The Government Procurement Act 2026 (“Act”) was gazetted on 26 May 2026. The Act will come into operation on a date to be appointed by the Minister of Finance (“Minister”) by notification in the Gazette. According to the Minister of Finance II Datuk Seri Amir Hamzah Azizan, the Act is expected to be enforced in 2027.¹
 
In this article, we highlight some of the main features to be introduced under the Act. Unless otherwise stated, references herein to a “section”, “Part” and “Schedule” are references to a section, Part and Schedule respectively of the Act.

1.	Objectives of the Act

The Act provides a framework for the conduct of Government procurement by procuring entities and the registration of suppliers and contractors seeking to participate in Government procurement. The Act seeks to uphold transparency, integrity and fairness in Government procurement and to maximise the benefits from the use of public resources.

2.	Scope of the Act

The Act applies to any person who administers, conducts or implements, and to any person who participates in, Government procurement.

 
The Minister or, in relation to a State, the Menteri Besar or Chief Minister (the Menteri Besar and Chief Minister are hereafter referred to as “Menteri Besar”) may exempt from the application of the Act, any one-off allocation of funds appropriated by the Supply Act or Supply Enactment, as the case may be, for any Government procurement by any statutory body, local authority, Federal Government entity, State Government entity or any other entity in relation to any new programme (section 2).²
 
The Act does not apply to: (a) procurement or acquisition 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; (b) appointment by the Federation or any State for the delivery of public service on contract basis; and (c) procurement for providing international assistance, funded by international organisation or foreign grants or conducted under an international agreement relating to the stationing of troops or relating to the joint implementation by the signatory (section 3).

3.	What is Government procurement?

“Government procurement” refers to any procurement for the supply of goods or services or for works funded by the allocation of funds by the Federal or a State Government, whether fully or partially, or through the use of any assets owned by the Federal or a State Government (section 5(1)).

4.	Procuring entities

For the purposes of the Act, a “procuring entity” means the Federal Government or any State Government and includes: (a) any Ministry or Federal statutory body, the local authorities of the Federal Territories of Kuala Lumpur, Labuan and Putrajaya or any Federal Government entity; (b) any ministry or department or statutory body of a State, any local authority in a State or any State Government entity; (c) any implementing agency³; and (d) any other entity, that administers, conducts or implements a Government procurement under the Act (section 5(1)).

 
A “Federal Government entity” means: (a) any company incorporated under the Companies Act 2016 (“CA 2016”) where— (i) in the case of a company limited by shares, the Minister of Finance Incorporated (“MOF Inc”) or any Federal statutory body holds more than 50% of the shares; or (ii) in the case of a company limited by guarantee, the MOF Inc, or a representative of any Ministry or Federal statutory body is a member; or (b) any body corporate incorporated under the Trustees (Incorporation) Act 1952 by the Federal Government (section 5(1)).
 
A “State Government entity” is similarly defined except the reference to “Federal Government” is substituted with “State Government” (section 5(1)).

5.	Administration of Government procurement

Administration, control and supervisions of all matters relating to the Act is the responsibility of  the Secretary General to the Treasury (section 6(1)).

 
There is a provision for the State financial authority to additionally issue any instructions as may be necessary or expedient for proper administration of the Act at that State, provided that such instructions are not inconsistent with the Act (section 92(a)).

6.	Approving authorities for Government procurement

Section 10(1) provides four authorities that may approve a Government procurement under the Act: 

Before approving a Government procurement, the Minister or, in relation to a State, the Menteri Besar or Designated State Authority, as the case may be, shall require the procurement board responsible to consider the Government procurement in accordance with the Act and submit a recommendation (section 13(2)). After considering the recommendation, the Minister or Menteri Besar or Designated State Authority may concur with the recommendation or may make a different decision as he thinks fit (section 13(3)). Such decision shall be final and be implemented accordingly (section 13(4)).
 
Every procuring entity, other than a Ministry or ministry or department of a State⁶ shall appoint a person as its controlling officer (section 9(1)).
 
The controlling officer is empowered to, inter alia, consider and approve a Government procurement (section 7(1)(e)) with the assistance of procurement officers, and procurement committees appointed by the controlling officer in accordance with section 7 and with such powers and duties as may be exercised or performed by a procurement officer or a procurement committee, subject always to the restrictions imposed by the Act (section 7(1)(g)).

