The Ministry of Industry, Trade and Labor's industrial cooperation authority, responsible for reciprocal procurements by foreign companies winning government and government companies' tenders, is calling on the government procurement administration to require Hyundai (KSE:11760) to make millions of dollars worth of reciprocal procurements in Israel.
Industrial cooperation authority chairperson Bina Bar-On called on government procurement administration director Avi Dor to require Hyundai to make reciprocal procurement, after Pele-Phone Communications Ltd. won a Ministry of Finance tender to supply 20,000 Hyundai handsets to government agencies. Hyundai will also be the service vendor for the handsets.
A source close to the tender said the defense establishment was also considering joining the handset tender, which would increase Hyundai's deliveries by hundreds of thousands of handsets. The tender uses the operational leasing method (i.e. the handset belongs to the wireless operator), which is also be used for the private car tender the Ministry of Defense wants to publish.
Bar-On wanted to make it clear that reciprocal procurements also applied to this type of tender. She told "Globes", "Operational leasing is the same as a purchase in terms of the Mandatory Tenders Law (5752-1992), and all obligations derived from the regulations apply to it."
Hyundai's obligation is expected to amount to 35% of the revenue from the tender.
Foreign companies from countries that are not parties to the World Trade Organization's government procurement agreement must make reciprocal procurements equal to 35% of the revenue from an Israeli tender. Companies from countries that are parties to the agreement must make reciprocal procurements equal to 30% of the revenue from an Israeli tender.
Published by Globes [online], Israel business news - www.globes.co.il - on March 2, 2005