CONFORMED COPY

LOAN NUMBER 1214 MA

LOAN AGREEMENT

(Second Kuala Lumpur Urban Transport Project)

between

MALAYSIA

and

INTERNATIONAL BANK FOR RECONSTRUCTIONAND DEVELOPMENT

Dated March 11, 1976

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LOAN AGREEMENT

AGREEMENT, dated March 11, 1976, between MALAYSIA (herein-

after called the Borrower) and INTERNATIONAL BANK FOR RECON-

STRUCTION AND DEVELOPMENT (hereinafter called the Bank).

WHEREAS (A) The Borrower has requested the Bank to assist

in the financing of the Project described in Schedule 2 to this

Agreement by making the Loan as hereinafter provided;

(B) The Project will be carried out by the Borrower, the

City of Kuala Lumpur and the Urban Development Authority with

the Borrower's assistance and, as part of such assistance, the

Borrower will make available to the City of Kuala Lumpur and the

Urban Development Authority, part of the proceeds of the Loan

as hereinafter provided; and

(C) The Bank is willing to make the Loan available upon

the terms and conditions set forth hereinafter and in a project

agreement of even date herewith between the Bank, the City of

Kuala Lumpur and the Urban Development Authority;

NOW THEREFORE the parties hereto hereby agree as follows:

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ARTICLE I

General Conditions; Definitions

Section 1.01. The parties to this Agreement accept all the

provisions of the General Conditions Applicable to Loan and Guar-

antee Agreements of the Bank, dated March 15, 1974, with the same

force and effect as if they were fully set forth herein (said

General Conditions Applicable to Loan and Guarantee Agreements

of the Bank being hereinafter called the General Conditions).

Section 1.02. Wherever used in this Agreement, unless the

context otherwise requires, the several terms defined in the

General Conditions have the respective meanings therein set forth

and the following additional terms have the following meanings:

(a) "Project Agreement" means the agreement between the

Bank and the City of Kuala Lumpur and the Urban Development

Authority of even date herewith, as the same may be amended from

time to time, and such term includes all schedules to the Project

Agreement and all agreements supplemental to the Project Agreement;

(b) "KLC" means the City of Kuala Lumpur;

(c) "UDA" means the Urban Development Authority of the

Borrower;

(d) "TMD" means the Traffic Management Department of KLC;

(e) "HP & PTU" means the Highway Planning and Public Trans-

port Unit of the Borrower's Ministry of Works and Transport;

-3-

(f) "Project Area" means the Federal Territory, Petaling

Jaya and other parts of the State of Selangor referred to as the

'"study area" in the final report on the Urban Transport Policy

and Planning Study for Metropolitan Kuala Lumpur executed by the

Borrower in 1973 and 1974; and

(g) "M$" means Malaysian dollars, the currency of the

Borrower.

-4-

ARTICLE II

The Loan

Section 2.01. The Bank agrees to lend to the Borrower, on

the terms and conditions in the Loan Agreement set forth or

referred to, an amount in various currencies equivalent to twenty-

six million dollars ($26,000,000).

Section 2.02. The amount of the Loan may be withdrawn from

the Loan Account in accordance with the provisions of Schedule 1

to this Agreement, as such Schedule may be amended from time to

time by agreement between the Borrower and the Bank, for expenditures

made (or, if the Bank shall so agree, to be made) in respect of

the reasonable cost of goods and services required for the Project

and to be financed out of the proceeds of the Loan.

Section 2.03. The Closing Date shall be June 30, 1981 or such

later date as the Bank shall establish. The Bank shall promptly

notify the Borrower of such later date.

Section 2.04. The Borrower shall pay to the Bank a commitment

charge at the rate of thrce-fourths of one per cent (3/4 of 1%)

per annum on the principal amount of the Loan not withdrawn from

time to time.

Section 2.05. The Borrower shall pay interest at the rate of

eight and one-half per cent (8-1/2%) per annum on the principal

amount of the Loan withdrawn and outstanding from time to time.

5

Section 2.06. Interest and other charges shall be payable

semi-annually on June 1 and December 1 in each year.

