Introduction

This Factsheet outlines the current progress in advancing Sustainable Public Procurement (SusPP) in Malaysia based on a desk review. The review applies an analytical framework of six Pillars (or "building blocks") of SusPP systems.

The Framework is designed to make clear that countries do not need to follow a linear step-by-step path to build effective GPP systems. Rather it is important to examine local contexts and prioritize the Pillars with the most potential in the country. No matter where a country starts, a balanced approach to implementation calls for progress on all Pillars to some degree.

This Factsheet is organized as follows:

• "Country Overview" section with executive summary, indicative maturity rating, key achievements, potential pathways forward and timeline of key events related to advancing sustainable public procurement.
• "State of Play & Forward Looking Analysis" section that summarizes the research findings from the desk review for each Pillar theme.
• "Key Stakeholders Driving the Agenda" explores opportunities for ADB teams to open discussions with country counterparts and add value to the work of partners.

The Factsheet is intended to be a living document to promote knowledge sharing and support training activities at ADB. It will be revised and improved as new information is uncovered and advances are made. If you have new information, please contact ychu@adb.org.

Government procurement in Malaysia is a significant socioeconomic catalyst as it represents about 13.2% of GDP and public expenditure is expected to grow. The Government of Malaysia recognizes the significant role that green public procurement can play in achieving its green growth ambitions. “Leading by example through government green procurement” is the first pathway highlighted in the National SCP Blueprint 2016-2030. Doing so aims to drive green purchasing practices across Malaysian society including businesses and consumers.

Green public procurement was first endorsed in the Government’s 2010 Budget Speech. The Government has taken a staged approach to GPP implementation, aligned with international practice. A 2013 Short-Term Action Plan piloted a “Government Green Procurement” (GGP) initiative with only five government agencies and six product groups. The initiative has slowly expanded the participation of government agencies and product groups, resulting in the present day where all agencies are involved with criteria specified for 40 product groups. The Malaysia Green Technology and Climate Change (MGTC) Corporation who leads GPP implementation has developed various supportive tools, including a GPP Guideline and training course (Version 3.0), Directory and Eco-Mark. Step-by-step guidance on green procurement is outlined in the GPP Guidelines, which recognizes that green procurement starts with demand management - buying less is always the greenest approach.

The country benefits from a robust monitoring system that tracks the level of GPP adoption, as well as its impact in terms of energy reduction, GHG emissions and more economic and environmental metrics. Work is underway to develop an online monitoring system for GPP integrated into the new e-procurement system.

>> Visual snapshot of Sustainable Procurement Maturity Level

Official Procurement Portal: https://www.malaysia.gov.my/portal/category/2

E-procurement Portal: https://www.eperolehan.gov.my/

Key Achievements

• 10+ years in GPP implementation through a phased approach
  
• Started with GPP pilot project in 2013 with just five participation government agencies and now covers all agencies including state and local authorities
  
• National development plans focused on green growth and sustainable consumption and production (11MP and 12MP)
  
• Committed to net zero by 2050 with targets set on energy efficiency, low-carbon transport, circular economy (including construction waste)
  
• Procurement aims to stimulate the growth of local industry
  
• GPP tools in place, including the MyHIJAU Mark and Director and environmental criteria for 40 product groups in the GGP Guidelines
  
• Various support programs on sustainability exist for local companies and SMEs
  
• Monitoring system in place that evaluates process, institutionalization and impact of GPP
  

Ongoing Activities

• New public procurement act under development for adoption in 2023
  
• GGP Guidelines for Works projects in preparation and pilot project being implemented to demonstrate GGP in a Works project
  
• Draft Energy Efficiency and Conservation Act (EECA) to be tabled for debate in late 2023
  
• Expanding GPP concept to social responsible public procurement and innovation procurement
  

Potential Pathways Forward

• Integrate sustainability criteria into ADB financed procurements
  
• Develop and raise awareness on the new GGP Guidelines for Works projects
  
• Expand activities on circular economy model related to construction waste
  

>> Timeline of Implementation of Sustainable Procurement Activities

2020

2010

2013

2014

2016

2017

2021

2018

Budget Speech calls for government procurement of environmentally-friendly products and services

