Industry Collaboration Programme (ICP) is a programme involving activities that provide value-add to any procurement made using fund provided by the Government of Malaysia. The purpose of these activities is to garner maximum benefits and impacts to the development of related local industries in a wholistic manner as returns on the investment by the Government via procurements made.

In support of the ICP aspiration, the ICP provider is required to consider the impacts of the proposed programme for short, medium and long term gains. The Government of Malaysia has categorized ICP implementation into 3 main platforms that ICP provider could use as guidance that are:

  • Economic Enhancement Programme (EEP);
  • Offset; and
  • Counter Trade.

elements

The Economic Enhancement Programme (EEP) is applied on local companies that received a contract from the Government for any procurement equal or more RM100 million in the area of supplies, works and services. EEP is mandatory in cases where the source of fund for the procurement is from the Government. In the case where the source of fund for the procurement is acquired from the internal source for the company itself, then the respective company will be encouraged to implement the EEP exercise.

In the event that the Government’s procurement contract with the local company involves subcontracting to foreign OEMs, then the respective OEMs shall be subjected to the Counter Trade and Offset programmes whereby the management and implementation of these programmes shall be directly under the jurisdiction of the TDA and the MOF.

The Government intends to use the ICP and VDP approach to facilitate the capacity and capability development of the local industries, especially the Small and Medium Enterprises (SME) within a selective industrial cluster. In order to ascertain the inclusivity of the industry development, the EEP implementation shall be in parallel with the guidelines of the VDP issued by the Government.

The Government is desirous, via the implementation of the EEP to create more local companies, especially Bumiputera companies in the field of manufacturing and services that involves usage of medium and high technologies to add value in supporting the development of industrial cluster in selected sectors.

The EEP implementation based on the ICP platform is part of the Government’s effort to drive local companies to progressively grow and become competitive to participate in the domestic and global market.

In determining smooth implementation of the EEP, the EEP provider shall be responsible for its implementation and to be monitored and advised by TDA and Ministry of Finance.

The EEP provider and its subsidiaries can become part of the recipients of any ICP programme with condition that the credit value created collectively from all the ICP projects by the STU under that ICP programme cannot be more than 30% of the Mandatory ICP credit value.

The Counter Trade is applied to foreign companies who received Government’s contract with the value equal or more than RM50 million. In this category, the maximum ICP credit value generated shall be the same as that of the cost value of the Counter Trade that can be implemented via Counter Purchase or Buy Back programmes. The management, monitoring and the programme implementation under this Counter Trade category is directly under the management of TDA and MOF.

CounterPurchase

  • For Counter Purchase programme implementation, the foreign ICP provider can implement it by purchasing selected Malaysia locally made products (usually stated as a percentage of the contract value) within a given period of time as an option to fulfil the ICP credit requirement.
  • The Counter Purchase programme shall give preference to the products manufactured by local companies. If the products do not meet the ICP credit percentage as required, then the supplier/ICP provider can include the Government approved export commodities as the product for counter purchase.
  • The export commodity and/or manufactured products and/or services value-add must be from the Government approved list. OEM/ICP Providers are required to submit a proposal to the Ministry of Finance for approval on the products or services that are not included in the list.

Buy Back

  • For the purpose of Buy Back Programme implementation, the ICP provider can effectuate it by buying back products produced by local companies which have been developed and produced resulting from the ICP programme (at least 30% from the ICP nominal value).
  • The buyback programme for the manufactured products under the “localization” activity is encouraged to show the ICP Provider support on the capacity and capability development of the local industry. This programme needs to be further continuously enriched to provide sustainable opportunities to local industry players to participate in the global supply chain (of the ICP provider).

Offset Programme is a programme that involves activities to strengthen localcompetitiveness by giving priorities to the technology development and knowledge-basedeconomy. It targets for the development of local technology-based industries by enhancingthe capacity and capabilities of the local companies to a higher level to enable it tocompetitively participate in the global markets and supply chain. The implementation policyof the offset programme shall be effectuated on foreign companies that received Government’scontractsubject to the Minimum Threshold Value specified in this Policy.

The assessment on the Offset programme and the ICP credit generated shall be based onthe success of the programme offered by the ICP provider and its impact in strengthening local industries and national economy in the targeted sectors within the agreed period. Under anormal circumstance, the ICP implementation period shall be the same to theimplementation period of the Main Procurement Contract.

Direct Offset

It comprises of activities and work packages related directly to the productsand equipment which are procured via the Main Procurement Contract, andare mutually agreed by the ICP provider and the Government. It includes:

  • Training, Human Capital and Capability Development
  • Local Work Package
  • Transfer of Technology and Competency Development
  • Foreign Direct Investment

Foreign Direct Investment

Programmes under this category are programmes that have indirect link or nolink at all to the products or equipment acquired via the Main ProcurementContract; and are mutually agreed for their implementation by theGovernment and the ICP providers. The main elements of the indirect offsetprogrammes include transfer of technology, knowledge and skill, industrialcapability development and human capital competency development. It includes:

  • Transfer of Technology, Knowledge and Skills
  • Research, Development and Commercialization (R&D&C):
  • Local Contents
  • Global Market Access
  • Foreign Direct Investment