WHY ALL THE DISQUIET ON PROCUREMENT?

Bismillahir rahmanir rahim

Assalamualaikum warahmatullahi wabarakatuh

Salam sejahtera dan Salam 1 Malaysia

En Ahmad Shahab Hj. Din
Ketua Pegawai Operasi, Institut Tadbir Urus Korporat Malaysia

Y.Bhg. Tan Sri Dato’ Setia Ambrin Buang, Ketua Audit Negara

Y.Bhg. Dato’ Dr Mohd Tap bin Salleh
Presiden, Institut Integriti Malaysia

Y.Bhg. Tan Sri Tan Sri, Datuk-Datuk, Tuan-Tuan dan Puan dan Puan

Para hadirin yang dihormati sekalian.

Bersyukur kita ke hadrat Allah SWT kerana dengan limpah rahmat serta keizinan Nya jua kita dapat bersama-sama dalam majlis ini, sempena berlangsungnya Forum National Procurement Guidelines 2010.

2. Saya merakamkan penghargaan serta ucapan terima kasih kepada pihak penganjur, Institut Tadbir Urus Korporat Malaysia, di atas jemputan untuk menyampaikan sepatah dua kata, dan seterusnya merasmikan Forum pada pagi ini.

Ladies and Gentlemen,

3. Events such as this are significant for Malaysia. It brings to the fore subjects we generally view difficult to candidly debate, yet need to for our own long term prosperity and global standing as a nation.

4. Thank you for inviting me this morning. It is a privilege for me to share some of my thoughts on Public Procurement and the debates that surround it, and the work that needs doing still by all of us, Malaysians.

WHAT MEASURES INTEGRITY

5. The term Public Procurement triggers much emotions and contention, not specifically in Malaysia but all across the world. It reigns in terms such as accountability, transparency and integrity in the main. This disquiet as it were, is foreseeable as it affects everyone – – from the public and private sectors to the man on the street, and to how a country is perceived as a result by global community.

6. The debate on “what would be the best model for public procurement” remains a tract, often a passionate one, I might add. How must absolute transparency be ratified where public and private sectors are involved? What is absolute transparency and accountability? How can we institute merit when we must equally balance equity and equitability for all Malaysians? Can accountabilities be managed through Pacts, alone? Through Acts instead? Transparency submitted only through Policies and Oversight? Or is enforcement good enough to gauge human integrity? These are some of the headline questions that are often deliberated in our policy making. I am sure it will be too in this Forum.

7. The essence of dignity and integrity ripples the greater human values, when really spoken. Before discussing the more technical aspects of procurement infrastructure in Malaysia, let us collectively posit the more global roles of personal integrity. Can a PACT alone circumvent lack of personal integrity of individuals and institutions? Or is integrity dependent on the greater eco-system we all, public and private sectors, media and civil societies, demand of our society? Can an eco-system of integrity even prevail, and fairly so, if we each rescind on our own unique deliverables in society?

8. To the extent that the public sector must commission and lead in the standard setting of integrity and transparency, Malaysia cannot set aside the 9 over million people who make and work in our private sector. Integrity cannot be a command sanctioned on one, the public sector, and not the other, the private sector, the bigger portion. How integrity is commissioned and then acted upon in our own spheres will form the final picture that will tell the story of Malaysia. It will define the collective fruits of the almost 11 million working population in Malaysia, 1.2 million of which are from the public sector.

WHOSE FIGHT IS IT?

9. We cannot even begin to dispute on facts like corruption damages a country, its society, its history and not least its future. Corruption damages companies and corporations. It affects growth of companies; it results in loss of opportunities, most of all it ends in loss of reputation and brand name. On a personal level it affects morale; it ruins character and displaces the good talents who will not condone these misbehaviour and would look for better pastures. Simply put – – corruption destroys what a country stands for.

10. Eradicating corruption isn’t one person’s fight; it isn’t a score’s battle. It ain’t just the predicament of governments. It is a societal viral that needs to be combated by the society’s anti-body. If in parts of our lives we allow breaking of rules, like say the traffic offenses, yet demand that in other parts we sanctify judiciary to the hilt, it confuses the system of morals in that society. If we consent to ignoring summons for traffic offences, and yet seek explanations for why a Project is late, it ruffles the clarity of what is right and not in that society. This selective reactions and responses, if endorsed, allows for individuals and groups to make up rules as they go along. And, this is not good.