Short Term Action Plan for GPP launched with 5 participating government agencies and 6 product groups

First Green Public Procurement Guidelines developed

GGP initiative expanded to 12 federal government agencies and 20 product groups

National SCP Blueprint 2016-2030 sets Pathway 1 as “Leading by example through government green procurement”

Long-Term Action

Plan for GPP 2016-2025 launched

GGP initiative expanded to 25 federal government agencies and 30 product groups

Green Public Procurement Guidelines 2.0 developed

Green Public Procurement Guidelines 3.0 developed

GGP initiative expanded to all government agencies including state and local authorities and 40 product groups

Ambition set to expand GGP to cover Socially Responsible Procurement (SRP) and Procurement Promoting Innovation (PPI)

Pillar 1: Government Vision & Awareness of SusPP

Governments that establish a clear policy vision on SusPP can accelerate the shift from procurement as an adminstrative to strategic function, making clear how SusPP can deliver on important national social and environmental goals.

Green public procurement

Malaysia has longstanding experience (10+ years) with green public procurement, taking a phased approach that has expanded with time to include more government agencies and product groups. GPP is recognized as a key market enabler to achieve the country's vision to shift economic development towards green growth. The 2010 Budget Speech called for government procurement of environmentally friendly products and services.

Green growth was one of six game changers in the 11th Malaysia Plan 2016-2020 (11MP). The Plan adopted the Sustainable Consumption and Production (SCP) concept as a strategic priority. Green public procurement was identified as a key action, along with the promotion of renewables, energy efficiency, low-carbon mobility and improved waste management. The National SCP Blueprint 2016-2030 sets out 16 Pathways for SCP IN Malaysia. Pathway 1 is “Leading by example through government green procurement.” The 12th Malaysia Plan 2021-2025 (12MP) expands on this foundation by setting out specific targets, actions, incentives and programs to further the Government’s green procurement ambitions.

National development and climate goals

Green Public Procurement can contribute to various socioeconomic and development goals in Malaysia, including:

• Climate Change: Malaysia has made a strong commitment to achieving net-zero emissions by 2050. The revised Nationally Determined Contribution (NDC) sets a mid-term target of 45% reduction by 2030.
  

• Energy efficiency: The Government has promoted energy efficiency through various incentive programs. Minimum Energy Performance Standards for domestic appliances were first gazetted in 2013. The Sustainability Achieved via Energy Efficiency (SAVE) Programme (2013-2011) offered rebates on the purchase of energy-efficient refrigerators and air conditioners and replacement of old chillers to more energy efficient ones.The National Energy Efficiency Action Plan (2015) promotes energy efficient appliances, minimum energy performance standards, energy audits and management, co-generation and energy-efficient building design. Most recently, the Government intends to table a draft Energy Efficiency and Conservation Act (EECA) for debate in late 2023 that will regulate requirements for comprehensive building energy codes, building energy labelling and electrical appliance energy performance standards. The regulatory requirements are targeted to come into force in 2019/2020
  

• Low-carbon transport: The Government of Malaysia first gazetted vehicle emission standards at the EURO 4m level in 2013. In 2014, the Government introduced 7% bio-diesel blends in vehicle fuels. The Low Carbon Nation Aspiration 2040 in the National Energy Policy 2022-2040 is a crucial component of Malaysia's National Energy Policy (NEP) setting targets to achieve by 2040 (compared to 2018):
  
• Increase urban public transport modal share from 20% to 50%.
  
• Increase electric vehicle (EV) penetration from <1% to 38%.
  
• Transition from B5 blend to B30 blend of alternative lower carbon fuels in heavy transport.
  
• Increase usage of LNG as alternative fuels in marine transport from 0% to 25%.
  

• Circular Economy/Construction Waste: The National SCP Blueprint 2016-2030 set a pathway “towards a circular economy waste system.” It calls on Government to lead by example by integrating technical specifications into tender documents, including reducing packaging and prefer ability to recycle materials, prefer goods that contain a certain percentage of recycled materials, and require take-back obligations on suppliers. The Government The 12th Malaysia Plan prioritizes implementing a circular economy approach to construction waste. The Government set a goal to build at least three construction-specific recycling.
  

