SPEECH BY
YB DATUK SERI JOHARI BIN ABDUL GHANI MINISTER OF FINANCE II

OPENING CEREMONY
GLOBAL OFFSET & COUNTERTRADE ASSOCIATION (GOCA) ASIA PACIFIC CONFERENCE (APAC) 2017

Date : 27 March 2017 (Monday)
Time : 9.00am
Venue : Royale Chulan Hotel, Kuala Lumpur

Yang Berbahagia Tan Sri Dr Irwan Siregar bin Abdullah Secretary General of Treasury

Yang Berbahagia Datuk Seri Hashmuddin bin Mohamad Deputy Secretary General of Treasury (M)

Mr. Cary F.Viktor
Chairman of the Global Offset & Countertrade Association

Yang Berbahagia Dato’ Zailani bin Safari
Chief Executive Officer, Technology Depository Agency (TDA) Berhad

Distinguished guests
Ladies and Gentlemen
Assalamualaikum warahmatullahi wabarakaatuh and a very good morning. INTRODUCTION

1. Firstly, thank you very much for having me this morning. It is indeed a great pleasure to be here today at the Opening Ceremony of Global Offset & Countertrade Association (GOCA) Asia Pacific Conference (APAC) 2017 Kuala Lumpur.

2. To international delegations, I wish all of you a warm Selamat Datang and may I extend my appreciation for your participation in this conference. To local delegations, welcome to GOCA APAC 2017. I hope that you will reap the benefits from this conference to gain more knowledge and insights about global offset best-practices and its implementations.

3. I would like to take this opportunity to congratulate the Secretariat from the Ministry of Finance, GOCA and Technology Depository Agency (TDA) for their initiative in organizing this conference. I was informed that this is the first GOCA conference to be organised in Asia Pacific region.

4. Therefore, it is indeed an honour for Malaysia to be given the opportunity to host the conference. This Conference provides a good platform for policy makers, industry players and academia to share knowledge and expertise in offset and countertrade.

INDUSTRIAL COLLABORATION PROGRAMME (ICP) AS TOOL FOR KNOWLEDGE BASED ECONOMY AND INDUSTRIAL DEVELOPMENT

Ladies and gentlemen,

5. The practice of offset and countertrade has long been associated with Government Procurement. According to World Bank 2017 Benchmarking Public Procurement Report, Government Procurement is the largest single marketplace in developed and developing economies, accounting for around one-fifth of global GDP (Global GDP 2016: USD75 trillion). This represents huge opportunities to enhance competition and development in these specific markets.

6. Nevertheless, we are of the view that the term “offset” can be better defined to reflect the rapid “democritization” of the global economy amid greater synergy between public and private sectors. Thus, a new term “Industrial Collaboration Programme or ICP” would be more appropriate to reflect the growing cooperation of both the government and industry players. Through ICP, we will be able to provide platforms that allow businesses not only to thrive, but also create a positive spill-over effect to local industries and ultimately, contribute to long- lasting economic development.

7. Premised on this encouraging development, this year’s conference with the theme of “Industrial Collaboration Programme (ICP): Tool for Knowledge Based Economy and Industrial Development” is therefore timely. As we all know, Knowledge Based Economy is directly based on the production, distribution and use of knowledge and information. On the other hand, the process of Industrial Development also requires the understanding of knowledge and usage of information.

8. The common denominator in both areas is clearly the ability to master knowledge, especially most recent advanced technologies. The process of mastering the knowledge can be achieved through Transfer of Know-How, Human Capital Development, Smart Partnership and Collaboration among the key players.

9. This is where ICP could be an effective tool to benefit the parties involved, including the governments, which ultimately will benefit the people and country’s development. For the coming two days, I believe we could learn further on how industrial collaboration, cooperation or partnership can be utilized to achieve the objectives.

SHARING OF MALAYSIA’S PROGRESS AND SUCCESS STORIES ON THE ICP

Ladies and gentlemen,

10. As a highly open economy with total trade amounting to about 130% of GDP (RM1.5 trillion), Malaysia is recognized as an excellent investment destination and it is no secret that we would like to maintain it that way. The 2017 Best Countries rankings for example has named Malaysia for best countries to invest in, noting that Malaysia is one of the top recipients of foreign direct investment, and its pro-business government offers a wide range of incentives to investors. We have also proven that we have excellent governance in particular with regard to Intellectual Properties Right (IPR), physical infrastructure and incentives and ready human capital with the right competency.