Section 2.07. The Borrower shall repay the principal of the

Loan in accordance with the amortization schedule set forth in

Schedule 3 to this Agreement.

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ARTICLE III

Execution of the Project

Section 3.01. (a) Without any limitation or restriction upon

any of its other obligations under the Loan Agreement, the Borrower

shall carry out Parts B(i) and C(i)(b), (i)(c), (i)(d) and (ii)(b)

of the Project, together with KLC carry out Part A of the Project,

and together with KLC and UDA carry out Part C(i)(a) of the Project,

and cause KLC and UDA to perform in accordance with the provisions

of the Project Agreement all the obligations therein set forth,

shall take and cause to be taken all action, including the pro-

vision of funds, facilities, services and other resources, neces-

sary or appropriate to carry out the Project and to enable KLC

and UDA to perform such obligations, and shall not take or permit

to be taken any action which would prevent or interfere with such

performance.

(b) The Borrower shall make appropriate parts of the proceeds

of the Loan available to KLC and UDA under arrangements to be en-

tered into between the Borrower, KLC and UDA, under terms and con-

ditions satisfactory to the Borrower and the Bank.

(c) The Borrower shall exercise its rights under the arrange-

ments referred to in paragraph (b) above in such manner as to

protect the interests of the Borrower and the Bank and to accomplish

the purposes of the Loan.

-7-

Section 3.02. (a) In order to assist the Borrower in carrying

out or causing to be carried out Part C of the Project, the Borrower

shall employ or cause to be employed consultants whose qualifica-

tions, experience and terms and conditions of employment shall be

satisfactory to the Borrower and the Bank.

(b) The Borrower shall employ advisors to HP & PTU acceptable

to the Borrower and the Bank and on terms and conditions satisfac-

tory to the Borrower and the Bank.

Section 3.03. Except as the Bank shall otherwise agree, thegoods, works and services (other than consultants' services) forthe Project to be financed out of the proceeds of the Loan, shall

be procured in accordance with the provisions of Schedule 4 to

this Agreement.

Section 3.04. The Borrower shall cause HP & PTU to: (i) have

the accounts and financial statements (balance sheets, statements

of income and expenses and related statements) of the Project foreach fiscal year audited, in accordance with appropriate auditing

principles consistently applied, by the Auditor General of halaysia

or other independent auditors acceptable to the Bank; (ii) furnishto the Bank as soon as available, but in any case not later than

nine months after the end of each such year, (A) certified copies

of such financial statements for such year as so audited and (B)

the report of such audit by said auditors, of such scope and in

such detail as the Bank shall have reasonably requested; and (iii)

furnish to the Bank such other information concerning the accounts

an.- financial statements of the Project and the audit thereof as

the Bank shall from time to time reasonably request.

-8-

Section 3.05. The Borrower shall cause HP & PTU to prepare

and submit to the Bank quarterly progress reports on the Project

in a form satisfactory to the Bank.

Section 3.06. The Borrower shall implement a program acceptable

to the Bank to abolish in phases and within four years of the date

of this Agreement the bus seat tax.

Section 3.07. The Borrower shall promptly transfer to KLC

at no more than nominal cost such land in the ownership oi the

Borrower as is required for the Project and shall ensure that KLC

shall be able promptly to acquire other land required for the

Project.

Section 3.08. The Borrower shall implement as part of the

Project, lanes, routes and priorities for high-occupancy vehicles,

and shall not substantially modify them without prior exchange

of views with the Bank.

Section 3.09. The Borrower shall, together with KLC, monitor

and evaluate the progress of Parts A and B(i), (ii) and (iii) of

the Project, in accordance with the performance indicators and

targets set forth in Part 1 of Schedule 5 to this Agreement.

Section 3.10. The Borrower shall take the necessary measures

to enable KLC to carry out its obligations under Section 2.07 of

the Project Agreement.

Section 3.11. The Borrower shall tak2 measures to review

annually the structure and levels of permitted bus and mini-bus

99

fares and make such adjustments as may be necessary to permit

services required by users to be provided on a commercial basis.

