Written by Sri Murniati Yusuf, IDEAS senior fellow in governance, transparency and public financial management. Dr Rohana Abdul Rahman, an associate professor at Universiti Utara Malaysia’s School of Law, specialising in government procurement law, anti-corruption law, insolvency law, alternative dispute resolutions and commercial law.

The Government Procurement Bill, which was tabled for its first reading on Aug 25 and drew wide debate in the Dewan Rakyat, has been passed. Unfortunately, the concerns expressed by members of parliament and civil society were not addressed. The Dewan Negara has the opportunity to address these and we hope they will use it to ensure Malaysia’s government procurement framework is truly credible.

It is true that the bill, as highlighted by some MPs, introduces some improvements such as the creation of a tribunal and review mechanism, as well as stronger provisions for conflicts of interest. However, the bill is built on a problematic assumption: that Malaysia’s procurement rules, embodied in various circulars, are already comprehensive, and that the main problem lies in weak enforcement.

This assumption reflects the Ministry of Finance’s long-standing view. During consultations, we noted that the ministry repeatedly pointed to the many procurement circulars already in place and explained that they were not keen to repeat those rules in legislation. The current draft clearly reflects that. Part V of the Act — which could have been expanded to provide detailed provisions on procurement methods, as is common in other jurisdictions — is instead very minimal in prescribing procurement methods and rules, and instead gives ministers broad discretion to decide procurement methods.

Such broad authority risks undermining the very consistency and fairness the Act promises. Defining methods such as open tender, selective tender or direct negotiation within the Act itself would create consistency and reduce the space for abuse. Beyond Malaysia’s domestic priorities, the Act also needs to reflect our obligations under regional trade agreements and be aligned with the United Nations Commission on International Trade Law Model Law on Public Procurement, which offers tested international standards.

The ministry appears to be using the Act primarily to address the long-standing issue of compliance by introducing sanctions and penalties, strengthening monitoring and establishing review mechanisms. But in doing so, it also grants the Treasury a wide range of new enforcement powers without adequate safeguards.

This approach misses the real problem and risks creating new ones. While weak compliance and enforcement are genuine concerns, we must also recognise that the concentration of discretionary power in the hands of ministers has created many problems of its own. The Act justifies this status quo by retaining ministerial authority to decide procurement methods and approve contracts. Yet it is precisely this direct control that has been at the root of numerous procurement scandals. True reform would place ministers in an oversight role — setting direction and ensuring accountability — rather than giving them the power to approve procurement contracts, even if subject to certain thresholds.

The Act also treats transparency as a secondary issue rather than a core principle. Requirements for publishing information appear to be left to subsidiary regulations, which do not carry the same legal weight. Transparency, accountability, value for money and fair competition must be written into the law itself, not left as vague aspirations. Without clear statutory principles, procurement risks are seen as just a technical process rather than a tool for good governance and public trust. At a time when citizens demand higher integrity and efficiency in how public funds are spent, the Act must go beyond procedure and signal an unambiguous commitment to these values.

Most importantly, by giving the Treasury sweeping enforcement powers, the Act risks concentrating too much authority. The fear of investigation, sanctions and penalties can indeed deter misconduct, but without strong institutional checks, these powers could also pave the way for arbitrary or selective enforcement. In trying to solve one problem, the Act may end up creating another.

Malaysia is right to pursue procurement reform, and the bill does introduce useful elements. But it will not achieve genuine reform if it is built on the assumption that existing rules are already sufficient and only enforcement is lacking. The deeper issues — ministerial discretion and the absence of guaranteed transparency and key important principles — remain unaddressed. Unless these fundamentals are confronted, the Act risks becoming another partial reform: heavy on enforcement powers, light on the safeguards that truly strengthen governance.

This article was featured in The Edge Malaysia Weekly, September 8, 2025 – September 14, 2025

The views expressed in this article are solely those of the authors and do not necessarily represent the views or positions of IDEAS Malaysia. All opinions are the author’s own.