What is Bank Guarantee-i?
Government procurement contracts would also require the submission of Bank Guarantee which amounts to 5% of the contract value. Without any existing banking facility, the standard requirement is 1:1 FDs for any issuance of the required Bank Guarantee.
Securing a bank facility for Letter of Credit is never easy. Even if a company is able to secure a facility, the terms can be unsettling. Banks would require an upfront security deposit of up to 40% for the guarantee.
Under government procurement contracts, performance bonds are issued under three categories:
- Bank Guarantee
- Insurance Guarantee
- Financial Institutions Guarantee
As a financial institution approved and accredited by the Ministry of Finance and e-Perolehan, IFSB can issue performance guarantees
What You Need to Know
- One of the requirements for government procurement contracts is a performance guarantee, at 2.5% to 5% of the contract value.
- A performance guarantee is a requirement prior to commencement of contracts.
- IFSB is an approved Syarikat Kewangan for issuance of Bon Perlaksanaan.
- A commission fee of 0.4% is chargeable monthly during the validity period.
We also offer Advance Payment Guarantees – which work in a similar manner to Performance Guarantees except that the government is entitled to reclaim the advanced payment made if the contractor does not complete the job awarded.
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Receive written confirmation (Letter of Offer, Letter of Award, signed contract) from the government on award of project.
Prepare three (3) signed copies of Arahan Pembayaran. The document should be signed by a government officer.
Submit to IFSB
Compile the following documents and submit to IFSB.
IFSB will issue the Performance Guarantee to you within three working days*.
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