Section 3.12. The Borrower shall take measures to ensure that

applications for licenses to operate a sufficient number of public

transport vehicles to implement the Project and achieve its obje"--

tives shall be approved.

Section 3.13. The Borrower shall place, or cause to be placed,

the cash surplus generated by Part B(iv) of the Project, including

all revenues from sales of land, in a separate fund and shall use

all proceeds in such fund exclusively to finance sites and services

and squatter area upgrading projects.

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ARTICLE IV

Other Covenants

Section 4.01. (a) It is the policy of the Bank, in making

loans to, or with the guarantee of, its members not to seek, in

normal circumstances, special security from the member concerned

but to ensure that no other external debt shall have priority over

its loans in the allocation, realization or distribution of foreign

exchange held under the control or for the benefit of such member.

To that end, if any lien shall be created on any public assets

(as hereinafter defined), as security for any external debt, which

will or might result in a priority for the benefit of the creditor

of such external debt in the allocation, realization or distribution

of foreign exchange, such lien shall, unless the Bank shall other-

wise agree, ipso facto and at no cost to the Bank, equally and

ratably secure the principal of, and interest and other charges on,

the Loan, and the Borrower, in creating or permitting the creation

of such lien, shall make express provision to that effect; provided,

however, that, if for any constitutional or other legal reason such

provision cannot be made with respect to any lien created on assets

of any of its political or administrative subdivisions, the Borrower

shall promptly and at no cost to the Bank secure the principal of,

and interest and other charges on, the Loan by an equivalent lien

on other public assets satisfactory to the Bank.

(b) The foregoing undertaking shall not apply to: (i) any

lien created on property, at the time of purchase thereof, solely

as security for payment of the purchase price of such property;

and (ii) any lien arising in the ordinary course of banking

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transactions and securing a debt maturing not more than one year after

after its date.

(c) As used in this Section, the term "public assets" means

assets of the Borrower, of any political or administrative sub-

division thereof and of any entity owned or controlled by, or

operating for the account or benefit of, the Borrower or any such

subdivision.

Section.4.02. The Borrower shall, (a) not later than July 1,

1976 or such other date as may be agreed between the Borrower and

the Bank, together with KLC establish, or cause to be established

by KLC, an appropriately staffed task force provided with appro-

priate specialist services, to carry out development policy analy-

) sis, broad spatial planning, capital programming and project reviews

in the territory under the jurisdiction of KLC;

(b) not later than September 1, 1976 or such other date as

may be agreed between the Borrower and the Bank, prepare or cause

to be prepared, after exchanging views with the Bank, a detailed

two-year work program, including terms of reference for the spe-

cialist services, for the task force referred to in paragraph (a)

of this Section;

(c) prepare or cause to be prepared recommendations on an

institutional framework and processes suitable over the longer

term for the continuation of the work described in paragraph (a)

of this Section and for decision-making; and

I

-12 0

(d) cause the task force referred to in paragraph (a) of

this Section, or the long-term institutional framework referred

to in paragraph (c) of this Section, to prepare not later than

January 1, 1978 or such other date as may be agreed between the

Borrower and the Bank, a ten-year spatial development plan and

five-year capital budget for the territory under the jurisdiction

of KLC.

-13 -

ARTICLE V

Remedies of the Bank

Section 5.01. For the purposes of Section 6.02 of the General

Conditions the following additional events are specified pursuant

to paragraph (k) thereof:

(a) KLC or UDA shall have failed to perform any covenant,

agreement or obligation of KLC or UDA, respectively, under the

Project Agreement.

(b) An extraordinary situation shall have arisen which shall

make it improbable that KLC or UDA will be able to perform its* obligations under the Project Agreement.

(c) The Federal Capital Act 1960 and Law No. 46 of 1971 of

the Borrower shall have been amended, suspended, abrogated, re-

pealed or waived in such a way as to materially and adversely affectthe ability of KLC and UDA to carry out the covenants, agreements

and obligations set forth in the Project Agreement.

