Rural project payments delayed as allocation nearly exhausted, says Treasury

The Treasury revealed on Thursday that contractors working on rural development projects have faced payment delays due to the nearly complete allocation for rural road projects. According to Johan Mahmood Merican, the Treasury secretary-general, the rural and regional development ministry has consistently overspent its approved annual allocation for rural road projects in the past three years.

In 2023, the ministry spent RM1.8 billion, compared to the approved RM1.1 billion; in 2024, it spent RM2 billion, exceeding the approved RM1.3 billion; and in 2025, it spent RM2.3 billion, surpassing the approved RM1.6 billion. As of June, the ministry had used up RM1.9 billion of the RM2.1 billion allocated for this year's rural road projects.

Merican stated that each ministry is responsible for planning and managing its expenditure within the annual budget approved by Parliament. The Treasury is working with the ministry to resolve the issue, including reallocating funds based on priorities. So far this year, the Treasury has approved an additional RM300 million to help settle outstanding payments to contractors.

Moreover, the Treasury is looking into savings from other ministries to cover the ministry's excess commitments. Rural and regional development minister Ahmad Zahid Hamidi recently expressed frustration over the delayed payments, stating that some contractors have been forced to close operations due to cash flow problems, even though they have completed their work and met project milestones.