Pillar 2: Legal & Regulatory Framework

Procurement law reform can be key to clear obstacles to implementation by establishing "value for money", not "lowest price", as a core procurement objective, and authorizing procurement approaches suited to SusPP.

Procurement legislation

Malaysia does not have a standalone procurement law, although the government is planning to introduce the act in 2023. Rather, procurement is governed by treasury instructions and circulars issued by the Ministry of Finance. The main legislative texts are:

• Financial Procedure Act 1957 ("FPA") which oversees, the control and management of the public finances of Malaysia;
  
• Government Contracts Act 1949 ("GCA") which regulates the making of contracts on behalf of the Government.
  

Value for money is recognized as a core objective of government procurement. Government procurement should provide the best returns in terms of quality, quantity, timeliness, price, and source for every Malaysian Ringgit spent.

Regime for GPP

The implementation of GPP in Malaysia is driven by a federal government administrative order, not legislation. The Ministry of Finance issued a Treasury Circular (1PP) No. 2 - “Short-Term Action Plan” 2013-2015 in 2014 to support a pilot implementation with five ministries. A GPP Long-Term .

Action Plan 2016-2030 was subsequently issued and updated through multiple Instruction Letters by the Ministry of Finance. The GGP administrative guidelines and circular only applies to Federal agencies; State level and Local level agencies are not yet mandated to practice GPP.

The Government of Malaysia first launched its Green Public Procurement (GPP) initiative in 2013-2015 through the GGP Short Term Action Plan (STAP) 2013-2014. The Action Plan focused on five pilot projects involving five ministries at the federal level and just six product groups. A Long-Term Action Plan (LTAP) was developed to cover the period from 2016 to 2025. Under the plan, GPP implementation was gradually expanded to cover more product groups with government agencies. As of 2021, the GPP initiative covers all Government Ministries and Agencies including state agencies and local authorities, as well as 40 product groups.

The Government aims to expand the GGP Initiative to cover Socially Responsible Procurement (SRP) and Procurement Promoting Innovation (PPI) from 2021 to 2030.

The Government of Malaysia has considered four factors when prioritizing the products and services to include in the GGP initiative: budget considerations, availability of standards, environmental impact and readiness of local suppliers. Based on this prioritization exercise, 40 product groups have been selected to date.

Domestic preferences

The GGP Guidelines (p. 5) set out the following priorities for Government procurement:

• Stimulate the growth of local industry through the use of materials and local resources to the maximum
  
• Encourage and support the development of Bumiputera entrepreneurs in line with the country’s aspirations to create a Bumiputera Trade and Industrial Society
  
• Improve the capacity of local institutions and industries through the transfer of technology and expertise
  
• Stimulate and encourage local industry-oriented services such as transportation (freight) and insurance
  
• Accelerating economic growth where Government revenue is used as an instrument to achieve socioeconomic and development goals.
  

Pillar 3: Institutions & Capacity

Green Public Procurement

The Government Green Procurement Steering Committee (GGPSC) and the Government Green Procurement Working Committee (GGPWC) jointly chaired and managed by Ministry of Finance (MOF) and Ministry Of Natural Resources, Environment and Climate Change (NRECC) have been established for the purpose of GGP implementation. The Steering Committee approves GGP policy, approves guidelines and reports the status of GGP implementation to the Cabinet of Ministers. The Working Committee formulates GGP policies and action plans, drafts guidelines and monitors implementation. A GGP core team represented by Central Agencies, several Ministries and technical Agencies supports implementation while providing a forum for various agencies to discuss implementation issues and solutions, technical matters and reporting status.

The Malaysia Green Technology and Climate Change (MGTC) Corporation, an agency within the Ministry of Natural Resources, Environment and Climate Change (NRECC), is the lead technical agency in charge of GPP implementation. The adoption of GGP has been gradual, starting in 2013 with just five ministries: the Economic Planning Unit; Ministry of Energy, Green Technology and Water; Ministry of Health; Ministry of Home Affairs (including the Royal Malaysian Police) and Ministry of Education. As of 2020, the GGP initiative covers all Government Ministries and agencies including state and local authorities.

The main agencies involved in GPP implementation include:

• Ministry of Finance: Issuing procurement circulars, instructions and procedures. Coordinating GGP planning and reporting by each Ministry.
  
