MOF halts approval of KKDW's selected open prequalification tenders for new projects

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MOF halts KKDW tenders

Highlights

MOF has halted approval of KKDW's selected open prequalification tenders (TTPKT) for new rural road projects following findings in the Auditor General's Report 2/2025.
KKDW's financial commitments exceeded the original budget allocation, causing arrears and delayed contractor payments for rural road projects, with funding shortfalls persisting despite several allocation revisions.
MOF approved an additional RM500 million in expenditure for 2026 and increased rural road project allocations to RM2.11 billion in 2026 and RM2.27 billion in 2027.

This article was translated from the original. Read the original version by our correspondent here.

Control measures following audit findings

According to The Edge Malaysia, as reported in a written reply published on the Parliament portal, the Ministry of Finance said the selected open prequalification tender method, or TTPKT, was introduced in 2023 as a special procedure to accelerate the implementation of high-impact projects for the public and remained in force until 30 June 2025, alongside several improvements to government procurement governance.

The ministry stated that the Auditor General's Report 2/2025 found that the implementation of the TTPKT method, including by KKDW, had failed to achieve the government's original objectives. The statement was made in response to Lim Guan Eng's question on action against KKDW officials who approved spending exceeding allocations by RM2.1 billion between 2023 and 2025, and whether the contractors involved were appointed through open tenders.

According to MOF, contractors for the Rural Road Programme under KKDW are typically selected through tender processes, including open tenders and the TTPKT method. As an additional measure, MOF directed KKDW to suspend the issuance of new letters of acceptance for rural road projects on 10 Sept.

Fiscal pressure and implications for rural road projects

MOF said KKDW had, for several years, made financial commitments and incurred expenditure exceeding the original allocations approved in the annual budget for rural road projects, resulting in arrears and delayed payments to contractors.

The original approved allocation for rural road projects was RM1.09 billion in 2023, RM1.32 billion in 2024 and RM1.57 billion in 2025. KKDW subsequently reallocated existing development expenditure funds from other projects through internal variation notices to meet the financing needs of rural projects, revising the allocations to RM1.85 billion in 2023, RM2.02 billion in 2024 and RM2.27 billion in 2025. However, these amounts remained insufficient to cover the ministry's project commitments.

To address the situation, MOF approved an additional RM500 million in expenditure for 2026 through a letter of authority to spend in excess of approved allocations, after savings were identified in the development expenditure of other ministries. MOF also requested KKDW to prepare projections of funding requirements for rural road projects until the end of 2026 and for 2027 based on contracts already awarded, to determine the need for additional allocations.

MOF said it also agreed to increase allocations for rural road projects to RM2.11 billion in 2026 and RM2.27 billion in 2027. Meanwhile, the adjusted allocation for 2026 stands at RM2.40 billion, with RM2 billion in expenditure recorded as of 31 August.

The corporate governance debate driven by the impact of the 1MDB scandal continues to underscore who should bear responsibility when controls, audits and checks and balances fail. In our earlier coverage, attention was given to board accountability, including issues of political appointments, strengthening whistleblower protection through legal amendments, and the need for internal auditors to be more proactive in using data to detect risks earlier rather than merely assessing past failures.

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