Rural project payments delayed as allocation nearly exhausted, says Treasury

Treasury officials reveal that rural development contractors have encountered delays in payment due to the majority of this year's allocation for rural road projects having been expended. Johan Mahmood Merican, the Treasury secretary-general, clarified that the Rural and Regional Development Ministry has full authority over its allocation for rural roads, as the funds have been wholly disbursed.

The ministry consistently exceeds its approved budget for rural road projects, with expenditures of RM1.8 billion in 2023, RM2 billion in 2024, and RM2.3 billion in 2025, surpassing the allocated amounts of RM1.1 billion, RM1.3 billion, and RM1.6 billion respectively. As of June, payments to contractors for this year's projects stand at RM1.9 billion, having consumed RM2.1 billion of the allocated funds.

Merican stated that each ministry is responsible for budget planning and management, as approved by Parliament. Payment constraints to contractors stem from the current year's allocation nearing exhaustion. The Treasury is collaborating with the ministry to resolve the issue, including reallocating funds based on priorities. An additional RM300 million has been approved to settle outstanding payments.

The Treasury is also exploring savings from other ministries to cover the ministry's overcommitments. Recently, Rural and Regional Development Minister Ahmad Zahid Hamidi expressed frustration over delayed contractor payments, with some contractors shutting down due to cash flow issues as they have completed their work and met project milestones.