(d) The Borrower or any other authority having jurisdiction

shall have taken any action for the dissolution or disestablishment

of KLC or UDA or for the suspension of its operations.

Section 5.02. For the purposes of Section 7.01 of the General

Conditions, the following additional events are specified pursuant

to paragraph (h) thereof:

- 14 0

(a) the event specified in paragraph (a) of Section 5.01 of

this Agreement shall occur and shall continue for a period of 60

days after notice thereof shall have been given by the Bank to the

Borrower, KLC and UDA; and

(b) the events specified in paragraphs (c) and (d) of Sec-

tion 5.01 of this Agreement shall occur.

Si

- 15 -

ARTICLE VI

Effective Date; Termination

Section 6.01. The following events are specified as additional

conditions to the effectiveness of the Loan Agreement within the

meaning of Section 12.01(c) of the General Conditions:

(a) The execution and delivery of the Project Agreement on

behalf of KLC and UDA have been duly authorized or ratified by all

necessary corporate and governmental action; and

(b) The arrangements required under Section 3.01(b) of this

Agreement have been concluded by all necessary corporate and

governmental action.

Section 6.02. The following are specified as additional mat-

ters, within the meaning of Section 12.02(c) of the General Condi-

tions, to be included in the opinion or opinions to be furnished

to the Bank:

(a) That the Project Agreement has been duly authorized or

ratified by, and executed and delivered on behalf of, KLC and UDA,

and is legally binding upon KLC and UDA in accordance with its

terms; and

(b) That the arrangements concluded as required by Section

3.01(b) of this Agreement impose legally binding obligations upon

the Borrower, KLC and UDA, respectively, in accordance with their

terms.

- 16 -

Section 6.03. The date June 14, 1976 is hereby specified for

the purposes of Section 12.04 of the General Conditions.

0

- 17 -

ARTICLE VII

Representative of the Borrower; Addresses

Section 7.01. The Minister of Finance or Deputy Minister of

Finance of the Borrower or such other person as such Minister

shall appoint in writing are designated as representative of the

Borrower for the purposes of Section 11.03 of the General Conditions.

Section 7.02. The following addresses are specified for the

purposes of Section 11.01 of the General Conditions:

For the Borrower:

The Treasury* Kuala Lumpur 01-01

Malaysia

Cable address:

TREAS URYKuala Lumpur

For the Bank:

International Bank forReconstruction and Development

1818 H Street, N.W.Washington, D.C. 20433United States of America

Cable address:

INTBAFRADWashington, D.C.

- 18-

IN WITNESS WHEREOF, the parties hereto, acting through their

representatives thereunto duly authorized, have caused this Agree-

ment to be signed in their respective names in the District of

Columbia, United States of America, as of the day and year first

above written.

MALAYSIA

By /s/ Anaitullah Karim

Authorized Representative

INTERNATIONAL BANK FORRECONSTRUCTION AND DEVELOPMENT

By Is/ Gregory B. VotawActing Regional Vice President

East Asia and Pacific

-19 -

SCHEDULE 1

Withdrawal of the Proceeds of the Loan

1. The table below sets forth the Categories of items to be

financed out of the proceeds of the Loan, the allocation of the

amounts of the Loan to each Category and the percentage of expendi-

tures for items so to be financed in each Category:

Amount of theLoan Allocated % of(Expressed in Expenditures

Category Dollar Equivalent) to be Financed

(1) Civil works for new 13,6009000 35%roads, road improve-ments and trafficengineering and con-trol

(2) Equipment for traf- 2,800,000fic engineering andcontrol

(a) directly im- 100% of foreignported expenditures

(b) imported but 70% of local ex-locally pro- penditurescured

(c) locally manu- 100% of local ex-factured enditures (ex-

actory)

(3) Sites and Services 3,100,000 45%

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Amount of theLoan Allocated % of(Expressed in Expenditures

Category Dollar Equivalent) to be Financed

(4) Consulting Ser- 41,400,000 50%vices

(5) Unallocated 2,100,000

TOTAL 26,000,000

4*

-21 -

2. The disbursement percentages have been calculated in compli-

ance with the policy of the Bank that no proceeds of the Loan shall

be disbursed on account of payments for taxes levied by, or in the

territory of, the Borrower on goods or services, or on the importa-

tion, manufacture, procurement or supply thereof; to that end, if

the amount of any such taxes levied on or in respect of any item

to be financed out of the proceeds of the Loan decreases or in-

creases, the Bank may, by notice to the Borrower, increase or

decrease the disbursement percentage then applicable to such item

as required to be consistent with the aforementioned policy of the

Bank.

