COMMENT | On Oct 18, the Supply (Budget) Bill 2025 was tabled in Parliament. Notably, it was the largest budget ever tabled in Malaysian history.

Overall, the items in the budget suggest a positive shift by the government in improving accountability in public service delivery, as well as an increased investment into programmes that directly improve the lives of citizens.

However, certain areas of the budget still reveal weaknesses in the oversight and accountability of government institutions and other government-linked entities. In light of the government committing to more expenditure than ever before, these must be addressed to prevent corruption and abuse of the system.

Hence, The Center to Combat Corruption and Cronyism (C4 Center) draws attention to specific areas of the budget where an application of good governance principles and transparency is especially needed and makes recommendations for improvement.

1. Procurement Act must be passed as soon as possible

The government has pledged billions of ringgit worth of infrastructure projects, including:

  • RM2.1 billion for the construction of four new police stations

  • RM2 billion for the upgrade and maintenance of schools nationwide

  • RM7.4 billion for Sabah Sarawak Link-Road (SSLR) Phase 2 work packages

  • RM253 million to expand airports in Tawau and Miri

While the stated ambition to move away from megaprojects is commendable, C4 Center raises concerns that without the safeguard of a Procurement Act, the announced projects will be subject to the same risks that led to the loss of billions of ringgit for previous projects through mismanagement and potential corruption. This year alone, the Auditor-General’s Report revealed mismanagement involving:

On top of this, the government has increased the value limit for direct negotiation and quotations for all maintenance and minor repair works to RM200,000 and RM1 million respectively.

While direct negotiations have specific use cases, they have also historically been employed in many instances of corruption due to their lack of transparency - it is concerning that the government has decided to expand the cost limit of these without first enacting a Procurement Act which would place safeguards and mandate reporting for these contracts.

River of Life project in Kuala Lumpur

The issues with the present system of public procurement are well-documented and extensive. C4 Center previously expressed the need for a procurement system that is more transparent.

This entails consistent and timely publishing of procurement-related information, both at the pre-tender as well as post-tender stages.

For these goals to be met, the government procurement system must be free of influence from the executive. This means that ministers and chief ministers should not have a say in how procurement contracts are evaluated, nor should they be involved in the selection of procurement evaluation board members - especially because many GLCs that fall under ministries are substantial beneficiaries of government contracts, particularly in the case of contracts that have massive budgets.

Therefore, C4 Center calls for the government to expedite the legislation of the Procurement Act.

2. GLIC management must be reformed to safeguard Malaysia’s investments

The budget announcement made mention of the recently launched Government-linked Enterprises Activation and Reform Programme (Gear-up), a plan to “structurally reform” the economy.

Phase one of Gear-up involves the expansion of domestic direct investments (DDI) by six government-linked investment companies (GLICs):

  • Khazanah Nasional Berhad

  • Employees Provident Fund (EPF)

  • Kumpulan Wang Persaraan (Kwap)

  • Permodalan Nasional Berhad (PNB)

  • Lembaga Tabung Haji (LTH)

  • Lembaga Tabung Angkatan Tentera (LTAT)

Within the next five years, these GLICs have pledged to invest RM120 billion in DDI, with an initial RM25 billion injection lined up for next year.

As part of this multifaceted investment programme, the government announced Kwap’s RM6 billion investment in “domestic private markets” through private equity, infrastructure, and real estate classes via Dana Pemacu.

Although principally C4 Center welcomes the government’s attempts to revitalise the country’s economy, several doubts hang tenuously above this Gear-up programme.

For one, there are significant concerns surrounding the independence of these institutions to act within their own best interests.

There are provisions in the acts of EPF, Kwap, LTH, and LTAT that vest a disproportionate amount of control in the minister-in-charge - even going so far as allowing them to provide directions to the respective boards, which they “shall give effect to”.

With PNB and Khazanah being owned by the Minister of Finance Incorporated (MOF Inc.), and Anwar Ibrahim acting as both prime minister and finance minister, C4 Center is concerned with the lack of accountability measures that regulate undue influence from ministers in the management of these multi-billion ringgit investments.

Already we have seen the abuse and mismanagement of several GLICs in the past, with Kwap and EPF being used as funders for the scandalous Pembinaan PFI project - a project exposed by the Public Accounts Committee (PAC) for the misuse of government land and multi-million investments into subpar projects.

Even in the wake of scandals such as this, not only has no individual been made directly accountable, but the government has yet to draw up any legislation that safeguards these major investment institutions from political influence.

With all this in mind, how can the government pursue such huge investment plans by our GLICs without adequately restructuring their management?

As such, C4 Center strongly urges that the government immediately undertake a wide-scale reform of checks-and-balances mechanisms within the management of GLICs.

3. Stronger audit requirements commendable, but performance audits should be considered

C4 Center commends the various announcements on improving governance and public service delivery. Through the Public Administration Efficiency Commitment Bill and the consolidation of government entities with overlapping roles, the government has set a clear focus on streamlining the bureaucracy.

The Guidelines on the Management and Governance of Federal Statutory Bodies - introduced earlier this year - now mandates all federal statutory bodies to set up internal audit units.

Combined, these efforts should help raise accountability standards, as well as reduce operational costs and functional redundancies. C4 Center calls on all state governments to introduce similar guidelines for state statutory bodies, if not yet introduced.

Another major recent development is the amendment to the Audit Act 1957 that expands the scope of the National Audit Department, enabling the agency to audit the accounts of any company that receives financial guarantees from federal or state governments.

