Page 102 - Bank Muamalat_AR24

100 BANK MUAMALAT MALAYSIA BERHAD

ECONOMIC

M13

PROCUREMENT PRACTICES: FOSTERING ETHICAL AND SUSTAINABLE PARTNERSHIPS

Why This Matters
Responsible procurement plays a critical role in upholding Procurement is more than a transactional function; it is a
the Bank’s commitment to ethical conduct, operational strategic lever to build long-term partnerships, strengthen
excellence, and sustainability. By managing supplier regulatory compliance, and embed the values of inclusivity
relationships with transparency, fairness, and due diligence, and sustainability in our daily operations. Our approach is
Bank Muamalat not only mitigates third-party risks but also also aligned with the principles of value-based intermediation
promotes environmental and social outcomes throughout its (VBI), ensuring that procurement decisions support both
supply chain. business objectives and national development goals.

Our Approach

The Bank’s procurement practices are grounded in strong • All procurement activities are conducted in compliance
governance, regulatory compliance, and a values-driven with relevant regulatory guidelines, including Fair
approach to supplier engagement. Key elements include: Treatment of Financial Consumers (FTFC) and
Outsourcing Policy. Clear and standardised requirements
• Comprehensive due diligence is performed when are established for all tender and quotation exercises to
onboarding new vendors, renewing contracts, or ensure fairness and transparency.
renegotiating terms. This includes credit assessments via
CTOS, anti-money laundering and counter-financing of • Every vendor is required to sign a Vendor Code of
terrorism (AML/CFT) screening, and reviews of legal and Conduct and Declaration of Interest, which formalise our
compliance history. mutual commitment to ethical conduct, conflict-of-interest
prevention, and accountability.
• Outsourced service providers are required to meet the
same ethical and operational standards imposed on the • In line with VBI principles, the Bank also considers inclusive
Bank by regulators. This includes periodic testing of and impact-driven elements in procurement decisions.
their business continuity plans (BCP) and adherence to Vendors that support local communities, employ individuals
information security protocols. from underrepresented groups (such as persons with
disabilities or single mothers), or demonstrate strong ESG
• Monthly governance meetings are held at the business practices are given due consideration
unit level to oversee outsourcing relationships, track
performance, and resolve any operational concerns in a
timely manner.

Key Actions and Outcomes

In 2024, the Bank strengthened its procurement practices • All vendors are required to sign a Vendor Code of
to reflect a deeper focus on compliance, inclusivity, and Conduct and a Declaration of Interest. These declarations
sustainability. strengthen mutual accountability between the Bank and
our vendors and reinforce our commitment to responsible
• The Bank introduced a mandatory vendor prequalification and ethical business practices.
process before onboarding. This includes credit checks
via CTOS, AML and CFT screening, and a thorough • A structured process has been implemented to address
review of the vendor’s legal and compliance history. procurement disputes in a professional and timely manner.
This step helps ensure that only reputable and capable This helps prevent unnecessary escalations and supports
vendors with a strong track record are engaged in our the preservation of long-term business relationships
procurement activities. through effective conflict resolution.
• To ensure a fair and transparent procurement process, • Vendor performance evaluations were carried out
the Bank established clear and standard expectations annually or when necessary. These evaluations assess
across all tender and Request for Quotation exercises. service quality, delivery timelines, compliance with contract
These include specific requirements on deliverables, terms, and responsiveness. The feedback from these
timelines, and quality standards to eliminate any potential assessments is used for continuous improvement and
for bias or preferential treatment. This approach ensures plays an important role in contract renewal decisions.
equal opportunity for all vendors.