By Lee Wei Lian
KUALA LUMPUR, June 20 — Foreign companies will be limited by a minimum threshold on the value of government projects they can bid for to protect local interests once the US-backed Trans-Pacific Partnership (TPP) comes into force, said Minister for International Trade and Industry Datuk Seri Mustapa Mohamed today.
This comes after former prime minister Tun Dr Mahathir Mohamad said that he feared the TPP might not be worth Malaysia’s time as the country always seems to be on the losing end of international agreements.
Mustapa (picture) said that he “appreciated” Mahathir’s remarks but the government placed a priority on protecting local interests and would get a buy-in from all stakeholders before proceeding with the TPP.
“There will be a certain threshold below which foreign companies will not be allowed to take part in government tenders,” he said in a press conference today.
He added that the threshold is considered “high” by the other countries.
Mahathir, who is a known strident critic of the US, said in his blog that the TPP is “another scheme” by the US to break into fast-growing markets in Asia.
He said that the US had its sights set on government contracts which he claimed are used by “every country” to support domestic business.
“Once the US gains access, not only will it make bids, but their government pressure will be used to favour their companies,” he said.
Government contracts in Malaysia are considered especially sensitive because they are also used to promote the business interests of the bumiputera community whose efforts are seen to be lagging behind that of the country’s Chinese community.
Critics have also charged that government contracts, which in the past have been awarded predominantly via direct negotiations rather than open tenders, have been abused by those who are linked to the political elite.
A more transparent and open government procurement system could make it harder for such abuses to take place.
The Najib administration has promised to make the government tender process more competitive and transparent as part of a package of reforms.
The reforms appeared to have hit a setback recently, however, when it was reported that a billion-ringgit tender for the supply of trains for the Klang Valley Mass Rapid Transit system drew a disappointing response and that several big names such as Bombardier and Kawasaki had decided not to take part.
The 13th round of TPP negotiations will take place in San Diego in July.
Countries involved in the TPP are Australia, Brunei, Chile, Malaysia, New Zealand, Peru, Singapore, the US, Vietnam, Canada and Mexico.
Malaysia has already signed a number of free trade agreements (FTAs) both bilateral and as part of Asean such as with Japan, Pakistan, China and Australia and is currently in negotiations with the EU.
Mustapa said that the value of Malaysian exports that enjoyed preferential access under FTAs hit RM97 billion last year.