7.	Approval thresholds

The First Schedule sets out a four-tier approval structure based on the approving authorities and prescribed approval thresholds:
 

 
Two important caveats should be noted in respect of the above.
 
First, notwithstanding the provisions in the First Schedule, a Menteri Besar may determine the approval threshold for State Government procurement, but the approval threshold so determined shall not exceed the approval thresholds specified in the First Schedule for each approving authority (section 10(3)).
 
Second, if a procurement board fails to reach a unanimous decision on any matter being deliberated in a meeting, the matter shall be referred to the Minister or, in the case of a State, the Menteri Besar or the Designated State Authority, as the case may be, for a decision (section 12(8)).

8.	Eligibility to participate in Government procurement

To be eligible to participate in Government procurement, a supplier or contractor must be registered under the Act (section 17).

9.	Registration of suppliers and contractors

Applications for registration are to be submitted to the Registrar of Government Procurement⁷ (“Registrar”) who may approve an application if he is satisfied that the applicant: 

The Registrar may impose such conditions as he thinks fit on any registration and may vary or revoke any condition imposed (sections 18(5) and 18(6)).
 
A registration under the Act is valid for the period specified in the certificate of registration (section 18(7)) and may be renewed in accordance with the provisions of the Act (sections 18(8) to 18(12)).
 
A registered person may apply to the Registrar for the relevant recognition as may be determined by the Treasury (section 18(15)).
 
Any person or class of persons may be exempted from the requirement to be registered under the Act subject to such conditions as the Minister (after consulting the Registrar) may specify, and may, upon recommendation of the Registrar, revoke such exemption (section 24).⁸
 
A person or registered person who is aggrieved by the decision of the Registrar under Part IV (Registration of Suppliers and Contractors) may, within 14 days of being informed of the decision, request the Secretary General to the Treasury to review the Registrar’s decision (section 26).
 
It should be noted that, unless with the prior approval of the Registrar, no registered person (including its employees, beneficial owners, persons of interest required to be disclosed under section 37(2) or any persons acting in concert with the registered person) shall be registered in the same classification code⁹ (section 27(1))).

10.	Conduct of procurement

Part V sets out the broad objective of the Act on the conduct of Government procurement. Part V requires the “open and competitive procurement method”, i.e. where all registered persons may participate, to be the primary method in conducting Government procurement, save where other procurement methods have been prescribed by the Minister, taking into consideration the objectives of the Act (section 28).
 
Notwithstanding the provisions of the Act, the Minister or, in relation to a State, the Menteri Besar, may, if he considers it in the national or state interest to do so, implement any policy or measures in any Government procurement to encourage, promote, stimulate or facilitate social, economic and environmental development in Malaysia or any particular State, as the case may be (section 29).
 
The Minister is also empowered by the Act to  prescribe the method/ procedure for any Government procurement: (a) during a period of urgency requiring immediate action in the interest of public order, health or safety (section 30); or (b) as may be required or necessary for implementing obligations arising from international agreements to which Malaysia is a party (section 31).
 
A registered person is prohibited from transferring, assigning or novating, in whole or in part, a grant or contract or any interest in a grant or contract awarded under the Act without the prior approval of the controlling officer responsible for the Government procurement (section 35(1)).¹⁰
 
The Act does not set out detailed procedures as to the conduct of the Government procurement. These are likely to be laid out in regulations to be issued by the Minister. In particular, section 89(2) empowers the Minister to make regulations on the conduct of procurement under Part V, including but not limited to: 

11.	Government procurement contract

A Government procurement contract between a procuring entity and a registered person shall be made in the form and manner and subject to such terms and conditions as may be prescribed by the Minister (section 33). Dispute resolution in relation to the administration of the contract shall also be as prescribed by the Minister (section 34).

12.	Grievance procedures

Any person who is dissatisfied with any Government procurement in general or with any Government procurement exceeding an approval threshold as determined by the Minister may submit a complaint to the procuring entity (section 61).