3. Notwithstanding the provisions of paragraph 1 above, no with-

drawals shall be made in respect of expenditures prior to the date

of this Agreement, except that withdrawals may be made in respect

of Categories (3) and (4) on account of expenditures incurred

after June 30, 1975 in an aggregate amount not exceeding the equiva-

lent of $800,000.

4. Notwithstanding the allocation of an amount of the Loan or the

disbursement percentages set forth in the table in paragraph 1 above,

if the Bank has reasonably estimated that the amount of the Loan

then allocated to any Category will be insufficient to finance the

agreed percentage of all expenditures in that Category, the Bank

may, by notice to the Borrower: (i) reallocate to such Category,

to the extent required to meet the estimated shortfall, proceeds

of the Loan which are then allocated to another Category and which

in the opinion of the Bank are not needed to meet other expenditures,

and (ii) if such reallocation cannot fully meet the estimated short-

fall, reduce the disbursement percentage then applicable to such

- 22 -

expenditures iv, order that further withdrawals under such Category

may continue until all expenditures thereunder shall have been

made.

5. If the Bank shall have reasonably determined that the pro-

curement of any item in any Category is inconsistent with the

procedures set forth or referred to in this Agreement, no expendi-

tures for such item shall be financed out of the proceeds of the

Loan and the Bank may, without in any way restricting or limiting

any other right, power or remedy of the Bank under the Loan Agree-

ment, by notice to the Borrower, cancel such amount of the Loan

as, in the Bank's reasonable opinion, represents the amount of

such expenditures which would otherwise have been eligible for

financing out of the proceeds of the Loan.

-23 -

SCHEDULE 2

Description of the Project

The Project is designed to enable more efficient use to be

made of existing and planned transport facilities and to initiate

a program of squatter area upgrading and sites and services devel-

opment in the Project Area. It consists of:

Part A: Formulating and implementing policy measures aimed at

improving public transport services and restraining the

uneconomic use of private cars, including revision of

bus fares, abolition of the bus seat tax, introduction

of mini-bus services, introduction of traffic priorities

for high-occupancy vehicles, increased parking charges

and area road pricing of low-occupancy vehicles.

Part B: (i) Construction of new roads according to design

standards described in the Annex hereto and

improvement of existing roads, except the

Inner Ring road.

(ii) Improvement of the Inner Ring road.

(iii) Construction of works and provision of equip-

ment for traffic engineering and control.

(iv) Development of sites and services and squatter

area upgrading in three phases, and the first

two phases shall be implemented as nearly as

possible as follows:

-24-

Phase 1 Phase 2 TotalPlots Gross acres Plots Gross acres Gross acres

Residential sites 414 26 330 23 49

Industrial sites 63 8 56 19 27

Commercial sites 10 1 10 1 2

Community facilities 1 1 3 7 8

Agricultural sites - - 18 25 25

Squatter area upgrading - - 2,100 160 160

Total 488 36 2,517 235 271

(v) Establishment and operation from January 1,

1976 to December 31, 1978 of a sites and

services and resettlement unit in UDA.

Part C: (i) Provision of the services of consultants (a)

for feasibility and engineering studies, and

for the supervision of construction work in

connection with Part B of the Project; (b) for

the preparation of an urban development project

in Kuantan; (c) for a study of water resource

development in Kuantan; and (d) for the prepara-

tion of a national sites and services program;

and

(ii) Provision of advisors (a) on traffic manage-

ment and (b) on public transport.

-25-

The Project is expected to be completed by June 30, 1980.

