Malaysia’s defence ministry is planning to implement an environmental, social and governance (ESG) framework this year as it seeks to improve transparency, credibility and sustainability amid an investigation into military procurement deals by the Malaysian Anti-Corruption Commission (MACC).
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Defence minister Mohamed Khaled Nordin said on Monday that the ministry should draw on lessons from the private sector, lauding the achievements of companies that have built sustainable business models, implemented transparent procurement processes and integrated labour rights.
“There is a huge gap between the governance in this ministry and the government, and [governance in] the private sector,” he said during a new year address to the defence dinistry.
“We need to learn from more advanced, proven and effective systems, even if it requires a fundamental reset in thinking and practices.”
The minister acknowledged that recent events, which include the detention of army officers by MACC to assist with an ongoing graft probe, have eroded credibility and public trust in the country’s armed forces.
On 8 January, a former army chief and his two wives were detained by MACC to assist with an ongoing graft probe into alleged bribery in military procurement deals.
They have since been released, but MACC said that another high-ranking officer of the Malaysian Armed Forces had been detained on Wednesday to assist with the case.
The graft-busting authority has also remanded 17 company directors suspected of being involved in a cartel related to the procurement contracts, national news agency Bernama reported. MACC has seized more than RM8 million (US$2 million) worth of gold bars, sports utility vehicles, Rolex watches and cash in foreign currencies, believed to be linked to the case.
Khaled said that the defence ministry would also undertake a major overhaul of its Anti-Corruption Plan this year, calling corruption a “cancer” that threatens the safety of the country’s armed forces, reduces its effectiveness, and causes waste and inefficiencies.
“We will review and improve all our tender and procurement processes in line with best practices,” he said. “We need to restore integrity and ensure our governance systems offer no room for the abuse of power.”
A special task force will also be established immediately to guide the ministry in developing an ESG framework that is in line with Malaysia’s national defence needs, said Khaled.
He said that the ministry “can no longer use the excuse of national security to avoid being more transparent, dynamic and sustainable”.
“We can no longer be shackled by ineffective bureaucracy,” he said. “We must immediately find ways to adapt best practices in governance as part of our efforts to restore credibility [in our national security forces].”
Digital ministry next in line
Although several other federal government ministries in Malaysia have announced and implemented sector-specific ESG frameworks in recent years, this is the first time a framework is being developed and adopted at a ministry-wide level.
The defence ministry is being prioritised in this initiative given the need for more transparency over its procurement activities, government spokesperson and communications minister Fahmi Fadzil told reporters on Wednesday.
“The defence minister informed the Cabinet that given the large volume of procurement exercises undertaken each year, it is appropriate and necessary for priority to be given to [his ministry],” Fahmi said, according to a report by national news agency Bernama.
He added that follow-up actions for ESG framework adoption would involve the digital ministry and National Digital Department, to support the digitalisation of several procurement procedures. This aims to improve the transparency and accountability of procurement processes, while reducing the risk of leakages.
In 2023, Malaysia’s Ministry of International Trade and Investment launched the iESG framework to support the adoption of ESG frameworks and standards by the country’s manufacturing industry.
The Ministry of Housing and Local Government has also announced initiative aimed at improving environmental standards and waste management, which include championing the use of green building standards in public housing development and the creation of a circular economy blueprint.
