Page 125 - BASIC PRINCIPLES OF QUANTITY SURVEYING PROFESSIONAL PRACTICES

Politeknik Kota Bharu

6.2.2 Performance Bond and Retention Fund

❑ A Performance Bond is an unconditional commitment
(unconditional undertaking) by a finance institution

recognized by the Treasury to pay a set sum to the
Government on demand if the Contractor does not or fails to

comply with and perform its contract obligations.

❑ Before or on the day of site possession, the contractor must

submit a performance bond.

❑ If the contract work is worth more than RM200,000.00, the

contractor must submit a Performance Bond of 5% of the total
contract amount together with the Letter of Acceptance.

❑ Performance Bonds must be issued in Ringgit Malaysia (RM)
by banks or institutions approved by the Treasury, and must

be presented in the following form: -

a) Bank Guarantees / Finance Companies issued by banks

b) finance company licensed under the Financial Services
Act 2013

c) Islamic Bank guarantees issued by licensed banks in

under the Financial Services Act 2013
d) Insurance guarantees issued by insurance

companies that licensed under the Financial Services
Act 2013

e) Takaful Guarantee issued by a licensed Takaful

Company under the Financial Services Act 2013
f) Guarantee issued by Bank Pembangunan Malaysia

Berhad (BPMB) and Bank Perusahaan Kecil &
Sederhana Malaysia (SME Bank).

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