Malaysia defence procurement scandal exposes flaws in new Government Procurement Act

The Center to Combat Corruption and Cronyism (C4 Center) is deeply alarmed by the revelations by the Malaysian Anti-Corruption Commission (MACC) that investigations have been opened into alleged procurement misconduct by Royal Malaysian Armed Forces.

The MACC has published several public statements stating that it had opened investigations under Section 17(a) of the MACC Act 2009, and in the course of their investigations have, to date:

Defence procurement has long been the subject of controversy in Malaysia, with many high-value procurement scandals being defence-related, such as the procurement of the Scorpene submarines and the littoral combat ships (LCS) that resulted in the loss or wastage of billions in ringgit.

This is due to the unique position of defence procurement being a highly specific area, with a relatively limited number of industry stakeholders, and that requires specialised knowledge for industry participation.

The small size of the industry, relative to its contract values and revenue, also creates additional opportunities for the formation of crony networks and cartels.

Furthermore, the use of catch-all ‘national security’ exemptions allow for the non-disclosure of defence procurement-related information by government bodies, and the resisting of any attempts at reform that would make the defence procurement process more transparent.

These factors make public and general oversight of defence procurement more difficult, seeing as access to data is near impossible and requires pre-existing specialised knowledge to interpret.

This clearly demonstrates that defence procurement is especially vulnerable to corruption.

The Malaysian government tabled the Government Procurement Act (GPA) in August 2025. It was subsequently passed in both houses of Parliament hastily and is currently awaiting gazetting by the finance minister.

While it was ostensibly enacted to address and remedy the long-running weaknesses of Malaysia’s procurement system, the GPA was heavily criticised by C4 Center and other civil society organisations when it was first tabled.

This was due to its numerous provisions that allow for the exercise of wide discretionary and unreviewable powers to the finance minister, and that crucially lack sections that lay out basic principles such as the types of procurements undertaken and standards of information disclosure by procuring entities.

Relevant here is that the GPA also lacks provisions that regulate defence procurement. Questions emerge over how defence procurement will be regulated.

The GPA in its current form would have been largely ineffective in preventing the scandal at hand and would be likely to not prevent similar instances from taking place in the future.

While it may be argued that the decisive action being taken by the MACC currently should not be dismissed – empowered by the provisions under the MACC Act – it needs to be stressed that legal provisions that criminalise corrupt acts are not sufficient as preventative measures and are not a substitute to good governance in defence procurement.

Transparency, good governance and regulation were supposedly the ambit of the GPA – it has unfortunately fallen short of that expectation.

C4 Center has long advocated for the enactment of minimum transparency and accountability standards over defence procurement specifically.

This is not an impossible task as many jurisdictions globally have supplementary measures to ensure that defence spending by governments is not completely opaque, while taking into account the sensitive nature of national security.

Possible measures include the introduction of a parliamentary special select committee on defence procurement that would be empowered to oversee and vote on defence expenditure, or a specialised defence procurement tribunal that is empowered to assess the validity of contracts, ensuring that procurement procedures were adhered to.

The current scandal unfolding before the people of Malaysia is more proof that defence procurement and the procurement system at large is systemically flawed and sorely in need of greater reform. It cannot be boiled down simply to just the acts of a few criminal individuals or treated as isolated cases.

Hence, C4 Center strongly urges:

– C4 Center