Finance Ministry halts selected pre-qualified tender method for new Rural and Regional Development Ministry projects after audit findings

KUALA LUMPUR, Oct 20 — The Ministry of Finance (MOF) has halted approvals for the Ministry of Rural and Regional Development (KKDW) to use the Selected Pre-Qualified Open Tender (TTPKT) method for new projects following findings in the Auditor-General’s Report (LKAN) 2/2025.

The ministry said the TTPKT method was introduced in 2023 as a special procedure to expedite the implementation of high-impact projects for the public and remained in place until June 30, 2025, with several enhancements aimed at strengthening government procurement governance.

“However, the Auditor-General’s Report 2/2025 found that that the implementation of the TTPKT method, including by the KKDW, had not achieved the government’s original objectives,” the ministry said in a written reply published on Parliament’s portal.

The ministry was responding to a question from Lim Guan Eng (PH-Bagan) regarding action against KKDW officials responsible for authorising spending that exceeded allocations by RM2.1 billion between 2023 and 2025, as well as whether the contractors involved had been appointed through open tender.

According to the MOF, contractors for the Rural Road Programme under the KKDW are generally selected through tender processes, including open tender and the TTPKT method.

The ministry said the KKDW had, over the past few years, made financial commitments and incurred expenditure exceeding the original allocations approved in the annual budgets for rural road projects, resulting in arrears and delays in payments to contractors.

In this regard, the MOF said it had taken additional measures, including directing the KKDW to suspend the issuance of new Letters of Acceptance (SST) for rural road projects on September 10.

The ministry said it had also approved an additional RM500 million in expenditure for 2026 through a letter authorising expenditure beyond the approved allocation, after savings were identified in other ministries’ development expenditure.

In addition, the MOF said it had asked the KKDW to prepare projections of funding requirements for rural road projects up to the end of 2026 and for 2027, based on contracts already awarded, to determine the additional allocation needed.

According to the MOF, the original allocations approved for rural road projects under the annual budgets were RM1.09 billion in 2023, RM1.32 billion in 2024 and RM1.57 billion in 2025.

“To reduce payment arrears, the KKDW took steps to reallocate existing development expenditure funds from other projects through an internal Notice of Change (NOC) to meet the funding requirements of rural projects,” it said.

The MOF said the measure resulted in the allocations being revised to RM1.85 billion in 2023, RM2.02 billion in 2024 and RM2.27 billion in 2025, but the amounts were still insufficient to cover the ministry’s project commitments.

To address the issue, the MOF said it had agreed to increase the allocations for rural road projects to RM2.11 billion in 2026 and RM2.27 billion in 2027.

Meanwhile, the ministry said the adjusted allocation for 2026 stood at RM2.40 billion, with RM2 billion in expenditure recorded as at August 31. — Bernama