MINISTRY OF FINANCE

MALAYSIA

PROCUREMENT REFORM
PROGRAM OF
MALAYSIA
Asia Pacific Procurement Partnership Initiative (PPI)
1st East/Southeast Asia Sub-Regional Meeting

Mr. Kumaresan Karuppiah

Government Procurement Division
Ministry of Finance Malaysia
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 GP PRINCIPLES :
1) Public Accountability 4) Open & Fair Competition
2) Transparency 5) Fair Dealing
3) Value for Money

Supplies & Below RM50,000

Services - Open to all. Registration with MOF is not required
Direct Purchase/
Direct Appointment Below RM20,000
Works
- Open to Class F Bumiputera contractors

Rotation/ Above RM20,000 to RM100,000 (With Schedule of Rates)

GP REGIME

Works
Ballot - Open to Class F Bumiputera contractors

i) Above RM50,000 to RM100,000 - Open amongst to Bumiputera companies/manufacturers

Supplies &
Services ii) Above RM100,000 to RM500,000 - Open to Bumiputera & Non Bumiputera companies/
manufacturers. Margin of Preference (MOP) for Bumiputera to be applied
Quotation
i) Above RM20,000 to RM200,000 (Without Schedule of Rates) - Open to Class F Bumiputera
Works contractors
ii) Above RM200,000 to RM500,000 - Open to Class E contractors

Above RM500,000
Supplies &
- Open to Bumiputera & Non Bumiputera companies/manufacturers.
Services
- Margin of Preference (MOP) for Bumiputera to be applied
Tender
Above RM500,000
Works
- Open to Class A/B/C/D contractors, based on respective threshold value of class

GP POLICIES :

1) Policy & Preferences for Bumiputera in Government Procurement

2) Local Content/Product/Services Usage Policy in Government Procurement
3) Imported Product Procurement Policy via Free on Board
4) Offsets Policies and Technology Transfers
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Note: Registration with MOF/PKK/CIDB is required unless stated above
 KEY CHALLENGES IDENTIFIED

Contractors/Consultants

- Cost overruns
- Inefficiency, lack of commitment
- Delayed projects
(definition of sick projects: delay exceeding 2
months or 20% of schedule)
- Sub-contracting
- Prices quoted too low leading to variation
orders
- Quality of works not satisfactory

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 KEY CHALLENGES IDENTIFIED

Contractors/Consultants (Cont’)

- Financial/cash flow problems

- Unable to secure Performance Bonds
- Too dependent on Government
- Fraud/corrupt practices
- Lack of professionalism
> Failure to advice properly
> Failure to supervise
> Inexperienced
> Poor/Over designing
> Not completing studies on time

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 KEY CHALLENGES IDENTIFIED

Government

- Poor project management

- Lack of technical capacity/experience
- Poor coordination
- Delay in payment
- Fraud/corrupt practices

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 E-PROCUREMENT STATUS

- Supply & Services

> eProcurement*
> eBidding*
> System developed by Commerce Dot Com
Pt. Ltd. under BOT
* fully implemented nationwide

- Works
> National eTendering Initiatives (NeTI)*
* in pilot stage

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eProcurement will achieve RM10 billion worth of procurement value by 2010 onwards

 RM23.2b worth of procurement value

12,000 1,000,000
since 2000 to Dec 2009
Millions

 2,509 Procurement Offices eP-enabled LPO 900,000 LPO 900,000 LPO 900,000
900,000
RM 10,000M RM 10,000M RM 10,000M
10,000  69,567 eP-enabled Suppliers LPO 805,046
800,000
RM 9,093M

700,000
8,000 Note :
Year 2000 (No Of LPO : 13 Transaction Amount :
RM0.04m) 600,000
LPO 514,292
Year 2001 (No Of LPO : 36 Transaction Amount :
RM0.07m) RM 6,017M
6,000 500,000

LPO 326,641 400,000

RM 3,857M
4,000
300,000

LPO 170,169
RM 2,006M 200,000
2,000
LPO 107,033
RM 1,089M
100,000
LPO 44,306
LPO 295 LPO 11,016 RM 316M
RM 3M RM 77M
0 0
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Value (RM) Number of LPO

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eBidding Module has been awarded and earned recognitions in many
accolades at national and international levels

“Jury Award” under “G2B Initiative of The Year”

Among 10 Finalists under “Best of

eGovernment & Services” Category
2009

Among 20 Finalists out of 158 submissions under

ANUGERAH KUALITI “Anugerah Inovasi Perkhidmatan Awam
SEKTOR AWAM 2009
(AIPA)” Category
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 • eP has delivered tremendous change in Government procurement
from merely modernisation of transactional activities towards a
responsive Government reflecting value-for-money procurement.
• eP will continue to be enhanced and will play a strategic and
prominent role in managing Government funds.

Value

• System • Enterprise
integration & Resource and
efficiency Inventory
• Order
• PO admin • Price focused • Business Management
efficiency &
focused • Bidding & Intelligence
controls
• Order Negotiating • Mature Supplier • Objective
• Supplier
expediting • Delivery & relationships driven
involvements
• Compliance Quality • Stakeholder decisions
in
improvements partnerships

Transactional Commercial Proactive Strategic Class-Leading

Time

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PROFESSIONALISM & TRAINING INITIATIVES

- Training of Trainers (TOT) by MOF

- Training conducted by National Institute of

Public Administration (INTAN)

- Training conducted by Ministries themselves

- Overseas study visit

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 LEGAL REFORMS

- Review of;
> Treasury Instructions (revised in 2008)
> Treasury Circular Letters (
> Treasury Central Contracts Circulars

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 LEGAL&
Guidelines REFORMS
Procedures
No. Title Remarks

1. Treasury Instruction Revised on 21 July 2008

3. Treasury Circular Letter on Guidelines In Effective on

Government Procurement Management on 24 April 2008
Tender
2. Treasury Circular Letter on Threshold and Effective on
Conditions of Direct Purchase for Supply & 19 December 2007
Services
4. Treasury Circular Letter on Changes On Effective on
Threshold Value And Quotation Procedures 24 February 2009
5. Treasury Circular Letter on Threshold Values, Effective on
Authority And Responsibilities Of Agencies’ 1 September 2009
Tender Board

6. Treasury Circular Letter on Disciplinary Effective on

Actions on Companies & Consultant Firms 23 July 2010
Registered Under MOF 12
 OTHER INITIATIVES

- Industrialized Building System

> Cleaner environment
> Lower dependance on foreign workers

- Green Procurement
> Just embarking
> Energy saving
> Environmental friendly
> Energy Performance Contract

- Transparency/competitive bidding
> MyProcurement Portal
> Integrity Pact

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