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Offset

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Offset Elements

Initiation of Offset
Type of Offset
Committee

The offset programme is initiated upon government procurement above RM 50 million and triggered by respective ministries or agencies. The offset programme developed leveraging on the procurement shall be strategic and gives a high impact to the country in terms of economic growth, and industry capacity/capability development.

Offset – to transfer of technology and providing local content:

	1.	Related to equipment/system being procured (Direct offset),
	2.	Other than above (Indirect offset)

Counter purchase – trading of Malaysian product:

	•	Commodities and/or
	•	Manufactured products to the supplier's country/network

	•	Malaysian Offset Executive Committee (MOEC) who oversee and provide strategic direction of the offset programme
	•	Offset Committee who supervise and guides the implementation of the offset programme
	•	Offset Management unit (OMU) is a unit under the procuring Ministry/Agency which monitors all offset programmes
	•	Offset Recipients consist of local companies, institutions or organizations that receive the benefits, profits or advantages from the offsets

Offset Strategy

Indirect Offset
Direct Offset

Indirect Offset is not directly related to the Main Procurement, which can be any activities agreed by both parties; buyer and seller. Indirect Offset could involve any of the following;

	1.	Technology Transfer - It is collaborative activities that result in new knowledge creation or enhancement of the existing knowledge
	2.	Product Marketing - It involves local product marketing into global supply chain through the foreign supplier platform
	3.	Contract Manufacturing - Recipient able to secure work packages through foreign supplier which is not related to the procured equipment
	4.	Foreign Direct Investment - Opportunity for foreign company to invest in Malaysia that not directly contribute to the procured equipment

Direct Offset comprises activities and packages which are directly related to the Main Procurement that involve any of the lists below;

	1.	Capability Development - Recipient will be given opportunity to develop the capability in thru-life support of the equipment procured
	2.	Product Design Capability - Recipient will be given opportunity to develop
	3.	Product Design Locally Parts and Component Making - Recipients able to secure contract to manufacture product that contribute directly to the development of the procured equipment
	4.	Foreign Direct Investment - Opportunity for foreign company to invest in Malaysia that contribute directly to the procured equipment

Home > Offset > Elements

Offset Elements

Offset schemes are usually not always designed to achieve a relocation of economic activity from the country of the equipment supplier to the purchasing country. As such, the offset programmes also include a broad range of activities such as mandatory co-production, licensed production, subcontractor production, technology transfer, counter-trade, and foreign investment.

Initiation of Offset

Counter trade associated with government procurements usually require foreign supplier to discharge obligations involving offset and counter purchase to create value from major capital by allowing local industry to participate through:

Type of Offset

The offset programme is initiated upon government procurement above RM 50 million and triggered by respective ministries or agencies. The offset programme developed leveraging on the procurement shall be strategic and gives a high impact to the country in terms of economic growth, and industry capacity/capability development.

•

Offset – to transfer of technology and providing local content:

	1.	Related to equipment/system being procured (direct offset), or
	2.	Other than above (indirect offset)

•

Counter purchase – trading of Malaysian product:

	1.	Commodities and/or
	2.	Manufactured products to the supplier's country/network

Offset Strategy

MIGHT utilizes its corporate knowledge gathered from various other processes such as Foresighting, Technology Road mapping, MIGHT Consultation, MIGHT Interest Group, Secretariat of Malaysian Aerospace Council and Malaysia Automotive Institute as inputs in undertaking its TDA strategic function for Industry and Technology Database. The outputs from these databases are then to be used as an input for offset strategic identification.

Direct Offset comprises activities and packages which are directly related to the Main Procurement that involve any of the lists below;

	•	Capability development - Recipient will be given opportunity to develop the capability in thru- life support of the equipment procured
	•	Product design capability - Recipient will be given opportunity to develop Product design locally
	•	Parts and component making – Recipients able to secure contract to manufacture product that contribute directly to the development of the procured equipment
	•	Foreign Direct Investment - Opportunity for foreign company to invest in Malaysia that contribute directly to the procured equipment

Indirect Offset is not directly related to the Main Procurement, which can be any activities agreed by both parties; buyer and seller. Indirect Offset could involve any of the following;

	•	Technology Transfer - It is collaborative activities that result in new knowledge creation or enhancement of the existing knowledge
	•	Product Marketing - It involves local product marketing into global supply chain through the foreign supplier platform
	•	Contract Manufacturing - Recipient able to secure work packages through foreign supplier which is not related to the procured equipment
	•	Foreign Direct Investment - Opportunity for foreign company to invest in Malaysia that not directly contribute to the procured equipment

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