KUALA LUMPUR (May 14): The Ministry of Finance (MOF) is developing a new integrated procurement system equipped with artificial intelligence (AI) features and automated red-flag mechanisms to strengthen compliance monitoring and curb corruption risks.

Under the system, enforcement agencies will be granted controlled access, while transactions and approvals will be monitored through automated checks designed to detect irregular patterns at an earlier stage, said Ahmad Fauzi Sungip, head of the eWORKS Project Management Office at the government procurement division under the MOF.

The unit's primary focus is the management of government procurement and related technical projects, with a focus on improving and digitising procurement processes.

“God willing, the rollout of the first phase will begin next month, and by the end of this year, the system will be fully operational end-to-end,” he said during a roundtable discussion with business chambers of commerce on Thursday.

According to Ahmad Fauzi, the new e-procurement system forms part of the MOF’s “by design” approach, which leverages digital systems and automation to reduce opportunities for misconduct.

However, he acknowledged that corruption can still occur when individuals manipulate systems while technically complying with rules and procedures.

As such, he said the reforms must also address the “human factor”, including strengthening training, ethics and institutional discipline in collaboration with relevant institutions.

Separately, Ahmad Fauzi said the MOF is considering introducing “moral incentives” within the procurement system to reward companies with strong governance and compliance records, including through better evaluation scores in tender processes.

The move could also help address so-called “Ali Baba” practices in procurement, he said, where winning bidders subcontract work to more capable firms that ultimately carry out the projects.

“Sometimes the winning bidders are not well-known and less capable, but the subcontractors are. However, we also need to be mindful because sometimes the subcontractors are large organisations that also require business opportunities. If they do not take up those opportunities, it can be difficult for them to survive because they have already invested significantly,” he said.