By Stephanie Jacob
The Malaysian negotiators have secured a significantly higher threshold for participation in government procurement under the Trans-Pacific Partnership (TPP) Agreement, said the International Trade and Industry Ministry (Miti).
This effectively secures a substantial portion of government procurement to be exclusively for bumiputera contractors, though this will be lowered over time. The full text of the agreement was released to the public earlier this evening.
One of the major criticisms and cause for concerns from Malaysian detractors had been that the deal would affect the privileged position of bumiputera companies, state-owned enterprises and small and medium enterprises (SMEs). However, Malaysia was able to secure among the highest thresholds out of the 12 negotiating countries in the area of government procurement.
Upon entry into force, the threshold for TPP member participation in government construction services will only be allowed for above the special drawing rights (SDR) 63 million (RM374 million) level for the first five years.
The threshold will then be reduced over a 21-year transitional period before settling at SDR 14 million. The threshold level is only second to Vietnam.
Miti added that even for construction services, which are open to TPP members, 30% will be set aside for bumiputera contractors. Furthermore, it added that the government’s central contract programme and price preference for goods and services given to bumiputera suppliers and manufacturers will also be maintained.
Meanwhile, state-owned enterprises will be able to maintain their preferential purchase treatment of up to 40% from bumiputera, SMEs and companies from Sabah and Sarawak, while Petronas will be able to maintain its preference for domestic suppliers for up to 40% of its annual upstream and sales budgets. The national oil company will also be able to practice preferential treatment to when securing non-commercial assistance for specific projects, said Miti.
Felda Global Ventures will also retain the right to maintain its preferential purchase of goods from Felda members for commercial sale, said Miti, adding that Khazanah Nasional Bhd will be exempted from being subject to the investor-state dispute settlement mechanism for the first two years of TPP’s entry into force.
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