- 26 -

ANNEX TO SCHEDULE 2

Design Standards for New Roadsand Interchange Ramps

ROADS RAMPS

Cross Sections

Pavement Width 1 lane 3.5 m (11.5 ft) 4.25 m (14.0 ft)2 lane 7.0 m (23.0 ft) -3 lane 10.5 m (34.4 ft)

Normal Crossfall 2.5% 2.5%

Shoulder Width outer 2.5 m (8.2 ft)inner .75 m (2.5 ft) .75 m (2.5 ft)

Normal Crossfall 4% 4%

Verge 1.0 m (3.3 ft) 1.0 m (3.3 ft)

Median Width 8.5 Tr (27.0 ft)

Horizontal Alignment

Design Speed 50 m..p.h. 25 m.p.h.20 m.p.h. (min)

Minimum Radius desirable 243.8 m (800 ft) 45.7 m (150 ft)absolute - 27.4 m (90 ft)

Maximum Rate ofSuperelevation 6.04 8.0%

Minimum Length ofTransition Spiral As required to develop superelevation

transition. The starting point ofsuperelevation transition and startingpoint of spiral (T.S.) are the same.

-27 -

ROADS RAMPS

Vertical Alignment

Maximum Grade desirable 4% 5%absolute 5% 8%

Minimum Grade desirable 0.5% 0.5%absolute 0.35% 0.35%

Minimum StoppingSight Distance 137.2 m (450 ft) 48.8 m (160 ft)

for 25 m.p.h.

36.6 m (120 ft)for 20 m.p.h.

Minimum Length ofVertical Curves 25 m.p.h. 20

m.p.h.

crest K=100 K=18 K=10sag K=75 K=24 K=16

Maximum RelativeGrade betweenEdges of Pave-ment in Devel-opment of Super-elevation 1% 1%

Vertical Clearancefor Structures 4.75 m (15.58 ft)

0

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SCHEDULE 3

Amortization Schedule

Payment of PrincipalDate Payment Due (expressed in dollars)*

June 1, 1981 260,000December 1, 1981 270,000June 1, 1982 280,000December 1, 1982 290,000June 1, 1983 305,000December 1, 1983 320,000June 1, 1984 330,000December 1, 1984 345,000June 1, 1985 360,000December 1, 1985 375,000June 1, 1986 390,000December 1, 1986 410,000June 1, 1987 425,000December 1, 1987 445,000June 1, 1988 460,000December 1, 1988 480,000June 1, 1989 500,000December 1, 1989 525,000June 1, 1990 545,000December 1, 1990 570,000June 1, 1991 595,000December 1, 1991 620,000June 1, 1992 645,000December 1, 1992 670,000June 1, 1993 700,000December 1, 1993 730,000June 1, 1994 760,000December 1, 1994 795,000June 1, 1995 825,000December 1, 1995 860,000

* To the extent that any portion of the Loan is repayable in acurrency other than dollars (see General Conditions, Section4.02), the figures in this column represent dollar equivalentsdetermined as for purposes of withdrawal.

-29-

Payment of PrincipalDate Payment Due (expressed in dollars)*

June 1, 1996 900,000December 1, 1996 935,000June 1, 1997 975,000December 1, 1997 1,020,000June 1, 1998 1,060,000December 1, 1998 1,105,000June 1, 1999 1,155,000December 1, 1999 1,205,000June 1, 2000 1,255,000December 1, 2000 1,305,000

* To the extent that any portion of the Loan is repayable in acurrency other than dollars (see General Conditions, Section4.02), the figures in this column represent dollar equivalentsdetermined as for purposes of withdrawal.