11. Further, with the introduction of the Policy & Guidelines of Industrial Collaboration Programme (ICP) in Government Procurement, which was published in 2014, Malaysia has became more competitive in terms of investment returns and able to create collaborative platforms for sustainable business.

12. To ensure an effective and efficient implementation of ICP in Malaysia, the Ministry of Finance has established Technology Depository Agency, an agency under the purview of the Ministry. Together, Ministry of Finance and TDA will act as Malaysia’s ICP Authority that will cover a broad range of procurements in bid to ensure our goal for sustainable industry development remains intact.

13. To date, the ICP obligation in Malaysia is valued at USD17.5 billion which is derived from various government procurements (defense and non-defense) up to year 2021. Currently, we have 71 ongoing Industrial Collaboration Programmes with a total of 265 projects.

14. From the total of 265 projects, 7 programmes have been fully completed and registered with a total of USD1.3 billion worth of ICP Credit Value (ICV) which has contributed to the current national economy. The nominal value for these programmes is estimated around USD250 million. Therefore it can be concluded that for every one USD (USD1) that is spent on the procurement, the Government is getting the returns 3 to 4 times higher in the form of quality investment, job creation (K-Worker), technical enhancement and technology transfer.

15. I am also proud to higlight another key example of Malaysia’s successful achievement in ICP implementation. Through Mass Rapid Transit (MRT) Sungai Buloh-Kajang Line Procurement, the ICP implemented have successfully resulted in the establishment of a rolling stock assembly plant in Rasa, Selangor, the first of it kind in Malaysia which is valued at RM81 million. This project has created 200 new high-skill jobs, enabled transfer of knowledge from global leaders in rail technology and developed new industry in rail transportation.

16. In addition, recognising the importance of ICP, implementation and its support, we believe it is equally important to have human capital development particularly in specific areas. As such, in 2015, Malaysia has established the Rail Centre of Excellence (RCOE) as spin-off from combination of few ICP programmes to support rail industry.

17. The RCOE functions as the rail technology learning and training centre, R&D facility as well as the main knowledge depository for the rail industry. This establishment is indeed important given the need to ensure that we are also competent in maintaining these valuable assets. We envisaged that we could do similar approach by creating Center of Excellences for other sectors such as maritime, aerospace and other emerging technologies.

FUTURE OUTLOOK

Ladies and Gentlemen

18. Moving towards 2020, it is expected that ICP will create more than USD17.5 billion of investment in Malaysia. More importantly, ICP would also strengthen the building blocks for Malaysia to be a high-income and productivity-driven economy. Although this seems quite challenging under current economic uncertainties, we believe that the target is achievable with continuous support from the Government and agencies, international and local industry players as well as ICP recipients.

19. To realise this vision, it is indeed crucial for stakeholders to have the right mindset. For the procuring agency, ICP must be viewed as an opportunity to share the economic benefits with other stakeholders. For the obligors, this responsibility shall be regarded as opportunities to create a sustainable business platform, while for the recipients, ICP shall be regarded as opportunities to create a win-win situation and sustainable businesses in complement with the obligors.

20. I believe that Malaysia would attain greater achievements from ICP implementation provided that a synergy is developed among the stakeholders in ensuring ‘value for money’ on every Ringgit we spent. Ministry Of Finance and TDA will continue our efforts to pro-actively facilitate our local industry players to work hand in-hand with globally renowned Original Equiment Manufacturers (OEMs) and help them to quantum leap into the global supply chain.

21. Malaysia’s approach of implementing the current ICP is one of the systematic methods and I am of the view that we should share our experience with other countries particularly our partners in ASEAN. Therefore, I would like to propose that both MOF and TDA to promote Malaysia as the reference centre when it comes to ICP implementation in this region.

CONCLUSION

Ladies and Gentlemen

22. On behalf of the Government, Ministry of Finance is keen to understand the issues faced by the industry, so I hope that GOCA APAC 2017 will gather as much information as possible and convey the information to the Ministry. Your input will be a useful source for our future policy review and formulation.

23. May I take this opportunity to again express my deepest appreciation to all stakeholders, be it from the Government and industry players who are here today. I hope this conference will be a successful one and I am looking forward to greater collaborations among the stakeholders, using the ICP platform to create sustainable economic activities.

24. On that note, I am pleased to officiate the Global Offset & Countertrade Association (GOCA) Asia Pacific Conference (APAC) 2017 Kuala Lumpur.

Thank you.