Problems relating to Trade and Investment on Malaysia
25. Government Procurement |
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Issue |
Issue details |
Requests |
Reference |
| (1) Expulsion of Foreign Capital from Government Tender | - Enterprises majority owned by foreign capital are closed out from bidding for governmental procurement, as GOM by tradition restricts its procurement only from Bumiputera enterprises (Malaysian enterprises operated by Bumiputera Malaysians). Because of this, MFS makes sales through Bumiputera enterprises, with accompanying difficulties, such as slow payment, etc. | - It is requested that GOM allows FFEs to sell goods to ministries and agencies. | - Government procurement from Bumiputera enterprises is a long- standing convention. |
| (Action) - Malaysia is not a signatory to the WTO Agreement on Government Procurement. - On 14 September 2013, Prime Minister Najib announced the Malaysian and the Bumiputeras' Socio-Economic Development Programmes comprising of 5-Measures. As one of the main Measures, Prime Minister Najib directed Government-Linked Companies (GLCs) to increase procurement from Bumiputera enterprises for inclusion into the CEOs' key performance index (KPI).The Bumiputera Economic Council (MEB) directly reporting to Prime Minister Najib was established for it to serve as the propelling organisation, (7 October 2013 JETRO Business News). |
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| (2) Prioritising Indigenous Operators in Tender | - With certain exceptions, in procurement of services or goods relative to the petroleum operation, it is necessary to use the limited operators licenced or authorised by Petronas. In many cases, eligible operators are restricted. The requirement for use of the domestic operators pushes up the procurement prices. | - It is requested that GOM deregulates the restrictions in government tender to accept bidding by not only by (Malaysian capitalised) local enterprises operators but also by enterprises supplying products at competitive prices in the open general market. | - The Production Sharing Contract (PSC) - Petronas Model Procurement Rule (GSCM-PGA-01) |
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