Introduction

The passing of the Government Procurement Bill 2025 (“the Bill”) by the Malaysian Parliament marks a milestone in the country’s ongoing efforts to modernise and standardise public procurement practices. For the first time, Malaysia will have a comprehensive legislative framework governing how public funds are spent[1], from tendering to contract management and oversight. Once in force expected in early 2026, the Bill aims to promote transparency, accountability, and fair competition in government spending while deterring corruption and misuse of public resources.

Historically, Malaysia’s procurement system is operated under a patchwork of Treasury Instructions, circulars, and financial regulations such as the Financial Procedure Act 1957[2] and the Government Contracts Act 1949[3]. While these instruments guided ministries and agencies, they lacked statutory force, leading to inconsistent practices and limited enforcement.

Malaysia’s Current Public Procurement Framework

Public procurement plays a significant role in the national economy, yet the Government had, until recently, not enacted specific legislation to govern it. Over time, the procurement process became tainted by multiple instances of corruption and cronyism, with numerous scandals involving the mismanagement of public funds.

The Bill replaces this fragmented framework with a clear legal foundation. It defines procurement processes, sets compliance standards, and introduces mechanisms for review and redress signalling the government’s commitment to align with international best practices in public sector governance. The Bill applies broadly to the acquisition of goods, services, and works funded wholly or partly by federal or state allocations. It captures not only government ministries and agencies but also statutory bodies and other entities handling public procurement.

The Bill however, carves out certain exemptions, such as procurements linked to international donor agreements, defence cooperation, and specific fiscal or debt-management services. Oversight and administration of the Bill rest with the Secretary General to the Treasury[4], who functions as the central authority ensuring consistency and compliance across government entities. Further, the Bill represents a significant move toward a rules-based framework for public procurement, designed to promote integrity, efficiency, and fairness in government spending. It is anchored on five fundamental principles, which will be discussed below.

The first principle is transparency[5], which requires procurement processes to be carried out openly, with information made readily accessible to ensure public confidence. The second is accountability, establishing clear responsibilities and personal liability for decision-makers involved in procurement activities. The third principle, Integrity, underscores ethical conduct by preventing conflicts of interest, corruption, and any form of improper influence. The fourth, fair competition, guarantees equal opportunities for all qualified suppliers to participate, fostering healthy market rivalry and innovation. Lastly, value for money, aims to ensure that public funds are used efficiently and effectively, while also advancing broader socio-economic objectives.

The Bill establishes a unified and binding legal framework governing the procurement of goods, services, and works by federal and state entities. It applies to all procurement activities undertaken by ministries, departments, statutory bodies, and any other public authority using public funds or government assets.

Applicability of the Bill and Introduction of New Roles

The Bill defines “government procurement” broadly to encompass any acquisition, lease, or engagement of goods, services, or works, whether wholly or partly financed by government allocations. This includes joint ventures or projects where public resources are deployed.

However, the Bill also delineates its boundaries carefully. It does not apply to:

  • procurements or acquisitions of fiscal agency or depository services, liquidation and management services for regulated financial institutions or services related to the sale, redemption and distribution of public debt, including loans and Government bonds, notes and any other securities;
  • appointments on contract basis by the Federation or any State for the delivery of public service;
  • procurements conducted for the specific purpose of providing international assistance, including development aid;
  • procurements funded by an international organisation or foreign or international grants, loans or other assistance to which procurement procedures or conditions of the international organisation or donor apply; and
  • procurements conducted under the particular procedure or condition of an international agreement relating to the stationing of troops or relating to the joint implementation by the signatory.[6]

This approach ensures wide coverage while maintaining flexibility for exceptional or sensitive procurement circumstances. Further, to ensure accountability and operational efficiency, the Bill introduces three key institutional roles each with defined functions, powers, and duties under section 7, 8 and 11 of the Bill. The key roles mentioned in the Bill are the Controlling Officer, the Procurement Officer and the Procurement Board.

i.  The Controlling Officer[7]

The Controlling Officer is the principal custodian of procurement governance within a ministry or public entity. Typically, this will be the head of department or an equivalent senior official.