11. The standards and principles imbued in ALL our sectors form the bedrock to our economy. In kind, the brand of Malaysia does not only hinge on public sector, it cannot just hinge on public sector. Why? Because governments don’t create all jobs. The private sector does too, and more. Governments do not create businesses. That the private sector does. The values upon which our businesses, institutions, families, and the larger society are grounded define the strengths and assets that will make brand Malaysia. Consequently, national brand building simply cannot be the responsibility of one segment of society, or a sector. We cannot risk such narrow allocations and apportioning of responsibility. We could risk prevaricating that brand if allowed.

Ladies and Gentlemen,

THE PUBLIC PROCUREMENT

12. Allow me to spend a few moments on the specific technicality of public and government procurement (otherwise referred to as GP). Public tendering or public procurement is the procurement of goods and services done on behalf of a public authority, such as a government agency. It is estimated that government procurement accounts for 10 to 15% of GDP in developed countries, and up to 20% in developing countries.

13. Appropriately thus, our public procurement procedures and processes must earn the trust of the public and our investors. Trust can only be earned through results – consistency in actions and results. It is earned through compliant and transparent bidding and tender processes; through clarity of terms and conditions, clarity in decision making; and through meeting of committed deliverables set in procurement.

14. Over the years Malaysia has evolved and improved on its public procurement process and procedures. The Treasury Instruction issued in 1997 on Public Procurement has since seen several updates and improvisations in meeting the demands and requirements requisite for the times. On the 1st of April 2010, our Prime Minister, YAB Dato’ Sri Najib Tun Razak launched MyProcurement website as one of the improvisations and strengthening of government procurement. The intent of this Site is to enable open and candid access to information relating to a bid and tender. In making it public, and accessible electronically by anyone, it would demand stringent scrutiny of our own processes and systems in the public sector. Intrinsically, public officials must be able to defend decisions with facts. We must ensure our work is proper. We need to ensure the lines of decision making are clear.

15. Admittedly, the Site saw initial glitches as any new Sites would. Notwithstanding this the intent of its establishment should not be trivialised. We need to collectively demand that an infrastructure such as this be strengthened not abandoned because of the first few days of glitches.

16. Even as we complain that Malaysia’s public procurement is not ideal, we have come a long way. The MyProcurement Site is a clear commitment by the public sector, the Government, that we are here to fight corruption. We are here to comply with the transparency required of any progressive and developed nation. We conduct open tenders. We offer everyone capable of requisite project delivery an opportunity to work with us. We no longer accept support letters on projects.

17. Further, we have instituted several additional measures. Bidders at all stages are now required to sign the Bidder Declarations. They would have to comply with the Anti-Corruption Clause set in Government Procurement. We are currently working on an Integrity Pact which will clearly show the public officials involved in a particular procurement, Members of Procurement Board and the Consulting Firms. We impose an Integrity Pact for bidders. This is done through all stages of bidding of General procurement contracts. Construction contractors are to acquire project management skills. We will start including Green procurement rulings into our GP to comply with our commitments on the Green Agenda and have more of our procurements done electronically for greater transparency.
Ladies and Gentlemen,

LET MANAGERS MANAGE

18. Fundamental to the evolution of public procurement procedures, is to instil and impart good corporate governance CULTURE. In assuring clear lines of accountabilities and responsibilities, we have delegated greater authority to Agencies and Ministries. Essentially – – ‘Let Managers Manage’. This decentralises control and circumvents unnecessary bureaucracy. It draws the lines to “where the buck ultimately stops”. This is in line with the National Key Result Areas (NKRA) announced by YAB Perdana Menteri.

19. As we decentralise procurement to Agencies and Ministries, and “Let Managers Manage”, Ministries and Agencies must live up to the assigned autonomy and responsibilities. Their respective Controlling Officers must closely monitor adherence to set rules and standards by the Treasury and uphold their responsibilities of ensuring that procurement procedures are implemented effectively, efficiently with accountability, and with no leakages of confidential procurement information.

