About ICP

What is Industrial Collaboration Program (ICP) ?

HISTORY OF ICP
HISTORY OF ICP

INDUSTRIAL COLLABORATION PROGRAM ACHIEVEMENTS

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ICP Programs

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ICP Projects

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Sectors

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Recipients

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Together empowering local industries and enhance economic power.

KKM

Kementerian Kesihatan Malaysia

MRT CORP

Mass Rapid Transit

PRASARANA

Public Transportation System

KETSA

Kementerian tenaga dan sumber asli

SEDIA

Sabah Economic Development and Investment Authority

CAAM

Civil Aviation Authority Malaysia

MOSTI

Ministry of Science, Technology And Innovation

APMM

Agensi Penguatkuasaan Maritim Malaysia

TNBM5

TNB Manjung Five

MOT

Ministry of Transport

JBPM

Jabatan Bomba dan Penyelamat Malaysia

JPN

Jabatan Pendaftaran Negara

ICP Management Framework Process

Pre-Implementation

Implementation

Post-Implementation

ICP Required Documents

Procurement Proposal by the Agencies

IRD Development

Bidder proposal submission

ICP Proposal Evaluation

Assess OEMs business and identity

Identify potential beneficiaries capabilities

ICP Projects Negotiation

Procurement Proposal by the Agencies

IRD Development

Bidder Proposal Submission

ICP Agreement

Finalization of activities, deliverables, outcomes and timeline

ICP Monitoring

ICP activities monitoring to ensure deliverables performance

ICP Implementation Verification

Post Implementation Audit

ICP Program Completion

Relief of Obligation upon completion

BACKGROUND: ICP INITIATIVES IN MALAYSIA

ICP IS USED AS AN ECONOMIC TOOL

  • 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 program to the local sectoral industry players through the Economic Enhancement Programme (EEP).
  • Increase jobs creation and contract manufacturing opportunities leveraging on Government networks.

Industrial Collaboration Program (ICP) is a program 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 program for short, medium and long term gains. The Government of Malaysia has categorized ICP implementations into 3 main platforms that ICP provider could use as guidance that are:

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 program whereby the management and implementation of these program shall be directly under the jurisdiction of the MOF and the TDA.

The Government intends to use the ICP and Vendor Development Program (VDP) approach to facilitate the capacity and capability development of the local industries, especially the Small and Medium Enterprises (SMEs) 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 MOF and TDA.

The EEP provider and its subsidiaries can become part of the recipients of any ICP program with condition that the credit value created collectively from all the ICP projects by the Syarikat Tempatan Utama (STU) under that ICP program 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 program. 

The management, monitoring and the program implementation under this Counter Trade category is directly under the management of MOF and TDA.

 

COUNTER PURCHASE

For Counter Purchase program 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 program 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. OEMs/ICP Providers are required to submit a proposal to the MOF for approval on the products or services that are not included in the list.

Offset Program is a program that involves activities to strengthen local competitiveness by giving priorities to the technology development and knowledge-based economy. 

It targets for the development of local technology-based industries by enhancing the capacity and capabilities of the local companies to a higher level to enable it to competitively participate in the global markets and supply chain. The implementation policy of the offset program shall be effectuated on foreign companies that received Government’s contract subject to the Minimum Threshold Value specified in this Policy.

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

 

DIRECT OFFSET

It comprises of activities and work packages related directly to the products and equipment which are procured via the Main Procurement Contract, and are 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

Program under this category are program that have indirect link or no link at all to the products or equipment acquired via the Main Procurement Contract; and are mutually agreed for their implementation by the Government and the ICP Providers. The main elements of the indirect offset program include the transfer of technology, knowledge and skill, industrial capability development and human capital competency development. It includes:

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

The Government of Malaysia is committed in developing national technology, industry and economy for the purpose of improving Malaysia’s competitiveness in the global market, supported by a holistic economic view and systematic development strategy. This effort is vital to sustain requirements in materializing the New Economic Model and high-income community development agenda.

In support of that, the Government of Malaysia is leveraging on the ICP platform as one of the strategies and has established a policy applied to all Government procurement related to activities, supply and service work. ICP shall be implemented through activities that add value to a procurement made by the Government of Malaysia, with an effective cost.

