Building the capacity of small and medium-sized construction firms through public procurement policies: the case of Malaysia

Abdul-Rashid Abdul-Aziz

Chapter 18 in Research Companion to the Construction Industry in Developing Countries, 2026, pp 471-494 from Edward Elgar Publishing

Abstract: The date 13 May 1969 is a black mark in Malaysia's history. The economic disparity between the country's Malays and Chinese fomented communal violence in various parts of the country. Consequently, the government introduced an affirmative action policy. Public procurers set aside certain construction contracts to Bumiputera (another word for “Malay”) contractors. Contrary to nurturing a vibrant and competitive Bumiputera class of contractors, set-asides have engendered a dependency syndrome among a large pool of Bumiputera contractors. Allegations also abound of certain rent-seeking Malay politicians and top bureaucrats usurping contracts and dubious Bumiputera contractors “selling” their contracts to non-Bumiputera counterparts for quick returns. There are also state-level government-linked construction companies which are effectively competing against Bumiputera contractors. Genuinely capable Bumiputera contractors have to endure these undesired outcomes. The pressure for race-based preferential treatment to be dismantled continues to mount. Construction scholars in Malaysia who have, so far, avoided doing research in this sensitive area should get engaged in this nationally important debate.

Keywords: Affirmative action; Ali Baba relationship; Contract set-asides; Dependency syndrome; Rent-seeking behaviour (search for similar items in EconPapers)
Date: 2026
ISBN: 9781035336302
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