• Economics Planning Unit: Lead agency for Sustainable Consumption and Production (SCP) projects.
  
• Ministry Of Natural Resources, Environment and Climate Change:Coordinating the development of green technologies and industries and meeting climate change commitments under the NDC.
  
• Department of Works: Assisting in the preparation of GGP Guidelines for Works projects and implementing a pilot project to demonstrate GGP in a Works project.
  
• SIRIM Berhad (Standard and Industrial Research Institute of Malaysia) under the Ministry of Trade and Industry: Preparing environmenta technical criteria for priority product groups
  

The Green Purchasing Network is active in Malaysia working with other NGOS to raise awareness of local authorities.

Training

The National SCP Blueprint 2016-2030 prioritizes action to ensure all procurement officers in Malaysia undergo systematic GGP training. Train-the-trainers modules will be developed within the scope of the virtual Malaysian SCP academy. The modules cover benefits of GGP, application of guidelines and life-cycle costing. The 12th Malaysia Plan 2021-2025 prioritizes a workshop to enhance existing professional accreditation for procurement professionals to incorporate sustainability elements. A training module was developed based on the GGP Guidelines Version 3.0, developed under a UNDP project.

Pillar 4: Market Practices

Market dialogue throughout the procurement process helps procuring entities to choose realistic sustainability criteria and ensure suppliers succeed in delivering on sustainability commitments over the contract duration.

Support Programs

The MyHIJAU SME and Entrepreneur Development Program aims to build the capacity of small and medium-sized enterprises to supply green products and services to Government Ministries and agencies. By 2016, 319 SMEs had participated in the training with 92 achieving green label certifications.

The Commerce International Merchant Bankers Berhad (CIMB) offers the “GreenBizReady” program described as a “one-stop sustainability ecosystem for SMEs.” The program offers training, web tools, networking, certification advisory services, financing and events. The CIMB signed a memorandum of cooperation (MoC) in July 2023 with the Malaysian Green Technology and Climate Change Corporation (MGTC) to explore opportunities to drive sustainability adoption among SMEs via a sustainability-linked financing programme.

Business Groups

The Malaysia Productivity Center is the government agency responsible for improve the global competitiveness and innovation of Malaysian enterprises.

Pillar 5: Procurement Operations

Various tools and procurement approaches can be employed to help procurers more easily identify environmentally friendly goods and services and attract a competitive market response.

Guidelines and Criteria

The Government of Malaysia has issued Guidelines on Green Public Procurement that offers the policy rationale for buying green, step-by-step guidance and environmental criteria for 40 priority product groups. The GGP Criteria were effectively aligned with various Type 1 Eco-Labelling Schemes, both on a national and international level. Different government ministries and agencies showed interest in collaborating for the development of the new criteria. These ministries include the Ministry of Works, which aimed to incorporate GGP into Green Building initiatives, and the Ministry of Agriculture and Agro-Based Industry, focusing on technologies that reduce water and energy usage for irrigation. Similarly, the Ministry of Transport aimed for improvements in the public transportation system to align with GGP principles.

Various product categories have been recognized under the MyHIJAU mark or certified by the SIRIM Eco-labelling scheme. These products gain additional scores during the technical evaluation of tenders. In cases where products from other countries hold eco-labelling marks, third-party laboratory test reports are required for verification, ensuring that the criteria are at least as stringent as the Malaysian GGP criteria.

Directories

Two product directories featuring green building materials exist in Malaysia to support green procurement, the MyHijau Directory and GreenPages Malaysia. All listed products must have obtained eco-label certifications. Additionally, products listed in the MyHijau Directory are eligible for incentives under MIDA’s Green Investment Tax Allowance (GITA) that was introduced in 2014.

Ecolabels

The MGTC created the MyHiJau Mark to bring together various eco-labels and environmental certifications to simplify green procurement by government agencies and others. Four categories exist under the Mark with various levels of verification. A total of 7,498 green products and services were registered in 2020 as compared to 181 in 2015. The MyHIJAU Mark program plans to conduct market research to understand readiness to supply green products and services and an awareness raising campaign to promote greater use of the Directory.