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Premiums on Prepayment

The following percentages are specified as the premiums pay-

able on repayment in advance of maturity of any portion of the

principal amount of the Loan pursuant to Section 3.05(b) of the

General Conditions:

Time of Prepayment Premium

Not more than three yearsbefore maturity 1%

More than three years butnot more than six yearsbefore maturity 2-1/4%

More than six years but notmore than eleven yearsbefore maturity 4%

More than eleven years but notmore than sixteen yearsbefore maturity 5-1/2%

More than sixteen years but notmore than twenty-one yearsbefore maturity 7-1/4%

More than twenty-one years butnot more than twenty-threeyears before maturity 8%

More than twenty-three yearsbefore maturity 8-1/2%

-31 -

SCHEDULE 4

Procurement

A. International Competitive Bidding

1. Except as provided in Part B hereof, goods, works and services

shall be procured under contracts to be awarded in accordance with

procedures consistent with those set forth in Part A of the "Guide-

lines for Procurement under World Bank Loans and IDA Credits" pub-

lished by the Bank in August 1975 (hereinafter called the Guidelines),

on the basis of international competitive biddiag.

2. Bidders for the works included in Part B(i), (ii) and (iii)

* of the Project shall be prequalified as described in paragraph 1.3

of Part A of the Guidelines.

B. Other Procurement Procedures

Civil works contracts for Part B(iii) and (iv) of the Project

shall be awarded in accordance with such local procedures of the

Borrower as are acceptable to the Bank.

C. Evaluation and Comparison of Bids for Goods; Preference forDomestic Manufacturers

1. For the purpose of evaluation and comparison of bids for the

supply of goods: (i) bidders shall be required to state in their

bid the c.i.f. (port of entry) price for imported goods, or the

ex-factory price for domestically-manufactured goods; (ii) customs

- 32-

duties and other import taxes on imported goods, and sales and

similar taxes on domestically-supplied goods, shall be excluded;

and (iii) the cost to the Borrower of inland freight and other

expenditures incidental to the delivery of goods to the place

of their use or installation shall be included.

2. Goods manufacturad in Malaysia may be granted a margin of

preference in accordance with, and subject to, the following

provisions:

(a) All biddin,7 documents for the procurement of goods shall

clearly indicate any preference which will be granted, the informa-

tion required to establish the eligibility of a bid for such pref-

erence and the following methods and stages that will be followed

in the evaluation and comparison of bids.

(b) After evaluation, responsive bids will be classified

in one of the following three groups:

(1) Group A: bids offering goods manufactured in Malaysia

if the bidder shall have established to the satisfac-

tion of the Borrower and the Bank that the manufac-

turing cost of such goods includes a value added

in Malaysia equal to at least 20% of the ex-factory

bid price of such goods.

(2) Group B: all other bids offering goods manufactured

in Malaysia.

(3) Group C: bids offering any other goods.

- 33 -

(c) All evaluated bids in each group shall be first compared

among themselves, excluding any customs duties and other import

taxes on goods to be imported and any sales or similar taxes on

goods to be supplied domestically, to determine the lowest evalu-

ated bid of each group. Such lowest evaluated bids shall then be

compared with each other, and if, as a result of this comparison,

a bid from group A or group B is the lowest, it shall be selected

for the award.

(d) If, as a result of the comparison under paragraph (c)

above, the lowest bid is a bid from group C, all group C bids

shall be further compared with the lowest evaluated bid from

group A after adding to the c.i.f. bid price of the imported goods

offered in each group C bid, for the purpose of this further com-

parison only, an amount equal to (i) the amount of customs duties

and other import taxes which a non-exempt importer would have to

pay for the importation of the goods offered in such group C bid,

or (ii) 15% of the c.i.f. bid price of such goods if said customs

duties and taxes exceed 15% of such price. If the group A bid in

such further comparison is the lowest, it shall be selected for

the award; if not, the bid from group C which as a result of the

comparison under paragraph (c) is the lowest evaluated bid shall

be selected.

D. Review of Procurement Decisions by Bank

1. Review of prequalification. The Borrover shall, befure quali-

fication is invited, inform the Bank in detail of the procedure

to be followed and shall introduce such modifications in said

procedure as the Bank shall reasonably request. The list of

- 34-

prequalified bidders, together with a statement of their qualifi-

cations and of the reasons for the exclusion of any applicant for

prequalification shall be furnished by the Borrower to the Bank

for its comments before the applicants are notified, and the Bor-

rower shall make such additions to, deletions from, or modifications

in, the said list as the Bank shall reasonably request.

