'AG report shows urgent need for procurement reforms'

A think-tank has renewed a call for reforms to the public procurement framework and governance of state-owned enterprises (SOEs), following the latest Auditor-General’s Report 2/2024.

The Institute for Democracy and Economic Affairs (Ideas) said the report exposed weaknesses in the implementation of the government’s newly introduced selected pre-qualified tender process.

It said the sizeable amount of public funds at stake merits stronger governance and transparency measures around procurement.

Otherwise, delays, leakages, unfulfilled contract terms, and oversight lapses that cost the public dearly will continue, it added.

Therefore, Ideas reiterated its call for a standalone Government Procurement Act, originally announced in 2023, but yet to materialise.

Such legislation, it argued, should embed clear legal standards for transparency and competitive procurement methods that achieve value for money.

“It should require the proactive disclosure of procurement plans, tender notices, selection criteria, and final contracts through the government’s centralised procurement platform…

“And also enforce compliance through an independent review mechanism over procurement procedure,” Ideas said.

The procurement act should cover not just ministries, but public sector entities that use public funds, given the major issues each year in the compliance audits of these entities, it added.

The group claimed that the new pre-qualified tender system, while meant to enhance fairness and efficiency, is failing to resolve bid manipulation through cartels and proxies.

It expressed support for the auditor-general’s recommendation that the process be strengthened by integrating it with a central e-procurement database.

Lax oversight calls for robust law

Ideas stressed that Malaysia urgently needs a law to regulate SOEs, which collectively manage billions in public assets yet operate with limited transparency or parliamentary scrutiny.

It said a robust law must define their roles, introduce transparent and merit-based board appointments, and empower Parliament to hold these entities to account.

“A strong Government Procurement Act will not fix everything overnight, but it is the baseline we need to restore public trust in the system.

“We need a government that protects public money with the same urgency it uses to collect it,” said Ideas CEO Aira Azhari.

“We keep pointing to the same problems year after year, yet the system remains fundamentally unchanged.

“Procedural irregularities point to a habit of prioritising expedience and speed in pushing out projects over necessary structural reform to ensure that public projects get the best value for money,” she added.

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