Date: 12.10.2026
By: Nicole Leong & Chai Zi Yan
In his speech on the Fifth Madani Budget 2027 by the Malaysia Prime Minister on 9.10.2026, Prime Minister and Finance Minister Datuk Seri Anwar Ibrahim saidthat,following the Government Procurement Act coming into force in 2027, the Government will enhance transparency by publicly disclosing project information, including the contractors involved and contract values.
The planned increase in government procurement transparency and scrutiny of procurement practices could have important consequences for corporate governance and compliance, raising issues worth exploring further by those who administers, conducts or implements Government procurement and any person (e.g. contractors, consultants, suppliers) who participates in a Government procurement. For example, whether there is appropriate governance over tender preparation and subcontractor selection, conflict-of-interest declarations and procurement documentation and how to manage commercially sensitive information in an environment of greater public disclosure.
Government Procurement Act 2025
The Government Procurement Act 2025 (“the Act”) is expected to come into force in 2027. This is a significant development for businesses which supply goods, services or works to the Government.
The Act marks an important shift in Malaysia’s public procurement framework. For the first time, Malaysia will have a dedicated legislation governing how Government procurement is administered, conducted and implemented. This is intended to strengthen transparency, accountability, governance and discipline in the use of public funds.
Businesses supplying goods, services or works to the Government should not wait until the Act comes into force to begin preparing. Under the new framework, they will need to meet statutory requirements on registration, disclosure and procurement conduct, with non-compliance potentially resulting in administrative penalties, criminal liability and enforcement action.
Current Framework
Before the Act, Government procurement in Malaysia has largely been governed through Treasury circulars, instructions and existing legislation such as the Financial Procedure Act 1957 and the Government Contracts Act 1949.
These instruments remain important. However, they do not operate in the same way as a single dedicated procurement statute. In practice, businesses dealing with Government procurement have had to navigate various circulars, registration requirements, procurement methods and disciplinary consequences.
The Act introduces a more structured statutory framework and is to be read together with existing written laws relating to Government procurement.
What Is “Government Procurement” Under the Act?
Section 5 of the Act defines Government procurement broadly. It covers procurement for:
- the supply of goods, services or works funded by the Federal Government or a State Government, whether fully or partially
- procurement involving the use of assets owned by the Federal Government or a State Government.
In practical terms, this may include the supply of goods to Government agencies, service contracts, construction works, infrastructure projects and other projects supported by Government funding or Government assets.
The Act applies to persons who administer, conduct or implement Government procurement, as well as persons who participate in Government procurement. For businesses, this would include suppliers, contractors and other registered persons participating in tenders or procurement exercises.
Open and Competitive Procurement as the Primary Method
One of the key changes under the Act is that open and competitive procurement is the primary method for Government procurement. (Section 28 of the Act)
In practical terms, open and competitive procurement means a procurement method where all registered persons may participate. The direction is clear: Government procurement should move towards a system where eligible suppliers and contractors are given a fair opportunity to compete.
However, this does not mean that every procurement will necessarily be conducted in the same way. The Act allows the Minister to prescribe other procurement methods, taking into consideration the objectives of the Act. It also recognises other procurement method for urgent procurement involving public order, health or safety, and procurement required to implement Malaysia’s international obligations.
For businesses, the move towards open and competitive procurement may provide greater visibility of Government opportunities.
Mandatory Registration- No Registration, No Participation
A central feature of the Act is the registration requirement. Under section 17 of the Act, no supplier or contractor may participate in Government procurement unless registered under the Act. Applications for registration are to be made to the Registrar of Government Procurement (“Registrar”).
Under section 18 of the Act, the Registrar may approve an application if satisfied that the applicant is a fit and proper person, has met the applicable requirements and preconditions for registration, and has made the required disclosure of interests.
Registration should not be treated as a mere administrative formality. Under section 19 of the Act, an application may be refused if the applicant:
- has been convicted of an offence under the Act;
- has been convicted of an offence under the Malaysian Anti-Corruption Commission Act 2009 or of an offence relating to corruption under any law outside of Malaysia;
- is found to have infringed a prohibition determined by the Competition Commission in accordance with the Competition Act 2010;
- has been convicted of an offence and his name has been registered under the Registration of Criminals and Undesirable Persons Act 1969;
- in the case of an individual, is an undischarged bankrupt whether within or outside Malaysia; and
- in the case of a company:
- is in the course of being wound up or otherwise dissolved;
- had an execution against him in respect of a judgment debt been returned unsatisfied in whole or in part;
- had a receiver, a receiver and manager, or an equivalent person appointed within or outside Malaysia; or in respect of any property of the applicant; and
- has, whether within or outside Malaysia, entered into a compromise or scheme of arrangement with its creditors, being a compromise or scheme of arrangement that is still in operation.
A registration may also be suspended or revoked under section 21 of the Act, including where the registered person submits information or documents that are materially false or misleading.
