Prime Minister Abdullah Ahmad Badawi today said that direct negotiations for government projects would be limited to "special cases" only.

Speaking at the National Economic Action Council dialogue at Putrajaya, the premier admitted that the handling of procurement and tender processes for government contracts lack transparency.

He said having efficient and transparent processes will reduce uncertainty as well as limit the opportunities for corruption.

"Tender processes need to be transparent, with open tendering being the norm," he told some 500 participants who mainly comprise of professionals and representatives from major corporations.

"Direct negotiations will be limited to very special cases. In this manner, an open tendering system will help promote efficiency and competition, which would directly lower the cost of doing business," he said.

Foreign contracts, too

However, at a press conference later, Abdullah declined to elaborate on what he meant by "special cases".

"I can't stand here and explain to you what special cases are," he said, adding that the new system would apply to foreign contracts as well.

Since Abdullah took office as the new premier on Nov 1, he has been proposing a host of reforms in the public sector, with fighting corruption being one of his priorities.

The 30-minute dialogue today was a closed-door affair but Abdullah told reporters that he called upon the corporate sector to support the government and contribute to the nation's revenue.

Abdullah also said car prices would most likely continue to increase, adding that it would be acceptable, reasonable and fair to the people.

He attributed the hike to car traders being unprepared to reduce their profit margin and the difference in exchange rates.

"One cannot continue to go on the basis of reducing car prices. If people have the ability to pay, they will pay the price. Businessmen can pay, so they buy expensive cars," he noted.

New tax structure

Malaysia, which is Southeast Asia's largest car market, has brought in a complex new tax structure that has seen some import tariffs cut but introduced excise duty - traditionally reserved for local products - for all imported cars.

Recently, International Trade and Industry Minister Rafidah Aziz was quoted by Bernama as saying that prices were likely to increase but said manufacturers could still cut prices if they were willing to reduce profit margins

On another issue, Abdullah said the ringgit peg would remain unchanged as there is no reason to warrant a change.

However, he added quickly that the government was not "dogmatic" about the peg.

"It is not that it will go on forever. It does not warrant change. It does provide stability and predictability," he said.

Malaysia imposed the currency peg following the 1997 Asian financial crisis. Although criticised by in certain quarters, others have claimed that the move has helped stabilise the country's economy.