The Controlling Officer bears personal accountability for any losses arising from negligence or non-compliance. This direct linkage between responsibility and liability represents a major cultural shift from past practices, where accountability was diffuse and difficult to enforce. A “controlling officer” may be appointed under the Bill or the FPA (as the case may be) to exercise the following duties and powers:

  • responsible and answerable for every action taken and decision made in connection with government procurement activities under his or her authority;
  • oversee all procurement officers and committees within their supervision and ensure that these personnel comply with the provisions of the Bill, as well as with any instructions or circulars issued under it;
  • exercise sound judgment and maintain adequate safeguards to prevent any conflict of interest while carrying out their duties or exercising powers under the Bill;
  • responsible for managing and executing government procurement activities for which the planning and budget allocations have been duly prepared and approved by the Federal or State Government, as applicable;
  • review and approve procurement exercises in accordance with the Bill;
  • appoint procurement officers and establish procurement committees to assist in performing their duties;
  • determine the scope within which such officers or committees may act on their behalf; and establish a review panel to handle any complaints relating to procurement activities carried out by their respective entity; and
  • undertake all actions necessary or beneficial for administering the Bill effectively, or for any other purpose consistent with its objectives, as may be directed by the Secretary General of the Treasury.

ii. The Procurement Officer[8]

A Procurement Officer is appointed by the Controlling Officer to execute day-to-day procurement functions. Procurement Officers act as the administrative backbone of the system, ensuring that procurement activities are conducted fairly, transparently, and efficiently.

iii.The Procurement Board[9]

Section 11 and 12 of the Bill introduces an additional layer of scrutiny, the Bill empowers the Minister, Chief Minister, or relevant authority to establish Procurement Boards at federal or state levels. These boards review, approve, and oversee procurement proposals based on value thresholds. They are composed of senior officials and independent members to ensure integrity and professional judgment. The Procurement Board functions as a check-and-balance mechanism, preventing unilateral decisions by individual officers on high-value contracts. It also promotes consistency across government agencies.

Furthermore, while the Bill mandates open and competitive procurement [10]as the general rule, it recognizes the need for exceptions under specific circumstances such as national security, disaster relief and/or international obligations.[11]

Additionally, the  Bill also establishes a comprehensive enforcement framework designed to deter misconduct and strengthen integrity in public procurement. It introduces a range of offences and penalties aimed at both public officials and suppliers, reflecting the government’s firm stance against corruption and procedural abuse. Under the Bill, procurement personnel who knowingly breach procedures, conceal information, or act dishonestly may face fines of up to three times the contract value on RM 1 Million, whichever is higher, and imprisonment of up to five years.[12] The Bill also criminalises the failure to disclose conflicts of interest.[13] Collectively, these enforcement measures reinforce a culture of ethical discipline, deterrence, and public trust, underscoring the government’s commitment to ensuring transparency and accountability in procurement governance.

Highlights of Significant Clauses

i. Approving Authority

Under Section 10 of the Bill, approval for a Government procurement may only be granted by the designated authorities, subject to specific financial thresholds, as follows:

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ii. Open and Competitive Procurement

Under Section 28 of the Bill, the open and competitive procurement method is established as the primary approach for conducting Government procurement. This method is intended to promote transparency, fairness, and value for money by allowing equal opportunity for participation among all qualified and registered suppliers. The term “open and competitive procurement method” refers to a process in which all registered persons are permitted to participate, ensuring that the Government’s procurement activities are conducted in an open, transparent, and non-discriminatory manner. Nonetheless, the Bill recognises that in certain circumstances, open and competitive procurement may not be practical or appropriate. In such cases, the Minister may prescribe alternative procurement methods, provided that these alternatives are consistent with the overarching objectives of the Bill.

iii.           Prohibition on transfer, assignment and novation

Under section 35, any registered person who has been awarded a grant or contract under the Bill is strictly prohibited from transferring, assigning, or novating the award. Whether entirely or partially to another party without obtaining prior written approval from the controlling officer in charge of the relevant Government procurement. This restriction ensures that the entity originally evaluated and approved through the procurement process remains responsible for fulfilling the obligations of the contract. It also prevents the misuse or trading of government contracts and safeguards the integrity, transparency, and accountability of the procurement system.

iv.         Duty to Disclose Interests

Any individual who is involved in managing, conducting, or carrying out a Government procurement and who has, whether directly or indirectly, any personal, family, or associate interest in the said procurement must declare and disclose the existence and nature of that interest, including any form of beneficial ownership as clearly stipulated under Section 37 of the Bill.

v.         Establishment of Review Panel

Under Section 62 of the Bill, a controlling officer is mandated to establish and oversee a review panel to ensure fairness, accountability, and transparency in Government procurement processes. The review panel serves as an internal mechanism to consider and address any objections or complaints relating to the administration, conduct, or decisions made in the course of procurement activities carried out by the procuring entity under the officer’s supervision.

