by HARIZAH KAMEL / pic credit: sol.uum.edu.my

BUMIPUTERA contractors need proper training and the ability to procure competitive inputs in terms of raw materials to improve in the sector.

Universiti Utara Malaysia dean of school of law Prof Madya Dr Rohana Abdul Rahman (picture) said Bumiputera contractors simply lack mentoring or training, which is why they could not improve from Grade 1 (G1) licence to G2 or G3 over the years.

“Generally, G1 contractors are mainly involved in general works that do not really need high-tech know-how or specified knowledge, and they have been doing that over the years without venturing into any other types of tenders in the construction industry.

“This is where a lot of agencies have been trying to address but because of their different objectives, maybe we do not really see improvements in the overall mentoring or training for G1 contractors,” she said.

Rohana spoke at the launch of the Institute for Democracy and Economic Affairs’ (Ideas) “Public Procurement and Bumiputera Company Development in the Construction Industry: Reviewing Policies, Exploring Possibilities” report yesterday.

She said G1 contractors also face challenges in getting competitive values for raw materials and inputs, hence they could not tender for bigger contracts which would impinge on their economic holdings and performance.

According to the report, Bumiputera contractors continue to be concentrated at G1 and proliferated when registrations were reopened in 2019 after a 14-year freeze. Some 63.3% of Bumiputera contractors are in G1 compared to 34.5% for non-Bumiputera.

The distribution across other tiers is also uneven — Bumiputera contractors are particularly underrepresented at G3 and G5, more so than at the highest grade of G7.

Ideas also observed a disproportionately greater presence of G1 contractors in lower income states and in rural or mixed rural/urban districts.

Another aspect that the think tank noted is that within G1, companies with a wider set of competencies tend to win tendered contracts more regularly.

“Some companies appear to adopt a higher-skilled and focused specialisation mode of participation in procurement, which presents scarcer opportunity but potentially better financial reward per contract,” said the report.

In terms of regulatory enforcement, the report mentioned it is widely known that fraudulent practices are prevalent, especially the registration of proxy companies under one beneficial owner and their deployment as fronts in balloting or contract-bidding exercises.

The steep challenges of detecting and prosecuting these cases are arguably compounded by under-resourced enforcement authorities.

“Enforcement shortfalls and policy loopholes detract from cost efficiency and effectiveness in promoting Bumiputera companies,” it stated.

On the topic of government procurement, Rohana suggested that if Malaysia has a government procurement act, a better regulation is foreseeable whereby the treasury circulars will be the legislative instruments under the act.

Meanwhile, Malaysian Bumiputera Contractors Association treasurer general Prof Datuk Ir Jamaludin Non said the government should also find ways to export Bumiputera contractors to other countries for their expertise.

“When you look at contractors from Korea or China who can get jobs in Malaysia, this is the thing that we want for our contractors in years to come.

“By nurturing some of these Bumiputera contractors, if we can export them overseas, some of our subcontractors can follow with government assistance. I think this would be a successful process that we can achieve for the good of the country,” he added.