management Planning Unit (MAMPU), Unit Kerjasama Awam Swasta (UKAS), Economic Planning Unit (EPU), Ministry of Finance (MOF) and the Attorney General’s Chambers (AGC).

3. In December 2018, PSKIN received a letter from the Home Ministry confirming the Cabinet’s decision to terminate the SKIN project by way of expropriation. The termination took effect on January 22, 2019.

4. PSKIN is not in default of the CA and is entitled to payment based on the formula set out in the agreement.

5. PSKIN in a media statement dated January 22, 2019 clarified that the key payment terms of SKIN were not financially burdensome to the GOM. PSKIN was to finance, build and operate SKIN for 15 years before transferring it to the GOM.

6. The SKIN project is a self-funded project which could have generated new income and created savings for the GOM.





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