History of ICP in Government Procurement

Historically, this programme was initiated by the Government of Malaysia in 1983. The term used then was ‘Countertrade’ and was under the auspicious of the Ministry of International Trade and Industry.

Later, in the mid 90’s, the activities were focused on the defense related procurement and the offset programme concentration was on the defense-related activities under the auspicious of Ministry of Defense.

In 2001-2002, the Economic Planning unit has commissioned a study to analyse the outcomes of the defense-based Countertrade programme. The study has recommended to main recommendations, which were brought to the Cabinet for approval and one of those was about TDA establishment.

In 2004, the Government has initiated a first-of-its-kind commercial countertrade programme in Malaysia. TDA which was temporarily assigned to MIGHT, was tasked to undertake the monitoring of the commercial countertrade programme. Based on the local economic requirement and global evolution on ‘Countertrade’, the programme has evolved to become an initiative which was termed as ‘Offset Programme’.

Further on, the Government of Malaysia has decided to expand the scope of the initiate to further support the local economy and industry development and currently is termed as ‘Industrial Collaboration Programme’ or in short ICP. It is currently under the auspicious of the Ministry of Finance and a policy was published in December 2014.

The current policy is titled ‘Policy and Guidelines on Industrial Collaboration Programme (ICP) in Government Procurement’ 3rd Edition.

Background: ICP initiatives in Malaysia

1987
Treasury Circular Letters No. 11, 1987 Guideline to Implement Countertrade in Government Procurement – the initial implementation of countertrade/offset in Government procurements.

2001-2002
A Study On Offset Programmes of the National Defence Procurement

2005
Counter trade Policy in MinDEF stipulation countertrade / offset requirements in all Defense Procurement

2009
Drafting of Economy Enhancement Programmes (EEP) and revised Countertrade/Offset policy at the national level

2011
Treasury Directive Letter dated 18 March 2011 – Policy and Guidelines to have offset as mandatory requirements in ALL Gov Procurements

2014
Approval of National Industrial Collaboration Programmes (ICP) Policy

ICP is used as an economic tool to

  • Develop knowledge based economy through technology acquisition and commercialization as well as relevant resources development;
  • Create competitive national economy by positioning local players and products into global supply chain leveraging on foreign suppliers platform which is faster than the normal commercialization method;
  • Distribute fairly the benefits from major Government procurement programme to the local sectoral industry players through the Economic Enhancement Programme.
  • Increase jobs creation and contract manufacturing opportunities leveraging on Government networks.

Major Provisions in the ICP Policy 3rd Edition

  • Improvement of the ICP elements into becoming an effective tool to support the national economic and technological development;
  • Inclusion of Economic Enhancement Programme (EEP), Offset Programme (direct/indirect) and Countertrade Programme;
  • Strengthening the national offset management structure to include the Malaysian ICP Executive Committee (MIEC) at central agency level, the ICP Management Unit (IMU) at the agency/procuring entity level, and the ICP Working Committee (IWC) at the working level;
  • Description of Malaysia’s ICP management process through a comprehensive Malaysian ICP Management Framework and process flow;
  • The introduction of Pre-ICP platform to enable an ICP activity to be carried out prior to any procurement which involve ICV Banking; and
  • The introduction of ICV generation formula based on the economic impact and alignment with current Government’s aspiration.

Main Terms & Conditions

  • The ICP consists of 3 main elements that are Economic Enhancement Programme, Offset Programme and Countertrade Programme;
  • The ICP Policy is applied on procurements related to supply, services and works;
  • The threshold value of the procurement that triggers EEP is RM100 million;
  • The threshold value of the procurement that triggers Offset and Countertrade programmes is RM50 million;
  • The mandatory ICP Credit Value (ICV) to be generated is equivalent or more than the main supply contract value;
  • Malaysian ICP Executive Committee at MOF and ICP Committee (at Ministry/Agency) are responsible to ensure the ICP programme implementation is in accordance with the ICP policy;
  • Technology Depository Agency (TDA), an entity under the auspicious of Ministry of Finance is responsible in ensuring all ICP  programme implementation in Malaysia adhere to the Malaysian ICP Management Framework.