Businesses should therefore treat Government procurement registration as part of their broader compliance framework. Their integrity and competition law record, financial position, ownership structure and compliance with disclosure obligations may all affect their ability to register and remain eligible to participate in Government procurement.
Disclosure of Interest and Beneficial Ownership
The Act requires businesses to be transparent about who owns or controls them and whether they have connections with other registered suppliers, contractors or persons involved in a procurement.
Under section 37 of the Act, a person applying for registration, or applying to renew or amend a registration, must disclose:
- any direct or indirect interest in another registered person or applicant; and
- the beneficial owner of the applicant or registered person.
The disclosure must also cover relevant interests held by family members and associates.
The disclosure of interest obligation also extends to the following:
- For companies – directors, shareholders and senior management
- For partnerships – all partners
- For co-operatives – persons holding key management responsibility
There is also a separate disclosure requirement when a registered person takes part, or intends to take part, in a Government procurement. The registered person must disclose to the procuring entity:
- its beneficial owners;
- any relevant interest in another registered person, whether or not that person is bidding for the same procurement; and
- any relevant interest in a person within the procuring entity who is involved in the procurement process.
Failure to comply with section 37 of the Act is an offence. A person may face a fine of up to RM250,000, imprisonment for up to five years, or both.
Registrations Under the Same Classification Code
Section 27 of the Act generally prevents a registered person from being registered more than once under the same classification code, unless the Registrar gives prior approval.
For this purpose, the Act takes a broad view of who may be treated as the same registered person. It includes employees, beneficial owners, persons whose interests must be disclosed, and persons or groups acting together to obtain registration under the same classification code.
In practical terms, businesses should review whether related entities or individuals within the same corporate group are registered, or intend to register, under the same classification code. Overlapping ownership, personnel or control arrangements may raise issues under section 27 of the Act, even where separate companies are used.
Companies with complex group structures should therefore check whether more than one connected entity is already registered, or plans to register, under the same classification code.
Transfers, Assignments and Subcontracting Risks
Section 35 of the Act prohibits a registered person from transferring, assigning or novating a Government procurement grant or contract, whether wholly or partly, or transferring any interest in it, without the prior approval of the controlling officer responsible for the procurement.
This is particularly relevant where a contractor or supplier intends to involve a subcontractor in performing the contract. Businesses should not assume that a contract awarded under the Act may be freely transferred to, or effectively performed by, another party. Any proposed change to the contracting party, the party carrying out the work or the project delivery structure should be reviewed carefully.
A breach of Section 35 of the Act may attract serious consequences, including a fine of not less than three times the value of the grant or contract awarded, or RM1 million, whichever is higher, imprisonment of up to five years, or both.
Competition law and bid-rigging risk
The Act should be considered together with Malaysia’s competition law framework.
Under section 4(2)(d) of the Competition Act 2010, an agreement between competitors that has the object of bid rigging is deemed to significantly prevent, restrict or distort competition. Common forms of bid rigging include cover bidding, bid suppression, bid rotation and market allocation.
The Act emphasises on the importance of compliance with the competition law in Government procurement. Under sections 19 and 21 of the Act, an application for registration must be refused, or an existing registration may be suspended, where the applicant or registered person is named in a finding of infringement determined by the Malaysia Competition Commission (“MyCC”) under the Competition Act 2010.
Businesses should ensure that bids are prepared independently. Employees and other personnel involved should not discuss tender prices, bidding strategies, whether the business intends to submit a bid, or the allocation of customers, contracts or territories with competitors.
Key Takeaways for Businesses
Although the Act is only expected to come into force in 2027, businesses involved in Government procurement should begin reviewing their existing practices before the Act comes into force.
In particular, businesses should consider:
- reviewing the registration status of suppliers and contractors within the group, including the classification codes held by each entity;
- reviewing their ownership and beneficial ownership structures, including the interests of directors, shareholders, senior management, family members, associates and related companies;
- putting in place a clear process to identify and record potential conflicts of interest before participating in a Government procurement;
- establishing internal protocols for communications with procuring entities, including who may communicate on behalf of the business, the permitted channels of communication and how those communications should be recorded;
- ensuring that bids are prepared independently and that tender prices, bidding strategies, intended participation and market allocation are not discussed with competitors;
- conducting trainings for employees and other personnel involved in tenders to recognise common forms of bid rigging;
- ensuring that commercially sensitive information is not shared with competitors;
- reviewing existing anti-bribery, competition and procurement policies to ensure that they address the specific risks arising from Government procurement.
Businesses should not need to wait for the Act to come into force before reviewing their practices. Companies that regularly participate in Government tenders should take the opportunity to check their registration details, update ownership and conflict records, review how bids are prepared and strengthen controls over communications with competitors and procuring entities. Early preparation can reduce the risk of registration issues, tender disputes and enforcement action, while helping the business respond more effectively when the new framework takes effect.