LOCAL AND FOREIGN TENDERS FOR SUPPLIES TO GOVERNMENT

Mr Bernard Rodrigues asked the Minister for Finance whether the present practice in international tenders for supplies to the Government, whereby the lowest local tender, which does not overbid the lowest foreign tender by more than 10 per cent, is accepted by the Government in preference to the latter, is sufficiently conducive to the promotion of local industries, and if he will consider increasing such preference margin to enable local industries to compete more favourably with foreign industries which may be in receipt of a generous subsidy from their governments.

Mr Lim Kim San: Mr Speaker, Sir, first, I would like to express my appreciation to the Member for Telok Blangah who has shown concern for the survival of local industries in order that our workers would not lose their jobs as a result of unfair foreign competition in public tenders and purchases.

I would like to clarify that our preferential purchase margin is not a straightforward single percentage figure. The margin varies from 5 to well over 10 per cent, depending upon a number of factors, namely, the size of tender contract, the cost of local production, the level of import duty, and the elements of subsidy or dumping price in imported goods. By a careful consideration of all these factors by those in Government and statutory bodies responsible for public purchases, an adequate preferential margin is then worked out to ensure that local manufacturers' interests are promoted and, at the same time, public bodies are safeguarded against unscrupulous manufacturers who may take advantage of our preferential purchase policy. There may, however, be cases whereby the local cost of production is genuinely high. In such a case the preferential margin may be raised.

Mr Speaker, Sir, the Government keeps under constant review its preferential purchasing policy. The Economic Development Board is represented when tenders of the Government as well as statutory bodies are considered. Administratively, Government departments as well as statutory bodies have to submit monthly returns showing their purchases of local and foreign products to the Economic Development Board. Such departments and statutory bodies are asked to justify in detail purchases of foreign products when local substitutes are available. In this way, Sir, the Government gives every opportunity to local industries to supply the requirements of Government and statutory bodies.