FOR IMMEDIATE RELEASE

29 June 2015

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PRESS STATEMENT: PPPs should not be completely carved out from the TPPA

29 June, 2015, Kuala Lumpur –IDEAS today released a policy paper outlining several options regarding the Public Private Partnerships (PPPs) section in the Trans-Pacific Partnership Agreement (TPPA).

Commenting on the publication, IDEAS Chief Executive Officer, Wan Saiful Wan Jan, said: “There have been discussions on concluding the negotiation this year. We can’t keep insisting on completely carving out provisions in government procurement including PPPs from the TPPA. However, I appreciate that we may need time to adjust. So, if we want to open only parts of the sector now, how should we do it? This paper by Dr David Jones who is an expert on procurement answers that question.

The options that the paper suggests are the following:

  • Negotiate a preferential price margin on the price factors in PPP tenders for local firms.
  • Exempt certain sectors from the PPP provisions of the TPPA, such as water and energy.
  •  Reserve a certain percentage of equity for Malaysian investors.
  • Have the government retain ownership of physical assets in strategic PPPs.
  •  Limit license periods to 15-20 years.
  • Give regulatory bodies additional powers to regulate strategic PPPs.

“I agree with the author that these alternatives, especially preferential treatment to local companies should be made temporary.  We need to be aware that the adoption of these options works as a two-way street. If we impose conditions, other TPPA countries can impose conditions too.  This means our Malaysian companies will not be able to fully benefit from the TPPA. This is why we need to minimise exemptions so that we don’t kill off the benefits that we should be able to reap.”

“The focus of government procurement, including through PPP, must be in getting best value for taxpayers money.  This must be the over-riding measurement and if foreign companies can bring better value, cheaper costs or better technology, we should take their offer. The competitiveness offered through the TPPA process must be maintained.”

“Our paper also demonstrates how competition with foreign companies will also benefit local companies. Local companies that have experience in partnering with foreign companies in delivering PPP projects can subsequently win projects on their own either in their countries or outside. For instance, Singapore allows foreign company involvement in their key sectors such as information and communications technology (ICT) as well as and electricity generation. As a result Singapore’s infrastructure companies have been able to win contracts for PPP projects in other countries such as India and China. They are now able to compete internationally. We should aim to produce globally competitive Malaysian companies too, and it starts with making them compete domestically.”

“The most important thing is, if we negotiate any exclusion, it must be temporary and a clear schedule must be put in place.”

The paper can be downloaded at : http://ideas.org.my/wp-content/uploads/2015/06/IDEAS-PEGU-PPPs-Revised-Visuals-R3.pdf

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About IDEAS

IDEAS is Malaysia’s first think-tank dedicated to promoting market-based solutions to public policy challenges. We are an independent not-for-profit organisation. As a cross-partisan think tank, we work across the political spectrum. Our purpose is to advance market-based principles, and we are not bound by party politics, race or religion.

Our mission is to improve the level of understanding and acceptance of public policies based on the principles of rule of law, limited government, free markets and free individuals. For more information, please visit http://ideas.org.my/

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