Works Ministry mulls tender deposits for government projects worth RM10m and above

KUALA LUMPUR: Widespread cartel practices disrupting fair competition have prompted the Works Ministry to consider introducing tender deposits for government projects valued at RM10 million and above.

Works Minister Datuk Seri Alexander Nanta Linggi said the mechanism aims to curb longstanding cartel issues raised by contractor associations while ensuring only capable and reputable contractors bid for government tenders.

Clarifying the proposal, Nanta said the measure is not intended to burden contractors, but rather to protect them from becoming victims of unfair competition within the construction industry.

"This proposal has been studied thoroughly, taking into account various factors, including the need to ensure that only capable and reputable contractors participate in government tenders.

"This is among the key issues raised by contractor associations, and we are working to find an effective solution," he said, adding that the ministry remains open to refining the mechanism, including reducing deposit rates to keep it reasonable.

According to a ministry survey sent to Grade G7 contractors, the Public Works Department (PWD) is seeking feedback on proposed deposit rates starting at RM100,000 for projects valued between RM10 million and RM50 million.

The proposed deposits scale up to RM200,000 for projects worth RM50 million to RM100 million, RM300,000 for RM100 million to RM200 million, RM400,000 for RM200 million to RM500 million, and RM500,000 for projects exceeding RM500 million.

A contractor association source said the deposit is expected to be refunded after tender decisions are finalised, which typically takes between three and six months.

Nanta said the ministry acknowledges the concerns raised regarding the proposed rates and their potential impact on company cash flows.

"We heard their complaints previously about cartels, and we are equally prepared to hear their feedback now regarding the proposed mechanism to tackle it.

"In principle, we intend to proceed with this tender deposit mechanism because the goal of curbing cartels cannot be compromised, though we are prepared to consider lower rates.

"The execution method can be refined, and deposit rates reassessed, but efforts to combat cartels must continue," he said, emphasising that any solution must remain practical for industry players.

He added that the ministry's position is clear: to eliminate cartels without burdening legitimate contractors operating with integrity.

He noted that cartel issues are not new, with contractor associations repeatedly highlighting their negative impact on smaller players, particularly those in Grade G1 to G4 categories.

"We have taken this matter seriously because cartel practices create unfair competition and deny genuine contractors a level playing field," he said, adding that the ministry aims to foster a transparent and competitive ecosystem.

He expressed hope that all stakeholders would provide constructive feedback to refine the execution without derailing efforts to resolve an issue that has plagued the industry for years.

The 2027 Budget 2027 allocated RM83 billion for development expenditure, while procurement values reserved for Bumiputera contractors in Grades G1 to G4 were raised to RM7.5 billion from RM4 billion this year.

For government facility maintenance and repairs, direct negotiation limits have been set at RM200,000, while quotation thresholds are permitted up to RM3 million.