KUALA LUMPUR (Oct 5): The government could not recover RM38.44 million cash advance to contractors who have been dissolved and placed into liquidation, the auditor general flagged.
The auditor general found five contractors dissolved and 13 being liquidated across five ministries at the end of 2025. However, there are still six active firms whose contracts have been terminated, bringing the uncollected receivables to RM68.81 million from the 24 companies.
The audit highlighted severe administrative inertia in pursuing the claims, the auditor general said and pointed to "weaknesses in follow-up action and monitoring by ministries regarding the financial and legal status of contractors".
The so-called contractor advance payments facility grants main contractors upfront cash advances of up to 25% of the builder's work value or RM10 million to kick-start development projects, which are then recouped via scheduled progress claim deductions.
However, project terminations between 2008 and 2013 left government ministries holding substantial unrecovered balances that ultimately turned into long-outstanding debts.
The Ministry of Education had the largest uncollected receivables totalling RM28.13 million, followed by the Ministry of Defence RM17.49 million, according to the Auditor General's report.
The rest came from the Ministry of Home Affairs, Ministry of Transport, and Works Ministry.
The Ministry of Home Affairs suffered the largest loss to a single contractor amounting to RM7.91 million. The company, which was not named in the report, had insufficient estate after being fully liquidated in April 2026.
To curb further financial leakage, the auditor-general recommended that affected ministries expedite the submission of the proof of debt form to the Department of Insolvency for contractors “with liquidation status to ensure the government's interest as a creditor is registered".
Further, the report emphasised that ministries, in collaboration with the Attorney General's Chambers, must take “immediate legal action such as issuing letters of demand or filing civil suits against active companies" well before corporate dissolution or end of statutory limitation periods.
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