ICP shall be used as an economic tool to:

  • Develop knowledge based economy through technology acquisition and commercialization as well as relevant resources development;
  • Create competitive economy by positioning local product into global supply chain leveraging the foreign suppliers platform which is faster than the normal commercialization method;
  • Contribute to the socio economic development aligns with the national economic development agenda;
  • Contribute to increase of jobs opportunities and create competitive platform for contract manufacturing.

The Committees

The ICP implementation in Malaysia is supervised by various committees which function as the overseer.

The highest level of ICP Committee in Malaysia, assisted by the Government Procurement Division, Ministry of Finance as the secretariat.
A committee established at the Agency level that oversees the implementation of the ICP, assisted by the Undersecretary Procurement Division of the procuring Ministry (or its equivalent if the procurement is made by the STU) as the secretariat.
A committee formed at the ICP Management Unit (IMU) level at the respective Agency, assisted by the IMU as the secretariat.

A committee formed at the procuring Agency to conduct evaluation on the proposed ICP, assisted by TDA as the secretariat.

The Reporting Channel

The current ICP Policy and Guidelines has specified the reporting channel with a clear segregation of roles and functions for monitoring and information consolidation purposes. Ministry of Finance is the highest authority that manages the ICP implementation assisted by TDA for the ICP Policy operationalization.

MAIN TERMS & CONDITIONS

 

  • The ICP consists of 3 main elements that are Economic Enhancement Program, Offset Program and Countertrade Program;
  • 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 programs is RM50 million;
  • The mandatory ICP Credit Value (ICV) to be generated is equivalent or more than the main supply contract value;
  • Malaysia ICP Executive Committee at MOF and ICP Committee (at Ministry/Agency) are responsible to ensure the ICP program implementation is in accordance with the ICP Policy and Guidelines;
  • Technology Depository Agency (TDA), an entity under the auspicious of Ministry of Finance is responsible in ensuring all ICP program implementation in Malaysia adhere to the Malaysia ICP Management Framework.

MAJOR PROVISIONS IN ICP POLICY AND GUIDELINES 2ND 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 Program (direct/indirect) and Countertrade Program.
  • 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.
  • The introduction of ICV generation formula based on the economic impact and alignment with current Government’s aspiration.

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Overview of ICP

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 the 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’s and 90’s, offset in 2000’s and recently termed as Industrial Collaboration Program (ICP). Malaysia has expanded the scope of the program to cover defense and non-defense capital procurements.

Leveraging on the procurement, the ICP arrangements are designed as part of the contract agreements to help purchasers obtain more value -added contributing to the national economic growth on top of the said procurement scope. 

ICP Implementation in Malaysia in guided by the National ICP established by the Ministry of Finance in 2014. It linked to macroeconomic frameworks such as Malaysia’s Vision 2020, The Five Year Development Plans, Industrial Master Plan, the National Policy Science, Technology and Innovation Transformation Program (NPSTI), Economic Transformation Program (ETP) and others.

The types of activities required by the countries depend on their goals and the country’s economic needs – whether it is developed, newly industrialised, or less industrialized. Companies will undertake a broad array of activities to meet these obligations.

History of ICP

Historically, this program was initiated by the Government of Malaysia in 1983. The term used before was ‘Countertrade’ and under the auspicious of the Ministry of International Trade and Industry (MITI).

Later in the mid 90’s, the activities were focused on the defence related procurement and the offset procurement was on the defence-related activities under auspicious of Ministry of Defence (MinDef).

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

1987

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

2001

From 2001 to 2002 a study on offset programs of the National Defence Procurement

2005

Countertrade Policy in MinDef stipulation countertrade/ offset requirements in all Defence Procurement

2009

Drafting of Economic Enhancement Programs (EEP) and revised Countertrade/ Offset Policy at the national level

2011

Treasury Directive Letter Dated 18 March 2011 - Policy and Guidelines to requirements in all Government Procurements

2014

Approval of Industrial Collaboration Programs (ICP) Policy