Kuala Lumpur, 7 June 2024: The Institute for Democracy and Economic Affairs (IDEAS) urges the Selangor state government and all state governments to institutionalise transparency in public procurement including those that are awarded through restricted methods. One of the ways of institutionalising transparency is by subjecting the states to legislation on government procurement. This comes after allegations of conflict of interest surfaced in the appointment of mobility service providers for the Proof of Concept (POC) of Demand Responsive Transit (DRT) services in Selangor.

IDEAS welcomes the explanations given by YB Ng Sze Han, the state Exco of Investment, Trade and Mobility that the DRT is a new and highly specialised field with few companies currently registered to provide the service, and another company, Badanbas, is involved in the Proof-of-Concept trials and that the companies were selected through a Request for Proposal. We also note that the Selangor Menteri Besar, YAB Dato’ Seri Amirudin Shari offered to provide complete details under Selangor’s Freedom of Information Enactment, including the meeting minutes involving APAD. However, the explanation and offer to disclose were provided only after probing questions from the public as to the nature of the appointment and allegations of conflict of interest because Asia Mobiliti’s co-founder and CEO, Ramachandran Muniandy, is the husband of current Minister of Youth and Sports, YB Hannah Yeoh. These disclosures should be institutionalised to allow for greater openness and public accountability.

“This incident emphasises the importance of the Government Procurement Act (GPA), which would provide rules for various government procurement methods to be competitive and transparent, and signal a strengthened commitment to fiscal responsibility. The GPA is expected to be tabled by the second quarter of this year, as stated by Deputy Finance Minister Datuk Seri Ahmad Maslan in October 2023. Currently, there is no specific legislation on public procurement processes in Malaysia, with government procurement processes largely prescribed by a series of circulars and regulations which translates to instructions from the Ministry of Finance,” comments Dr Tricia Yeoh, CEO of IDEAS. 

IDEAS calls for state governments to  apply high standards in procurement transparency, such as disclosing relevant information at every stage of the procurement process through the publishing of procurement plans, bid invitation details, and details of the winning bids or appointments made at state treasury websites or dedicated online procurement portals. Disclosure requirements should apply to all types of projects, including proof-of-concept, pilot projects, or feasibility studies. In addition, a review mechanism  to field complaints regarding unfair procurement selection would provide further public assurance, as competitors who may have been unfairly ousted would have an avenue for the selection process to be reviewed. Currently, only six states publish tender results on a centralised portal, namely Kedah, Penang, Perak, Selangor, Melaka, and Negeri Sembilan. The portals unfortunately only displayed information on the results of tender and quotation exercise, not the result from other procurement methods such as the request for proposal (RFP).  

On the continued calls for open tender, Sri Murniati Yusuf , IDEAS Senior Research Director said, “Open tender is not the only procurement method that would ensure competition and transparency.  In fact, it is not suitable for procurement of services and works that require specific expertise or qualifications, and where these expertise are not widely available.  The UNCITRAL Model Law for Public Procurement, for example, identifies nine other procurement methods to choose from depending on the context of procurement exercises. However, it is important to note that if open tender is not being used as the procurement method, the procuring authority has to provide justification for choosing other methods. More importantly, once the selection has been made, the procuring authority must publish the information to the public. The upcoming procurement law should provide various  procurement methods for procuring authorities to choose from while obligating them to carry out the procurement process transparently; the UNCITRAL Model Law for Public Procurement could be used as a reference. 

On the involvement of politically exposed persons, Sri Murniati said, “Politically exposed persons are not barred from bidding for or providing government services, but care must be taken to ensure a transparent process that is fair and competitive, providing value for money to the public. Ultimately, it is crucial that the public can trust the procurement process, and trust can only be gained by processes that are transparent and accountable.”

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