December 19, 2014

Malaysia’s GDP was ranked by the IMF at 35th globally in 2013. The country has a major commodity sector and wide-ranging export-base manufacturing and service industries. Malaysia has great potential to grow through further trade liberalization. However, many of the goods and services produced now are typically supplied to government agencies under decades-long government procurement contracts.

A recent study by Malaysia-based Institute for Democracy and Economic Affairs (IDEAS) points out that public spending on procurement currently stands at around 25 percent of the annual GDP in 2014. The study also shows that long-term government procurement policies have limited the competitiveness of domestic businesses, and have prevented the country from enjoying the full benefits of global trade.

The study estimates that gradually opening up the procurement market will likely generate access to a market that has an estimated value of around 954.1 Billion SDR ($1.4 trillion USD).

The study is part of an ongoing Free Trade research and education project that aims to strengthen research and collaboration among global think tanks in promoting trade liberalization. The project also supported the study on the costs of transportation published by Eastern Africa Policy Centre in September, 2014.