PETALING JAYA: A significant shortfall in penalty collection has emerged from Malaysia’s government vehicle concession programme, according to the recently released auditor-general’s findings.
The 2025 Auditor-General’s Report Series 3, presented in Parliament today, revealed that inadequate management of the government’s vehicle concession system has resulted in approximately RM54.51 million in unpaid penalties from suppliers.
According to the audit findings, more than 6,000 vehicles arrived significantly past their due dates. The concession vehicle management system’s data showed that 6,028 units were delivered anywhere from one day to over 500 days late as of December 31, 2024.
The standard delivery timeframe under the agreement is 60 working days from the order placement. However, auditors discovered no documentation showing that penalties had been levied against the concession companies responsible for the delays.
The audit uncovered another financial burden: the federal government spent an extra RM28.79 million by continuing to operate vehicles whose lease agreements had already expired, rather than replacing them on schedule with new units.
According to statements from the Finance Ministry, steps are now underway to address these issues.
Two committees have been established:
A penalty committee led by the deputy secretary-general of the Treasury (investment)
A penalty assessment working committee
These bodies, which include representatives from multiple ministry divisions and the accountant-general’s department, are tasked with reviewing the situation and determining appropriate penalty claims for submission by the relevant ministries.
On August 18, the Finance Ministry conducted a briefing session with all ministries to discuss the audit department’s findings and outline required corrective measures.
The current vehicle concession programme operates under a second agreement (CA2), signed on January 31, 2022. This 15-year contract, running from July 31, 2022 to July 30, 2037, covers the supply, repair, maintenance, and management of government vehicles.
CA2 replaced an earlier agreement (CA1) that was originally scheduled to end on December 31, 2018. CA1 received four extensions through supplementary agreements before finally concluding on July 31, 2022.
By the end of December 2024, the programme had supplied 14,459 vehicles in total:
5,881 vehicles under CA1
8,578 vehicles under CA2
These vehicles serve two primary purposes: 11,322 units for government departments and 3,137 for official use.
The concession structure includes monthly payments comprising lease charges plus repair, maintenance and ancillaries (RMA) fees for each vehicle. A notable concern is that RMA rates increase as vehicles age.
Between 2021 and 2024, ministries paid a combined RM1.75 billion for leasing, repair, and maintenance of vehicles under both concession agreements.
The national audit department has called on the Finance Ministry, as the contract administrator, to take immediate action on two fronts:
Recover the estimated RM54.51 million in outstanding penalties
Speed up the process of replacing vehicles that have exceeded their lease periods
The findings highlight the need for stronger enforcement mechanisms and more rigorous contract management in government procurement programmes.
