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A Concession Agreement lets a private company operate and maintain public assets or services under government oversight in Malaysia. These contracts typically span 20-30 years and cover major infrastructure projects like highways, power plants, or water treatment facilities. The government keeps ownership while granting specific rights to the private sector.

Under Malaysian law, these agreements set out clear responsibilities, revenue-sharing terms, and performance standards. The private company (concessionaire) usually invests significant capital to develop or upgrade the facility, earning back their investment through user fees or government payments. This arrangement helps Malaysia develop public infrastructure without straining government budgets.

Use a Concession Agreement when your company plans to operate large-scale public infrastructure in Malaysia while sharing risks and rewards with the government. This arrangement works particularly well for toll highways, power plants, airports, or water treatment facilities that require substantial private investment but serve public needs.

The timing is right when you need to define long-term operational rights, establish revenue mechanisms, and set performance standards. Malaysian regulatory frameworks favor these agreements for projects exceeding RM500 million, especially when the government seeks private sector efficiency while maintaining public oversight. Getting expert legal counsel early helps structure terms that protect both public interest and commercial viability.

• Build-Operate-Transfer (BOT) agreements: Most common for new infrastructure projects where private companies construct and operate facilities before transferring them to the government
• Build-Own-Operate (BOO) agreements: Used when private sector maintains permanent ownership while providing public services
• Rehabilitate-Operate-Transfer (ROT) agreements: Popular for upgrading existing infrastructure like aging highways or utilities
• Operation and Maintenance agreements: Focus solely on managing existing public facilities without major construction
• Hybrid concessions: Combine multiple elements to suit complex projects, especially in Malaysia's PPP framework

• Government Agencies: Usually represented by ministries or authorities who grant the concession rights and monitor compliance throughout the agreement term
• Private Companies (Concessionaires): Infrastructure developers, operators, or service providers who invest capital and manage the facilities
• Legal Counsel: Corporate lawyers and government legal officers who draft, review, and negotiate agreement terms
• Financial Institutions: Banks and investors who provide project financing and require specific provisions to protect their interests
• Technical Consultants: Engineers and industry experts who advise on operational standards and performance metrics

• Project Scope: Define exact infrastructure or services covered, operational boundaries, and project timeline
• Financial Model: Calculate investment requirements, revenue projections, and tariff structures
• Performance Standards: Establish clear metrics for service quality, maintenance requirements, and public safety
• Risk Allocation: Map out responsibilities between government and concessionaire for various operational scenarios
• Regulatory Approvals: List required permits, environmental clearances, and compliance requirements
• Exit Mechanisms: Outline transfer conditions, asset valuation methods, and handover procedures

• Parties and Recitals: Full legal names, authority references, and project background
• Grant of Rights: Specific concession scope, duration, and territorial limits
• Financial Terms: Revenue sharing, tariff mechanisms, and payment schedules
• Performance Standards: Service levels, maintenance requirements, and quality benchmarks
• Risk Allocation: Force majeure provisions, liability limits, and indemnification terms
• Termination Clauses: Exit conditions, compensation formulas, and asset transfer procedures
• Dispute Resolution: Malaysian arbitration provisions and governing law statements

A Concession Agreement differs significantly from an Asset Purchase Agreement in Malaysian business law. While both involve transferring rights to operate assets, their fundamental structures and purposes are quite different.

• Ownership Transfer: An Asset Purchase Agreement permanently transfers ownership of assets, while a Concession Agreement only grants temporary operational rights while the government retains ownership
• Duration: Concession Agreements typically span 20-30 years with specific performance requirements, whereas Asset Purchase Agreements represent a one-time permanent transfer
• Revenue Structure: Concessions involve ongoing revenue sharing and performance-based payments, while Asset Purchases require a single payment or structured installments
• Regulatory Oversight: Concessions maintain continuous government supervision and public interest protections, unlike Asset Purchases which give buyers full control subject only to general regulations