RESEARCH ARTICLE | OCTOBER 05 2023

Malaysian construction industry corruption: Views of

government agencies, contractors, and consultants 
Rumaizah Mohd Nordin  ; Ezlina Mohd Ahnuar; Asrul Nasid Masrom; Nasseem Ameer Ali; Nasyairi Mat Nasir

AIP Conf. Proc. 2881, 050001 (2023)

https://doi.org/10.1063/5.0167609

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06 October 2023 04:15:15

Malaysian Construction Industry Corruption: Views of
Government Agencies, Contractors, and Consultants
Rumaizah Mohd Nordin1, a), Ezlina Mohd Ahnuar1, b), Asrul Nasid Masrom2, c),
Nasseem Ameer Ali3, d), and Nasyairi Mat Nasir1, e)
1
College of Built Environment, Universiti Teknologi MARA, 40450, Shah Alam, Selangor, Malaysia
2
Department of Construction Management, Faculty of Technology Management and Business, Universiti Tun
Hussein Onn Malaysia (UTHM), 86400, Batu Pahat, Johor, Malaysia
3
School of Built Environment, Massey University, Auckland, 0632 New Zealand
a)
Corresponding author: drrumaizah@uitm.edu.my
b)
ezlina961@uitm.edu.my
c)
asruln@uthm.edu.my
d)
n.a.n.ameerali@massey.ac.nz
e)
nasyairi@gmail.com

Abstract. Corruption is believed to slowly penetrate the construction sectors around the world due to it involves a
multitude of players, different phases of work, and a great deal of inputs from both the public and private sectors. Due
to the construction’s central role in development, corruption in construction can be especially harmful in term of poor

06 October 2023 04:15:15

quality of the finish product, reduce the economic return to investments, injury, and death. Hence, a commitment to
rooting out corruption is critical. This paper aims to test the perception of different stakeholders on the issues of
corruption. Questionnaire surveys were conducted with the three groups of construction stakeholders namely clients
(government agencies), consultants and contractors. The result shows that there is difference in perception between
the respondents in the vulnerable areas for corruption in the construction project development. This could assist policy
reform in designing more effective anti-corruption strategies in order to reduce corruption.

INTRODUCTION
The construction industry plays a very significant role in the socio-economic development of any nation [1-2]
whereby it essentially supports Malaysia’s Gross Domestic Product (GDP) [3-4] as more than 120 industries rely
on construction industry [5]. Corruption is a fiduciary crime that is believed to slowly penetrate the construction
sectors in countries around the world [6]. The construction industry is said to be vulnerable to corruption due to
its large size and fragmented nature of construction projects, which contractor and subcontractors often involved
complexity of construction activities, an extended period of construction, complicated process, and financial
intensity [7-8]. Due to the construction’s central role in development, corruption in construction can be especially
harmful. In particular, corruption that leads to poor quality of the finish product, and insufficient maintenance can
significantly reduce the economic return to investments and carry high human costs in terms of injury and death
[9]. Thus, a commitment to rooting out corruption is a critical part of any developmental strategy.

CORRUPTION IN CONSTRUCTION INDUSTRY

Corruption has been a prevalent issue in development of Malaysia and known to be a common issue for the
money spending in the construction industry [10]. The behaviour of receiving and giving bribes are due to both
factors, technical and human conscience [11]. Risks may arise in any phases of each construction project, from
tendering all the way to construction stage of the project itself [12]. However, procurement found to be facing the
highest risk to corrupt [13-15] and the vulnerabilities comes from the criteria of the project itself which affects
the integrity of the players [16]. As mentioned by [17], most common unethical conduct evidenced during
procurement are cover pricing, bid cutting, poor documentation, and collusive tendering.

3rd International Conference on the Built Environment and Engineering (IConBEE) 2022
AIP Conf. Proc. 2881, 050001-1–050001-4; https://doi.org/10.1063/5.0167609
Published by AIP Publishing. 978-0-7354-4682-3/$30.00

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 In order to plan and manage a successful project, the three parameters of time, cost and quality should be
considered [18]. Based on various research, higher corruption leads to poor performance of construction projects
in term of time, cost, and quality [9] and [19-20]. In addition, other serious consequences of corruption may
include lower economic growth rate, ineffective government, infringement of civil/political rights, decrease in
investment of foreign and domestic investors, lower quality of public infrastructure, and reduced effectiveness of
provision of public goods [21]. To combat corruption in the construction industry, all stakeholders (i.e., company
shareholders, professional trade bodies, civil society organisations) have roles to play in exposing and combatting
the malpractice [22]. For the purpose of this study, issues of corruption in construction and the anti-corruption
strategies will be tested for different in opinion based on the research hypothesis:

H01: There is no significant difference between the three groups of respondents (i.e., Government agencies,
contractors, and consultants) in perception of the issues of corruption (i.e., areas of corruption, sources of
corruption, effects of corruption, extent of corruption and anti-corruption strategies).

METHODOLOGY
The data collection method utilised for this study is a questionnaire survey using a-ten-points Likert type
scaled items for the participants to indicate their level of agreement and disagreement. A non-probability of
judgement purposive sampling was used based on the expertise of respondents (Government, public authorities,
consultants, and contractors) on the subject matters. The data were analysed using Multivariate Analysis of
Variance (MANOVA) from Statistical Package for Social Science (SPSS) version 21.
Based on Table 1, a total response of 37.6% was attained from the total of 189 questionnaire sent. The response
rates for the data collection are acceptable since the normal response rate in construction environment is around
20 to 30 percent [23]. Other than that, based on the experience of the participants (Table 2), it is reasonable to
infer that the majority of the participants have sound knowledge on the issues of corruption in construction with
a total of 42 respondents (59.2%) have more than ten years of experience in construction industry or in the effort
to fight corruption. This implies that the data gathered are relevant as more than half of the respondents were
experienced more than ten years in handling construction projects and/or involved in the anti-corruption effort by
which can be considered as highly experienced [24].