Demand Management

Better management of existing assets is recognized in Malaysia as a first step in green procurement. The GGP Guidelines (p. 19) call on all agencies to take three steps to improve demand management:

• Implement efficiency programs through audits of energy, water and waste generation
  
• Encourage the use of online applications or systems to avoid equipment purchase and waste generation
  
• Identify procurement requirements based on existing allocations.
  

Awards

The Government of Malaysia has issued National Energy Awards since 2018 to recognize Malaysian corporations and institutions that adopt game-changing sustainability initiatives in line with the nation’s Just Energy Transition, Net Zero, and sustainable development agenda. In 2023, awards were granted to 29 winners who went on to represent Malaysia at the ASEAN Energy Awards - with 12 winning Malaysia projects including the Tzu Chi International School and Johor Port Authority Building.

Programs

The Low Carbon Cities 2030 Challenge (LCC2030C) brings together 30 local authorities committed to reduce their emissions intensity by up to 45% by 2030. The program sets five challenges:

• Energy – Maximise building energy efficiency and increasing adoption of renewable energy
  
• Water – Maximise water efficiency and increase adoption of rainwater harvesting
  
• Mobility – Increase the use of public transport (bus), cycling, walking and other low carbon modes
  
• Waste – Reduce the amount of waste that goes to landfills
  
• Greenery – Maintain or increase the number of trees and green spaces in the city
  

The Government grants Low Carbon City Awards ceremony to recognise the efforts of authorities and private organisations in reducing greenhouse gases (GHG) emissions through the 2030 Challenge. In addition, a Low Carbon City Catalyst Grant supports the financing of low carbon urban projects.

Green Buildings

The Government is in the process of creating an annual Energy Efficiency Award which will indirectly stimulate more interest in green building ratings (12th Malaysia Plan, p. 102). The 12th Malaysia Plan also stipulates that the Government will analyze building asset data across all ministries in order to understand building energy consumption patterns. Once processed, energy efficiency targets will be set for government building for 2020, 2025 and 2030. A Construction Industry Transformation Programme (CITP) has been launched to reduce the impact of construction industries on the environment.

The 12MP promotes the use of sustainable, durable, biodegradable and recycled construction materials, through the application of Industrialised Building Systems (IBS) technologies, BIM, Prefabricated Prefinished Volumetric Construction (PPVC) and Modular Methods. The Government will encourage developers to adopt sustainable certification and performance tools, including the Sustainable Infrastructure Rating Tool (Sustainable INFRASTART), Green Building Index and GreenRE.

Tax Incentives

The Government offers a Green Investment Tax Allowance (GITA) for the purchase of green technology assets and Green Income Tax Exemption (GITE) on the use of green technology services until 2023. Eligible technologies include renewable energy, energy efficiency, green buildings, green data centers, electric vehicles, and integrated waste management. The 12MP set the stage for the introduction of a carbon tax in Malaysia, which could improve the comparative affordability of green market options.

Pillar 6: Monitoring & Impact Measurement

Monitoring systems are essential to gather the information needed to keep SusPP implementation on course and communicate on the benefits achieved for the country.

The Government of Malaysia has set clear targets to advance GPP practices across government ministries. The 11th Malaysia Plan 2016-2022 set a target of 20% government green procurement. The Government estimated that achieving this goal would offer benefits of an anticipated cumulative savings of about RM390 million in electricity bills with an associated reduction of 0.7 MtCO2 eq. (12th Malaysia Plan, p. 160). The outcome was an achievement of 20.7% green procurement by participating government agencies between 2016-2019. The National SCP Blueprint 2016-2030 listed four indicators to track GGP implementation:

• Number of agencies at national, state and local level practising GGP
  
• Number of selected product groups
  
• Share of green contracts for selected products and services (%)
  
• Total expenditure on green government procurement (RM)
  

The 12th Malaysia Plan raised ambition to 25% government green procurement.

To monitor GPP practices, each procuring entity must submit reporting twice yearly in June and December to the Ministry of Finance and Malaysian Green Technology and Climate Change Corporation (MGTC) using a standard template form. The results are presented to the GGP Steering Committee who will inform the Cabinet of Ministers.

