Goverment can help companies facing B2G contractual breach

KUALA LUMPUR – The new Malaysian Government led by Dato Sri Ismail Sabri can do more to assist Malaysian companies that are facing contractual and legal disputes with foreign Governments, says the Retail and Trade Brands Advocacy Malaysia Chapter (RTBA Malaysia) today.

RTBA Malaysia, which is a non-governmental organisation that aims to safeguard supply chains and brands from adverse public policies and criminal conduct, made the statement following news reports of Malaysian construction players having to resort to taking legal action against foreign state-owned entities for breach of contract.       

Dato Fazli Nordin, President of RTBA Malaysia, said, “It is often a case of David vs Goliath when it comes to Malaysian privately-owned corporations going up against Government-owned enterprises of other sovereign nations in a contractual dispute. The company will have a distinct disadvantage,”

“As such, the Malaysian Government can and should play a more pro-actively role in helping to ensure local companies are able to resolve these disputes in a fair and equitable manner,” he added. 

Citing a recent case in point is the lawsuit by construction and property developer WZR Property Sdn Bhd (WZR) against the government of Maldives for breaching the contract on the development of the Ministry of Finance building in Hulhumalè, Maldives. “In spite the fact that an adjudicator from the Asian International Arbitration Centre had already ordered the Maldives state-owned Housing Development Corporation (HDC) to pay WZR for the work completed till July 2020, the company has yet to receive full payment that amounted to RM97.36 million,” Dato Fazli explained.  

“Unfortunately, there is nothing the company can do at this point but to take the legal route that can take years to decide,” Dato, Fazli, who is also a qualified legal practitioner, added.

Dato Fazli also highlighted the case between WCT Holdings Berhad and Dubai state-owned property developer, Meydan Group LLC, where by both parties had recently come into a settlement agreement under which Meydan will pay WCT about RM828.25 million for a dispute linked to the development of a racecourse in Dubai. This dispute dates back to 2009.

“It takes a very long time for disputes of this nature to be resolved, causing the companies involved to lose millions of Ringgit in operational and legal expenses. Even if a company were to win the case against a state-owned enterprise, there is no guarantee that the payment will be made,” Dato Fazli said. 

RTBA Malaysia believes that the Government, specifically the Ministry of International Trade and Industry as well as Ministry of Foreign Affairs, can do more to safeguard the interest of Malaysian companies in B2G (business to government) legal disputes. 

“While MITI and Wisma Putra strive to open up new trade opportunities around the world, it is just as important for these Ministries to help protect our home-grown companies from unfair practices and potential ‘sovereign bullying’. This can be achieved through clever and strategic G2G engagements while adhering to the rule of law,” Dato Fazli added.  

“After all, if our local companies succeed and thrive outside Malaysia, our nation’s public revenue will also grow through direct and indirect taxes,” he concluded.

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