The panel is required to operate in accordance with prescribed procedures, subject matter, and conditions as set out in the relevant regulations. This provision aims to promote good governance and integrity in procurement by providing an avenue for parties to seek impartial review and redress within the administrative framework before resorting to external remedies.

vi.          Introduction of Appeal Tribunal

The Appeal Tribunal is established to hear and determine appeals concerning decisions or the decision-making process of a Review Panel. Its primary function is to ensure fairness, transparency, and consistency in the review process relating to Government procurement activities.[1]

However, the Tribunal’s jurisdiction does not extend to the following matters:

  • any issue involving the contravention of the Bill;
  • matters related to investigation and enforcement under Part VIII of the Bill;
  • decisions made in relation to dispute resolution for Government procurement contracts;
  • any issue arising after the issuance and signing of a letter of acceptance by the procuring entity and the registered person;
  • matters involving trade secrets or intellectual property rights;
  • cases where another tribunal has already been established under written law to hear such claims; and
  • any complaint or objection that has not yet been decided by a Review Panel.

Conclusion

The Bill represents a major step forward in strengthening Malaysia’s public procurement framework, shifting it from administrative guidelines to a comprehensive, legally binding system. By consolidating existing rules and circulars into a single statute, the Bill sets out a clear framework grounded in transparency, accountability, and integrity for all government procurement activities.

Its introduction is expected to bring greater consistency and oversight. Clearly defined roles for Controlling Officers, Procurement Officers, and Procurement Boards, together with strong enforcement provisions and independent review mechanisms, are designed to ensure that public officials act responsibly and ethically. Open and competitive procurement will encourage fair participation, while enhanced disclosure and reporting obligations will help curb corruption and inefficiency.

That said, the Bill’s long-term success will depend on effective implementation and sustained enforcement. Close attention must be given to how exceptions and discretionary powers are applied to ensure they are not misused. Ultimately, the Bill signals Malaysia’s commitment to good governance and fiscal integrity. It lays the foundation for a more transparent and accountable procurement system, but its true value will be realised only through consistent application, institutional discipline, and continued political resolve.

[1] Section 63, Government Procurement Bill 2025

[1] Malaysia’s Parliament approves law to regulate government procurement | Reuters (2025) Malaysia’s parliament approves law to regulate government procurement. Available at: https://www.reuters.com/world/asia-pacific/malaysias-parliament-approves-law-regulate-government-procurement-2025-08-28/ (Accessed: 07 October 2025).

[2] Government procurement bill 2025 passed by Malaysian parliament (2025) Malaysia. Available at: https://www.christopherleeong.com/viewpoints/government-procurement-bill-2025-passed-by-malaysian-parliament/?utm (Accessed: 08 October 2025); Act 61, Financial Procedure Act 1957

[3] Act 120, Government Contracts Act 1949

[4] Zalani, A. (2025) Treasury chief: New Government Procurement Law holds all, including ministers, accountable, Malay Mail. Available at: https://www.malaymail.com/news/malaysia/2025/08/29/treasury-chief-new-government-procurement-law-holds-all-including-ministers-accountable/189291?utm (Accessed: 08 October 2025).

[5] Government procurement act 2025: Aligning markets, discipline, and integrity (2025) EconWorks Advisory Sdn Bhd. Available at: https://www.econworks.my/government-procurement-act-2025-aligning-markets-discipline-and-integrity/?utm (Accessed: 08 October 2025).

[6] Section 3, Government Procurement Bill 2025

[7] Section 7, Government Procurement Bill 2025

[8] Section 8, Government Procurement Bill 2025

[9] Section 11 and 12 of the Government Procurement Bill 2025

[10] Section 28, Government Procurement Bill 2025

[11] Procurement bill to end decades of leakages, ensure no repeat of 1MDB – Anwar (2025) The Edge Malaysia. Available at: https://theedgemalaysia.com/node/768416?utm (Accessed: 08 October 2025); Section 29 of the Government Procurement Bill 2025; Section 30 of the Government Procurement Bill 2025; Section 31 of the Government Procurement Bill 2025.

[12] Govt tables procurement bill to close loopholes; jail for false tender disclosures (2025) The Edge Malaysia. Available at: https://theedgemalaysia.com/node/767951?utm (Accessed: 08 October 2025).

[13] Malay Mail (2025) New Procurement Law aims to end Malaysia’s ‘Ali Baba’ contract culture, Malay Mail. Available at: https://www.malaymail.com/news/malaysia/2025/08/28/new-procurement-law-aims-to-end-malaysias-ali-baba-contract-culture/189153?utm_ (Accessed: 08 October 2025).