Over the past decades, many countries have increased their demands for activities such as offset, industrial participation, industrial collaboration or other activities alike to achieve more substantial economic benefits.
These countries are using new approaches in their said activities above to increase economic benefits. These changes include targeting the activities and granting the credit only for new business rather than existing business.
Malaysia has carried out the activities which were referred as countertrade in 80’ and 90’s, offset in 2000’s and recently termed as Industrial Collaboration Programme (ICP). Malaysia has expanded the scope of the programme to cover defense and non-defence capital procurement.
Leveraging on the procurement, the ICP arrangements are designed as part of the contract agreements to help purchasers obtain more value add contributing to the national economic growth on top of the said procurement scope.
ICP implementation in Malaysia is guided by the National ICP Policy established by the Ministry of Finance in 2014. It is linked to macroeconomic frameworks such as Malaysia’s Vision 2020, the Five Year Development Plans, Industrial Master Plan, the National Policy on Science, Technology and Innovation and Economic Transformation Programme (ETP) and others.
The types of activities required by the countries depend on their goals and the country’s economy needs — whether it is developed, newly industrialized, or less industrialized. Companies will undertake a broad array of activities to meet these obligations.
The philosophy of the Malaysian 3rd Edition ICP Policy can be illustrated through a graphic presentation below.