Discusses the legal requirements for selling to the host government, including whether the government has agreed to abide by the WTO Government Procurement Agreement or is a party to a government procurement chapter in a U.S. FTA. Specifies areas where there are opportunities.
Last Published: 8/26/2019

Government procurement refers to the acquisition of supplies, services and works in accordance with Malaysia’s current rules and regulations to achieve a set objectives. In line with good governance practices, the Malaysian Government has emphasized the importance of ensuring all Government procurement is conducted in compliance with the principles of public accountability, transparent, best value for money, open and fair competition, and fair dealing. To facilitate Government procurement’s planning and monitoring, any individual, company and corporate body that intends to participate in the Government procurement of supplies and services must register with the Ministry of Finance Malaysia (MOF), and for works, they must register with the Contractors Service Centre (Pusat Khidmat Kontraktor; PKK) and the Construction Industry Development Board Malaysia (CIDB), which are agencies under the Ministry of Works Malaysia.
The prime objective of the Malaysian Government procurement is to support government programs by obtaining value for money through acquisition of works, supplies and services. The benefits or value from procurement are always aligned to provide support for the achievement of a developed nation status and to: 

  • stimulate the growth of local industries through the maximum utilization of local materials and resources;

  • encourage and support the evolvement of Bumiputra (indigenous) entrepreneurs in line with the nation's aspirations to create Bumiputra Commercial and Industrial Community;

  • increase and enhance the capabilities of local institutions and industries via transfer of technology and expertise;

  • stimulate and promote service oriented local industries such as freight and insurance; and

  • accelerate economic growth whereby Government procurement is used as a tool to achieve socio-economic and development objectives.

The Government of Malaysia categorizes procurement into the following:

  • Works:  Works contracts include construction and engineering activities involving infrastructure and structures such as buildings, airports, roads/highways, dams, drainage etc. It is also inclusive of mechanical and electrical aspects of works.

  • Supplies:  Supplies include the supply of raw, intermediate or finished goods and products for any activity of users. Also included are construction materials, food products, uniforms, vehicles, equipment, spare parts, and furniture.

  • Services:  Services include engagement of manpower, expertise and consultants in the areas of feasibility studies, research, designing, surveying, and management. Other services such as repairs, maintenance and cleaning services are minor activities under this category.

All the above categories can be procured via:

  • Direct Purchase: This procedure allows procurement of supplies and services up to the value of RM50,000 directly through the issue of a Government Order to any known suppliers of goods or services consistently supplying goods at acceptable quality and reasonable price. Procurement of works valued up to RM20,000 may be through the issue of a Works Indent to a contractor who is registered with the Contractors Services Centre (PKK) and Construction Industry Development Board (CIDB) Malaysia.

  • Tender:  Procurement of works, supplies and services above the value of RM500,000 must be done through tender processes. All contractors intending to participate in local tenders must be registered with the Government. International tenders will be invited for supplies and services if there are no locally produced supplies or services available. For specific works, if local contractors do not have the expertise and capability, tenders may be called on a joint venture basis between local and foreign contractors to encourage the transfer of technology. International tenders for works may only be called when local contractors do not have the expertise and capability, and a joint venture is not possible.

  • Registered Contractors:  All individuals, companies or corporate bodies intending to participate in Government procurement are required to registere with the Malaysian Ministry of Finance and relevant Ministries/Agencies.  The registration process ensures that all companies or contractors are bona fide, truly committed in the relevant business fields and possesses the capability to carry out works or supply and provide the services.

 After the recent government transition, there were calls from the private sector for an amendment or revision to the current public proceurement law with more  transparency and integrity incorporated into the procurement process.  Most of these objections were over the rampant usage of negotiated tenders for government projects.  These concerns have led to the proposed procurement legislation that the government plans to present in Parliament in 2019.  This new legislation  will govern procurement processes to ensure transparency and competition while punishing abuse of power, negligence and corruption.

U.S. Commercial Service Liaison Offices at the Asian Development Bank and World Bank
The Commercial Service maintains Commercial Liaison Offices in each of the main Multilateral Development Banks, including the Asian Development Bank and the World Bank. These institutions lend billions of dollars in developing countries on projects aimed at accelerating economic growth and social development by reducing poverty and inequality, improving health and education, and advancing infrastructure development. The Commercial Liaison Offices help American businesses learn how to get involved in bank-funded projects, and advocate on behalf of American bidders. Learn more by contacting the Commercial Liaison Offices to the  Asian Development Bank and the World Bank.  The new Malaysian government which was elected in May 2018, has announced new directions towards economic restricting and enhanced productivity.  Under the 11th Malaysia Plan, the country aims to reach high-income status by 2020, but initiatives to achieve this goal have encountered challenges.  In September 2017 an Agreement of Cooperation was signed to provide a comprehensive and coherent framework for a new development partnership including collaboration on activities at subregional, regional, state, and federal level.  The support that ADB rendered to Malaysia focused on advancing regional cooperation and integration, catalyzing private investments through public-private partnerships and capacity building. A Green City Action Plan has been set up by the government to address climate change which includes ADB’s assisted studies to convert existing street lights to energy-efficient lamps across the city of Melaka and a feasibility study for solar power farms.  The other priority of ADB in Malaysia is to foster and develop cross border infrastructure projects, energy cooperation, trade facilitation, strengthening of regional economic survelliance, promoting special border economic zones and collaboration in developing economic corridors.

Prepared by our U.S. Embassies abroad. With its network of 108 offices across the United States and in more than 75 countries, the U.S. Commercial Service of the U.S. Department of Commerce utilizes its global presence and international marketing expertise to help U.S. companies sell their products and services worldwide. Locate the U.S. Commercial Service trade specialist in the U.S. nearest you by visiting http://export.gov/usoffices.