 
If such person is dissatisfied with the decision by the procuring entity, he may submit the decision for review by the review panel of the procuring entity (section 61(3)), which shall submit its decision in writing to the person making the objection within a reasonable period (section 61(4)). If the person making the objection is not satisfied with the review panel’s decision, he may within 14 days after the decision date, appeal to the Government Procurement Appeal Tribunal¹¹ (“Appeal Tribunal”) (section 61(5)).
 
The Appeal Tribunal has jurisdiction to determine any appeal on matters relating to the decisions and process of the decisions of a review panel (section 67(1)), save as set out in section 67(2)¹².
 
An appellant may, within seven days from the filing of a notice of appeal with the Appeal Tribunal, and having, inter alia, served on the review panel the notice of appeal, submit an application to the Appeal Tribunal for an order to suspend: (a) the procedures leading to the award of the Government procurement contract which is the subject matter of the appeal; or (b) the implementation of any decision made in relation to the aforementioned procedures (sections 69(1) and 69(2)) and provide a copy of the application under section 69(1) together with supporting affidavit to the procuring entity without unnecessary delay (section 69(3)). The procuring entity may in turn file an affidavit to the Appeal Tribunal stating its reasons for not making an order to suspend the Government procurement (section 69(4)).
 
The Appeal Tribunal, upon considering the affidavits of the parties, may either decline the request by the appellant, or, order the Government procurement to be suspended, either unconditionally or upon such terms and conditions as the Appeal Tribunal may determine (section 69(5)), save where: (a) such suspension is against the public interest; or (b) the contract has already been awarded at the date of hearing of the application for the order (section 69(6)). An Appeal Tribunal which refuses to order the suspension of the Government procurement, must give its reasons in writing (section 69(7)).
 
The Act expressly provides that where an appeal lodged is within the Appeal Tribunal’s jurisdiction, the issues in dispute must not be the subject of proceedings between the same parties in any court unless: (a) the court proceedings were commenced before the appeal was lodged with the Appeal Tribunal; or (b) the appeal before the Appeal Tribunal is withdrawn, abandoned or struck out (section 70(1)).
 
The Appeal Tribunal has powers to affirm, vary or set aside the decision of the review panel (section 80(3)). It shall make its decision without delay and where practicable, within 30 days from the first day of the hearing before the Appeal Tribunal (section 80(1)) and shall give reasons for its decision (section 80(4)).
 
The Appeal Tribunal's decision shall be final and binding on the parties to the appeal (section 80(7)) and may, by leave of the High Court, be enforced in the same manner as a judgment or an order of the High Court (section 81).

13.	Other noteworthy provisions

Two noteworthy provisions of the Act are set out below.

 
Interference with active procurement
 
Section 38 renders it an offence for any person to, directly or indirectly, intervene or, by intimidation, undue influence or in any other manner interfere, in an active procurement¹³ so as to cause or which is likely to cause a departure from the procurement process or any instructions, circulars or guidelines issued under the Act. The offence is punishable with a fine not exceeding RM500,000 or imprisonment for a term not exceeding five years or with both.
 
Expanded definition of “registered person”
 
Section 5(1) defines a “registered person” under section 18 as including: (a) every person named in a registration; (b) in the case of a company, the directors, shareholders and senior management of the company; (c) in the case of a partnership, all the partners in the partnership; and (d) in the case of a co-operative society, any person holding key responsibility in the management of the co-operative society. It would appear that the directors, shareholders and senior management of a company which is a registered person are not permitted to apply for registration under the same classification as the registered person.
 
Further, notwithstanding that a registered person may be a legal entity, this expanded definition could impose obligations under the Act on such other persons as included in the aforementioned definition.
 
Comments
 
The Act provides for an overarching framework for the way in which Government procurement in Malaysia is conducted and the emphasis on an “open and competitive procurement method” is welcome. When the Act comes into force, it is hoped that it will ensure that Government procurement will be implemented in a transparent and fair manner, that alleviates any past concerns relating to “direct negotiations” with shortlisted suppliers or contractors, and will protect the integrity of the Government procurement process.
 
 
Article by To’ Puan Janet Looi (Partner) and Kyra Iman Yaakob (Associate) of the Corporate Practice of Skrine.
 
 

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