An online monitoring and tracking system is planned for development to provide data to improve GGP policies as well as to provide market intelligence on emerging demand and supply gaps (12th Malaysia Plan, p. 161). Under a UNDP project, a monitoring and evaluation framework will be developed and integrated into the government e-procurement system to enable the tracking of green procurement results.

The Malaysian Green Technology and Climate Change Corporation (MGTC) is responsible for quantifying the emission reductions and other environmental benefits of government policies and actions.

Projects Supported by ADB

ADB collaboration with Malaysia focuses on regional economic cooperation, private sector development, and developing sustainable cities under the Twelfth Malaysia Plan, 2021–2025.

Supporting sustainable procurement activities aligns with the ADB’s support of the ASEAN Catalytica Green Finance Facility. The ADB also supports collaborations to enhance urban sutsainability at the local government level through the development of green city action plans. An opportunity exists to prioritize green and sustainable procurement in these plans.

Other Initiatives supported by National/International Agencies

UNODC supports procurement reform in Malaysia under the Association of Southeast Asian Nations (ASEAN) Parliamentary - Civic Partnership Project. UNODC hosted a three day procurement dialogue in June 2023 to support the consultative process to develop a new Procurement Act.

UNDP “Implementing the National Sustainable Consumption and Production Blueprint through Government Green Procurement (SCP-GGP)” is a 2.5-year project (2018-2021, 400,000 USD) that supports Malaysia in the development and implementation of SCP as a means of achieving green growth. The project focuses on the role of the government as a key catalyst to create a green market for products and services. The Environment and Natural Resource Economics Division, Ministry of Economic Affairs Malaysia is the main implementing partner for the project.

References

ADB Member Fact Sheet, 2023. Malaysia.

Ahmed Alqadami et al 2020. “Challenges of implementing green procurement in public construction projects in Malaysia”, IOP Conf. Ser.: Mater. Sci. Eng. 849 012047

Atan, Malik Bin, 2022. SPP Monitoring & Evaluation (M&E) System in Malaysia.

Chan, M., Masrom, M. A. N., & Shamsul Bahrin, A. S., 2021. Government Green Procurement in Sustainable Infrastructure Development. International Journal of Real Estate Studies, 15(S1), 7–17.

Government of Malaysia, 2009. National Green Technology Policy.

Government of Malaysia, 2014. Government Green Procurement (GGP): Guidelines for Government Procurers.

Government of Malaysia, 2015. “Contribution of the Government of Malaysia” to the UNODC Open-ended Intergovernmental Working Group on Prevention, Sixth Session (Vienna, 31 August to 2 September 2015).

Government of Malaysia, 2016. Eleventh Malaysia Plan 2016-2020.

Government of Malaysia, 2016. National SCP Blueprint 2016-2030.

Government of Malaysia, 2017. Green Technology Master Plan Malaysia (2017-2030).

Government of Malaysia, 2020. Green Public Procurement Guidelines Version 3.0 (in Malay).

Government of Malaysia, 2021. Twelfth Malaysia Plan 2021-2025.

Government of Malaysia, 2022. National Energy Policy 2022-2040

Ishak, Dr. Nur Faiza Ishak; Thiruchelvam, Prof. Vinesh, 2023. Sustainable and Innovative Green Public Procurement in Malaysia.

RIshak, N.F. and Thiruchelvam, V. (2023), "Sustainable innovations in Malaysia’s public procurement: strategic policy initiatives and coherences", International Journal of Innovation Science, Vol. ahead-of-print No. ahead-of-print.

agavan, Dr. Hariramalu, 2022. “Malaysia Country Report: Enhancing Green Public Procurement implementation” presented at the Sub-regional webinar: Enhancing the implementation of Green Public Procurement in Southeast Asian region, 21 February 2022.

UNEP, 2020. Monitoring the Implementation and Estimating the Benefits of Sustainable/Green Public Procurement.

The World Bank. Global Public Procurement Database “Malaysia country profile for 2021”.

Yusoff, Nuryusnita and Alias, Mazni and Ismail, Norhazlin (2021) Drivers Of Sustainable Procurement Behaviour Among Procurement Officers in Government of Malaysia. In: 2nd Post Graduate Social Science Colloquium Proceedings 2021, 8-9 June 2021, Cyberjaya, Malaysia

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