Nothing wrong with 'direct negotiation' contracts: Malaysia's finance chief

Malaysia's Finance Minister Zafrul Aziz yesterday said there is nothing wrong with conducting direct negotiations, despite earlier accusing the previous Pakatan Harapan (PH) government just days ago of giving out billions of ringgit worth of contracts without open tenders.

Stressing that the issue should not be politicised, Datuk Seri Tengku Zafrul said there are policies which enable justification for direct negotiations under Section 6 (1) of the Financial Procedure Act 1957 (Revised 1972).

"To me, it is just factual, and a reflection of what was signed based on the data (letter of awards signed) that we have in the Ministry of Finance, and it should not be an issue," he told reporters at an event in Kuala Lumpur.

Minutes earlier, his predecessor Lim Guan Eng responded to Mr Zafrul's revelation in Parliament on Monday that the PH administration dished out RM6.61 billion (S$2.16 billion) in 101 "direct nego" contracts.

Under pressure from opposition MPs, the government on Wednesday released details of the 101 contracts.

Most of the RM6.61 billion, Lim told a news conference, went to legacy projects (67.7 per cent) and contracts for supplies or services (26.5 per cent) taken on during the Barisan Nasional administration that was toppled in 2018.

He added that PH was responsible for only 5.3 per cent of the RM6.61 billion in contracts awarded during its 22 months in power.

The issue surfaced in Parliament on Monday when the Finance Minister was responding to queries about directly awarding contracts without open tender during the coronavirus pandemic. He said this was necessary due to the urgent situation.

Mr Zafrul said PH had also engaged in direct negotiations, a claim that caused an uproar as the coalition had promised to do away with the practice in its manifesto ahead of the 2018 election.

The term "direct negotiations" has become a byword for corruption over the decades, with allegations of large government contracts directly awarded to crony companies. Malaysia's anti-corruption commission has also said it will be studying the matter.

While the list was supposed to show PH had awarded contracts without open tender, it has instead revealed the shortcomings of member parties in the current Perikatan Nasional administration.


The list of 101 projects showed that two-thirds of the RM6.61 billion was for the Klang Valley Double Track Phase 2 upgrade. The project was initially directly awarded to Dhaya Maju LTAT two days before Parliament was dissolved in 2018.

PH had cancelled the RM5.3 billion deal before re-awarding it last year to Dhaya Maju LTAT - a joint venture involving the armed forces pension fund - at a reduced cost of RM4.5 billion.

Note: This story has been edited for clarity.

A version of this article appeared in the print edition of The Straits Times on August 28, 2020, with the headline 'Nothing wrong with 'direct negotiation' contracts: Malaysia's finance chief'. Subscribe