2. Review of invitation to bid and of proposed awards and final

contracts:

With respect to all contracts for civil works estimated to

cost the equivalent of $200,000 and equipment estimated to cost

the equivalent of $100,000 or more:

(a) Before bids are invited, the Borrower shall furnish to

the Bank, for its comments, the text of the invitations to bid

and the specifications and other bidding documents, together with

a description of the advertising procedures to be followed for

the bidding, and shall make such modifications in the said docu-

ments or procedures as the Bank shall reasonably request. Any

further modification to the bidding documents shall require the

Bank's concurrence before it is issued to the prospective bidders.

(b) After bids have been received and evaluated, the Borrower

shall, before a final decision on the award is made, inform the

Bank of the name of the bidder to which it intends to award the

contract and shall furnish to the Bank, in sufficient time for

its review, a detailed report, by the consultants referred to

in Section 3.02 of this Agreement, on the evaluation and comparison

of the bids received, together with the recommendations for award

-35 -

of the said consultants and such other information as the Bank

shall reasonably request. The Bank shall, if it determines that

the intended award would be inconsistent with the Guidelines or

this Schedule, promptly inform the Borrower and state the reasons

for such determination.

(c) The terms and conditions of the contract shall not, with-

out the Bank's concurrence, materially differ from those on which

bids were asked or prequalification invited.

(d) Two conformed copies of the contract shall be furnished

to the Bank promptly after its execution and prior to the submission

to the Bank of the first application for withdrawal of funds from

the Loan Account in respect of such contract.

3. With respect to each contract to be financed out of the pro-

ceeds of the Loan and not governed by the preceding paragraph,

the Borrower shall furnish to the Bank, promptly after its execution

and prior to the submission to the Bank of the first application

for withdrawal of funds from the Loan Account in respect of such

contract, two conformed copies of such contract, together with

the analysis of bids, recommendations for award and such other

information as the Bank shall reasonably request. The Bank shall,

if it determines that the award of the contract was not consistent

with the Guideline.s or this Schedule, promptly inform the Borrower

and state the reasons for such determination.

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SCHEDULE 5

Key Performance Indicators

1. TRANSPORT

Estimated Estimated TargetsIndicator Objective 1975 Value 1980 1985

A(i):

Modal split Modal shift of 38% bus/ 48/52 53/47non-bus/bus 10% (absolute) 62% non-bustravel in peak to bus travel byperiods 1980 and a fur-

ther shift of 5%by 1985

A(ii):

Average private 10% increase by Car: 1.9 2.1 2.2car and taxi oc- 1980 and a fur-cupancy in peak ther 5% increaseperiods (persons by 1985per vehicle) Taxi: 1.1 1.2 1.3

B(i):

Average bus pas- 20% increase by 6.6 mph 7.9 8.7senger trip speed 1980 and a fur-throughout the ther 10% increaseday by 1985

B(ii):

Bus failures to Reduce to less 30% 10% 7%clear queues than 10% by 1980in peak periods(% buses toofull to take ontravellerswaiting atbus stops)

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2. SITES AND SERVICES

Indicator Objective and Target

C:

Average cost of low in- Should be (i) M$5,500 or less (1975 prices)come plot and house for 1200 square foot plots in Phase 1; (ii)

M$4,000 or less (1975 prices) for 1200 squarefoot plots in Phase 2; and (iii) M$5,500(1975 prices) or less for 1800 square footplots in Phase 2.

D:

Monthly household income Should be M$300 or less for 90% of house-of purchasers of low in- holds purchasing 1200 square foot plotscome plots (excluding and M$400 or less for 90% of householdsdisplaced squatters) purchasing 1800 square foot plots (1975 prices)

Number of employees Should through 1980 on the average increaseof businesses who have more rapidly than experienced on the previouspurchased and occupied sites over the past four years.plots

F:

Average household The income distribution within theincome community should not deteriorate,

and the average income should increase,relative to the Federal Territory average.