KUALA LUMPUR (May 21): The Federation of Malaysian Manufacturing (FMM) has called on the government to immediately enforce the Government Procurement Act (GPA) 2025, warning that current global disruptions — particularly the ongoing West Asia conflict — have made the reform more urgent than ever. 

In a statement released on Thursday, the FMM said that the conflict has severely disrupted shipping routes, driving up freight and insurance costs, and creating direct cost pressures for Malaysian manufacturers reliant on imported inputs.

The GPA, which was passed by the Dewan Rakyat in August 2025 and subsequently by the Dewan Negara in September, is Malaysia's first-ever dedicated legislation governing public procurement. 

However, under Section 1(2) of the Act, its commencement depends on a date to be appointed by the minister of finance via notification in the Federal Gazette — a step that has yet to be taken. 

The federation is now pressing the government to gazette the commencement date without further delay.

"Government procurement is one of the largest areas of public expenditure, channelling public funds into infrastructure, services and programmes that directly affect the competitiveness of Malaysian industry and domestic supply chains," said the FMM.

The FMM has long advocated for a single, legally binding procurement statute to replace the previous patchwork of Treasury instructions, circulars, and financial regulations that lacked full statutory force and consistent enforcement. 

The GPA, once enforced, will establish a legally binding framework for transparency, fair competition, and accountability across all procuring entities at both federal and state levels, it said.

By mandating open and competitive tendering as the primary procurement method — with documented justifications for every award decision — the Act raises governance standards for every ministry, agency, and government-linked company (GLC).

"For investors, both foreign and domestic, a transparent and credible procurement system signals that Malaysia awards contracts on merit, reduces risks of rent-seeking and reinforces Malaysia's standing as a reliable investment destination. For the Malaysian public, greater transparency and fair competition strengthen value for money in public spending and free up resources for effective delivery of infrastructure and public services," said the federation.

The FMM has formally requested that the government confirm the specific commencement date and publish a timeline for subsidiary regulations, including approval thresholds, transition plans for agencies currently operating under existing Treasury instructions, and the operational readiness of the Government Procurement Appeal Tribunal to handle cases upon enactment.

The federation also highlighted that global trade shifts have intensified trade diversion pressures across the region, raising the risk that government procurement channels could be used to supply goods that do not meet local content requirements. 

Against this backdrop, robust verification mechanisms within the GPA framework are essential to protect the integrity of the "Buy Malaysian" policy. Building domestic manufacturing capacity and channelling public procurement towards Malaysian-made goods and services, the FMM argued, is both an economic and a strategic priority.

Under Clause 29 of the Act, which allows for specific policies to advance social, economic, and environmental development, the FMM proposed incorporating a mandatory "Buy Made-in-Malaysia" requirement across all ministries, agencies, and state governments, with annual public reporting on the proportion of contracts awarded to local manufacturers. Tender specifications must remain neutral and cannot be written around a particular brand or technical parameter that excludes qualified local suppliers. The FMM recommended a mandatory specification review process, administered by the Procurement Board, requiring procurement officers to justify any specification that cannot be met by multiple qualified local firms.

To address the risk of trade diversion through local-entity trading, the FMM called for cross-agency coordination between the Registrar of Government Procurement, the Royal Malaysian Customs Department, and the Ministry of Investment, Trade and Industry (Miti) to validate supplier declarations against manufacturing licences and import records. A centralised, verified Malaysian manufacturer directory integrated with the e-Perolehan platform and Miti's manufacturing licence database would give procurement officers a standard reference before proceeding with any import-based specification.

For small and medium enterprises, the FMM recommended full digitalisation of the supplier registration system through a single-window platform, along with the breakdown of large tenders into smaller contract lots where operationally feasible. The federation also proposed mandatory payment timelines of 30 days for contracts below RM1 million and 45 days for larger contracts, with automatic interest provisions for non-compliance.

Section 2(2) of the Act allows the finance minister to exempt one-off allocations from its application for statutory bodies, local authorities, GLCs, and government entities. The FMM has called for GLCs receiving public funding to be held to the same standards as government agencies, with annual public disclosure of supplier nationality and contract values. Without consistent application across GLCs, the FMM warned, the level playing field the Act promises will not be fully achieved.

FMM president Jacob Lee Chor Kok reiterated the federation's readiness to engage with the government and the Ministry of Finance on the implementation framework, urging all relevant agencies to work collectively to bring the Act into force at the earliest opportunity

The FMM represents more than 13,300 member firms — including 4,200 direct and 9,100 indirect participants across the manufacturing supply chain.