KUALA LUMPUR, July 9 — The government lost nearly RM28.79 million due to delays in replacing thousands of cars in its rented vehicle fleet, the Public Accounts Committee said today.

PAC chairman Datuk Mas Ermieyati Samsudin said this was established after the committee investigated the government’s vehicle rental contract, which had been flagged for weaknesses in the Auditor-General’s Report last October.

“Because the new vehicles arrived late, user ministries and agencies were forced to extend the old rental leases for 5,323 vehicles beyond the original 48 to 60-month period,” she told a press conference in Parliament here.

“The government was forced to pay the full monthly fixed rental costs alongside much higher monthly repair and maintenance rates, compared to if the vehicles had been replaced with new ones that carry significantly lower first-year maintenance costs.”

PAC launched an inquiry as a follow-up to the the Auditor-General’s audit that deemed the management of concession vehicles by the government unsatisfactory, specifically panning Spanco Sdn Bhd’s delivery delays and the government’s subsequent failure to impose late penalties.

The bipartisan panel said it interviewed several ministries from November 3 to November 18 last year, including the Ministry of Finance, which oversaw the procurement, and the Home Ministry.

Protect public funds

Among key findings of its proceedings were weaknesses in contract management by the MOF as the ministry managing the concession agreement on behalf of the federal government.

The contract was effective for 15 years from July 31, 2022, to July 30, 2037.

“The PAC found that there was a communication gap between MOF and the user ministries and agencies of the concession vehicles, confusion regarding the definition of when the penalty period begins, and that MOF had failed to distribute the contract documents to the user ministries and agencies,” it said.

“This resulted in the government being late in collecting millions of ringgit in late vehicle delivery penalties from Spanco Sdn Bhd.”

PAC then urged the MOF to sign a supplementary agreement with Spanco to ensure the government is not charged monthly lease rates for expired vehicles kept in service due to new delivery delays, which it said would protect public funds.

Second, the committee recommended updating the mandatory 60-working-day vehicle delivery timeline to reflect realistic automotive industry capacities. 

This amendment must account for manufacturing norms, customs clearances, specialised equipment installation, and geographical factors, particularly for Sabah and Sarawak, to prevent unfair penalties.

Finally, the PAC recommended full implementation of a digital fleet monitoring system across all ministries to provide early warnings for lease expiration. 

It also directed the MOF to expedite the auditing and verification of all remaining vehicle delivery delays.