20. Public sector must have the “trigger bells” for unauthorised and blacklisted contractors from participating in procurement. We must be uncompromising on non-compliance to agreed terms and conditions, not only on completion date, but also on other terms such as quality of work. The Government cannot be reserved in the enforcement of Liquidated Ascertained Damages Clause on non performance, or on recourse to defect liability. We should no longer offer those lines of compassion to contractors who fail, continue to fail and simply fail the public.

21. Wastage and delays in Government projects are no longer elusive from public scrutiny. Public are clamouring for information and transparency. Public want clarity of accountability in public officials. As our demography and society matures, so must our process and procedures. We must not only have policies that command transparency, but also the systems able to execute these policies. We must ensure public officials have the skills to accurately articulate the demands of those policies to avoid inaccuracies, misinterpretation or misrepresentations.

Ladies and Gentlemen,

THE MARKET

22. To complement the current demands, there must exist a market system able to rise to those similar stipulations expected of public sector, today. The transparency and accountability commanded must comply with the full cycle of Procurement — from bid call to delivery of Project. The private sector must ascent to those market requisites as well. Private sector must meet committed responsibilities in this instance.

23. As they demand payments to be made to them on time, for instance, they too must deliver to committed contracts on time. Much too often the public sector is asked to rise to the standards of private sector in payment and delivery. We have in so doing ensured payments are made to our contractors within 14 days of invoice submission. But all too often sub-contractors are not paid within those timelines by their main contractors, causing unnecessary compromises in Project deliveries. And, often time the Government being blamed.

24. Part of strengthening our public procurement must include a wide base of local manufacturers and contractors with high integrity and business ethics. We must have a private sector able to put forth contractors comparable to global standards, able to meet delivery standards of global comparables. The market must not tolerate “sleeping partners” and “Ali Baba” set ups, if we are stern about a strong public procurement culture. We need to mitigate lobbying and dependencies of companies/contractors on government procurement.

25. If Malaysia is to increase its private investment to 12.8% as envisaged in the 10th Malaysia Plan, we need standards of evaluation and delivery equivalent if not better than global standards. If Malaysia is to commensurate markets of developed countries, then private sector deliveries must correspond those benchmarks.

Ladies and Gentlemen,

PROGRESS MARKERS

26. Malaysia’s procurement standards are progressive. But there is a lot more work to be done by all of us. Our global standing in United Nations Commission on International Trade Law (UNCITRAL), United Nations Convention Against Corruption (UNCAC) and Anti-Corruption Action Plan (ACAP) for Asia and the Pacific authoritatively depict our commitment to building a strong public procurement culture, free of corrupt practices.

27. In the public sector, we must simply be bold enough to say – if you want to do business with us, you must deliver what is best for the greater good of the country. The most deserving companies, with best combination of experience, price and value must get the work. We need to shy away from narrow profiting at the expense of the greater good of Malaysia’s social and economic advantage. The private sector must start offering value added new services in their offerings. Offerings not only relevant to today’s needs, but more importantly ones that will prepare Malaysia for tomorrow’s competition.

28. The market must rid of contractors who deliver low quality work, delayed products and lack knowledge building in their businesses. We must consider a form of recognition and point system for those who build innovative and progressive businesses in private sector to meet the high income economic model. We must implement the green lane system for them. This would encourage a positive competition in our market for good quality contractors and service providers.

Ladies and Gentlemen,

THE NAME IS INTEGRITY

29. It is often the conjecture that developing countries have a blurry public procurement system when compared to the more developed countries. I am not necessarily persuaded with this argument. The colour of integrity is not the function of economic progress but it is by the eco-system of a society. If indeed integrity and reliability is defined by progress, we would not have witnessed the collapse of some great global organisations across America and Europe today. We would not have seen crises hitting the markets of European cities and American metropolis.

30. Ultimately the success of our procurement system hinges on you and me, it hinges on us as people first and foremost. The greater burden for all of us, beyond the building of a procurement system and process, is in building of a culture. A culture that upholds doing the right thing. A culture that rewards doing the right thing. A culture that demands doing the right thing on all counts and not selectively. A culture, that we, all of us CAN NURTURE.

On that note, I am pleased to officiate the 2010 National Procurement Guidelines Forum.

Thank you.

Wabillahittaufik walhidayah
Wassalamualaikum warahmatullahi wabarakatuh.