Auditor-General’s Report

Combined with the promised legislation of an Ombudsman Act, these advances are potentially transformative for public service delivery and bureaucratic culture.

To build on these efforts further, C4 Center proposes the introduction of performance auditing for government agencies and GLCs under the National Audit Department.

Presently, Article 106 of the Federal Constitution and the provisions of the Audit Act 1957 focus on the financial auditing role of the auditor-general, which only represents a partial view of public administration efficiency.

Financial audits reveal how public money is spent, but may not capture the impact of such expenditure - a key mechanic in accountability for government programmes.

Introducing performance assessments to evaluate the degree of success in accomplishing key performance indicators (KPIs) for government entities would be an important next step towards improving good governance.

4. Review of 3,000 ‘archaic’ laws must not delay implementation of NACS legal reforms

C4 Center is paying close attention to the government’s effort to review and revise over 3000 “archaic” laws, with a stated focus on commercial laws.

While improvements to our legal framework are always encouraged, it is worrying that truly archaic laws such as the Sedition Act 1948, Official Secrets Act 1972, and numerous provisions of the Penal Code have not been specifically identified for repeal despite years of demands from the public.

Releasing a complete list of the laws to be reassessed would be beneficial for the public to consider the possible implications of this massive exercise.

C4 Center also calls for the government to ensure that this effort does not delay the implementation of the National Anti-Corruption Strategy (Nacs), which has already specified timelines for several key legal reforms.

The increased financial allocations for the MACC, the National Audit Department, and the Legal Affairs Division (BHEUU) of the Prime Minister’s Department are well aligned with the larger responsibilities now placed upon each of these institutions.

With particular regard to BHEUU, C4 Center reiterates the call to reestablish a Law Ministry. As the main department overseeing legal and institutional reforms, it must have the resources to carry out this important agenda.

At present, BHEUU holds a wide range of administrative functions on top of its duty to develop or amend laws placed under its purview.

In 2023-2024 alone, this singular body was responsible for developing the Abolition of Mandatory Death Penalty Act 2023 and the Jurisdictional Immunities of Foreign States Act 2023, as well as preparing amendment bills for the Audit Act 1957, the Penal Code, the Criminal Procedure Code, the Evidence Act 1950, the Evidence of Child Witness Act 2007, the Sexual Offences against Children Act 2017, the Arbitration Act 2005, and the Construction Industry Payment and Adjudication Act 2012.

With BHEUU’s duties set to expand significantly starting next year, it is only fitting to restore the division’s status as a ministry to ensure the reform agenda is fully implemented.

5. Energy transition efforts welcome, CCUS and REE development a concern

C4 Center welcomes the government’s efforts and goals for energy transition. Under the Paris Agreement, Malaysia has established the Nationally Determined Contribution (NDC), which aims to reduce carbon emissions by 45 percent by 2030.

Malaysia is also committed to achieving net-zero emissions by 2050, resulting in a growing transition from oil and gas reliance to renewable energy resources.

In the pursuit of this, the government has announced RM300 million for the National Energy Transition Facilitation (NETF) - an increase of RM200 million from last year.

However, C4 Center emphasises two areas of concern - the government’s rapid support of Carbon Capture, Utilisation, and Storage (CCUS), and its commitment to developing the rare earth element (REE) industry. Unfortunately, meaningful public participation in both matters has been limited.

C4 Center reiterates that CCUS technology remains unproven based on several failed projects worldwide and has posed major environmental risks which may require additional outlay to resolve. CCUS technology initiatives are also predicated on importing carbon waste from developed countries, perpetuating carbon colonialism, and hindering Malaysia’s NDC commitments.

Worryingly, the CCUS bill has been developed at a rapid rate, involving little consultation with civil society. Malaysia’s current environmental regulations - such as the Environmental Quality Act 1974 - do not adequately protect the environment, nor are they sufficient for dealing with the climate crisis. These issues may be exacerbated by rushed renewable energy projects that remain questionable.

Government support for the REE industry is another cause for concern. C4 Center reiterates the insufficiency of our existing environmental legislation to safeguard the environment and preserve natural resources.

Without a more holistic and transparent regulatory framework, the accelerated development of REE poses significant corruption and environmental risks with no apparent plan to address these issues.

Thus, as the government plans to amend the Mineral Development Act 1994 to map out potential REE resources, C4 Center strongly recommends the government amend the Environmental Quality (Prescribed Activities) (Environmental Impact Assessment) Order 2015 to ensure that all Environmental Impact Assessment (EIA) reports for all prescribed activities require public display and public comments.

Summary: C4 Center Recommendations

Ultimately, C4 Center acknowledges the positive elements that are present throughout Budget 2025, but doubt remains over the transparency of certain announcements, while there is massive concern over the direction taken in managing the environment. Therefore, C4 Center strongly recommends:

  • To expedite the legislation of the Procurement Act

  • To undertake a wide-scale reform of checks-and-balances mechanisms present within the management of GLICs

  • For all state governments to introduce internal audits for state statutory bodies, if not yet introduced

  • To introduce the practice of performance audits on all government agencies and GLCs under the National Audit Department

  • To publicise a list of all the “archaic” laws which will be reassessed

  • To initiate plans to reestablish a Law Ministry to increase capacity to carry out legal and institutional reforms

  • To amend the Environmental Quality (Prescribed Activities) (Environmental Impact Assessment) Order 2015 to ensure that all Environmental Impact Assessment (EIA) reports are made public.

    C4 CENTER is a non-governmental organisation with a vision of good and clean governance in Malaysia.

    The views expressed here are those of the author/contributor and do not necessarily represent the views of Malaysiakini.

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