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TABLE 1: Response rate
Respondents Sent Return Percentage (%) Cumulative Percentage
Government Agencies 99 25 35.2 35.2
Contractors 43 25 35.2 70.4
Consultants 47 21 29.6 100.0

189 71 100.0

TABLE 2: Respondents’ experiences

Years of experience 0 - 10 11 - 20 21 - 30 More than 30 Total
Contractor 8 12 4 1 25
Government agencies 16 3 5 1 25
Consultant 5 8 6 2 21
Total 29 23 15 4 71
Percent 40.8 32.4 21.1 5.6 100

DATA ANALYSIS AND FINDINGS

MANOVA tests were used to test the differences among groups across several dependent variables and
simultaneously by using sum of squares and cross-product matrices [25]. In order to test the research hypotheses
utilising MANOVA, four (4) steps need to be conducted including checking for Multivariate Normality, checking
for Equality of Covariance Matrices (Box’s M test), checking for Equality of Error Variances (Lavene’s Test) and
Multivariate Test. When all the four tests were found significant with no assumption were violated, Tests of
Between- Subject Effects were conducted as shown in Table 3.
Due to the significant result, the follow up test is conducted to explain the group differ-ences. Since at this
point a number of separate analysis were being looked into, Pallant [26] suggested to set a higher alpha level to

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reduce the chance of the Type 1 error. This is done by applying the Bonferroni adjustment through dividing the
original alpha level (i.e., .05) by the number of analyses intended (i.e., 5). Hence, for this research the new alpha
is .01 and the result will be considered significant only if the probability value (Sig.) is less than .01. Based on the
result, the only significant difference between the three groups of respondents (i.e., Government agencies,
contractors and consultants) was on the vulnerable areas for corruption in the construction project development.
While the remaining four issues (i.e., sources of corruption, effects of corruption, extent of corruption and
anticorruption strategies) are similar in opinion between the three groups of respondents.
The importance of the impact of different respondents from different organisations on vulnerable areas for
corruption can be evaluated using the effect size statistic utilising the value of Partial eta squared. The value in
this case is .196 which according to Cohen (1988) in Pallant [26] is considered a large effect. This represents
about 19.6 percent of the variance in vulnerable areas of corruption explained by the three groups of respondents.
Furthermore, Table 4 shows the estimated marginal means in order to know the difference of mean scores
between the groups. For vulnerable areas for corruption, the mean score for contractors is 25.080, government
agencies are 19.640, and consultants is 26.762. Government agencies were found to have different perception on
the vulnerable areas of corruption compared to contractors and consultants while the mean score for contractors
and consultant are almost similar (less than 1 scale point). This shows that contractors and consultants might have
the same perception on the vulnerable areas for corruption but different with the Government agencies.

TABLE 3: Tests of Between-Subjects Effects

Source Dependent Type III df Mean F Sig. Partial Eta
Variable Sum of Squares Square Squared
Extent (Culture) 1037.157 2 518.578 3.914 .025 .103
Areas 656.478 2 328.239 8.269 .001 .196
Organisations Source: Technical 777.294 2 388.647 1.714 .188 .048
Effects 30.561 2 15.281 .105 .901 .003
Strategies 376.728 2 188.364 1.174 .315 .033

TABLE 4: Estimated Marginal Means

Organisations

06 October 2023 04:15:15

Contractors 25.080 1.260 22.565 27.595
Areas Government Agencies 19.640 1.260 17.125 22.155
Consultants 26.762 1.375 24.018 29.505

Hence, it could be deduced that H01 cannot be accepted. The reason for this predicament may be due to the
involvement of the different stakeholders in the different phases across construction project development that
leads to the difference in perception on which phase creates more opportunities for corruption. Adding to that, the
result revealed that Government agencies were found to have different perception on the vulnerable areas of
corruption compared to contractors and consultants. The probable reason for this predicament is that government
tend to hide information on corruption [27] suggesting that the definition of corruption on the abuse of powers by
public officials for private gain is true. Besides, this result inclines to support various reports on public officials
or civil servants that condemned as notably corrupt sector [28].
Other than that, Wena et al. [29] suggested that behaviour of the construction player itself who are not willing
to take the risk and make changes to the existing unwanted unethical behaviour by the construction industry parties
has led to poor quality of project deliverables.

CONCLUSION
In summary, it is noteworthy that there is a different perception between the government agencies and the
contractors and consultants in term of areas vulnerable for corruption. This may be due to the involvement of the
different stakeholders in the different phases across construction project development. Besides, the opportunities
of corruption within the various phases may be the result of different scope of work and authorities by the various
stakeholders. Therefore, it is inevitable to consider the differences in order to develop significant anti-corruption
strategies.

ACKNOWLEDGEMENTS
The authors would like to thank Neksus Penyelidikan Uitm (Reneu), Pejabat Timbalan Naib Canselor under
Penerbitan Yuran Prosiding Berindeks (PYPB)for supporting this publication.

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