THE country’s multibillion-ringgit push to position itself as a regional innovation hub has been dealt a sobering reality check.
The Auditor-General revealed that weaknesses in governance, monitoring and financial controls have blunted the impact of the nation’s Research, Development, Commercialisation and Innovation programmes.
The AG's Report 1/2026 paints a picture of structural underperformance despite sustained public investment.
Of 87 R&D&C&I projects inspected, valued at RM318.48 million between 2021 and June 30, 2025, implementation stood at just 34.1 per cent.
The report also highlighted a shortfall in Gross Expenditure on Research and Development performance, raising concerns about whether Malaysia is keeping pace with its own stated ambitions.
“As of June 30, 2025, five out of six 12th Malaysia Plan (12MP) objectives and all three Sustainable Development Goal (SDG) 9.5 indicators have not been met,” the report stated.
The findings strike at the heart of Malaysia’s policy architecture.
Four lead ministries were audited: the Higher Education Ministry, the Science, Technology and Innovation Ministry, the Investment, Trade and Industry Ministry, and the Agriculture and Food Security Ministry.
The Economy Ministry and Finance Ministry were also scrutinised as central agencies responsible for approving budgets.
Significantly, the Economy Ministry informed auditors that targets under the forthcoming 13th Malaysia Plan would remain unchanged from those of the 12th, despite the latter’s failure to achieve its goals.
The report further noted that six out of 12 short-term strategies under the National Science, Technology and Innovation Policy 2021–2030 remain unfulfilled, while seven out of 12 mid-term initiatives have yet to be achieved.
Innovation metrics tell a similarly muted story. Between 2021 and 2024, Malaysian patent applications averaged just 968 annually, falling short of national targets and underscoring concerns that research outputs are not translating into commercially viable intellectual property.
The Auditor-General recommended centralised coordination of the R&D&C&I ecosystem to ensure standardisation and strengthen oversight.
It urged the Economy Ministry to empower the Centralised Research Management Unit to streamline governance and improve coordination with research institutes, universities and industry players in order to better track project outcomes and national impact.
Parallel concerns were raised over the early implementation of the MyDigital ID development project under Mimos Bhd. The audit found significant weaknesses in spending controls and internal governance.
A total of RM28.13 million allocated to Mimos was spent without approval from the designated oversight committee.
This included RM4.08 million spent across 11 sub-scopes despite no allocation being channelled, or beyond the sums allocated.
A further RM70,000 was spent in excess of the approved total cost for a single sub-scope.
“This indicates weak internal controls and non-compliance with the established governance and mandate,” the report said.
Auditors also found that RM14.09 million in development funds was used for resource costs, emoluments, medical facilities and office equipment, contrary to the 12th Malaysia Plan development project implementation guidelines.
The spending did not align with the intended purpose of the allocation.
On July 21, 2023, Mimos was appointed implementing agency for MyDigital ID under the supervision of the Home Ministry and the National Registration Department, with RM80 million in development funds channelled to the company.
Mimos was required to provide detailed expenditure reports for monitoring and verification by a designated committee.
Procurement weaknesses further compounded concerns. The purchase of security cages and door access systems proceeded without Value Assessment Lab approval.
The equipment remains unused, resulting in wasted funds and reflecting what the report described as poor asset control.
The Auditor-General stressed that board members of Mimos must discharge their fiduciary duties rigorously, ensuring that governance frameworks and internal controls are strictly observed.
“This includes the need to comply with conditions imposed by the Home Ministry on the management of My Digital ID Sdn Bhd (MyDIDSB),” the report added.
Taken together, the findings suggest that Malaysia’s innovation ambitions will require not merely funding, but deeper institutional reform.
Without firmer oversight, stricter compliance and clearer accountability, the nation’s strategic objective of becoming a high-technology economy by 2030 risks being undermined by its own administrative frailties. - February 23, 2026
