Nowadays, application of electronic commerce is increasing in commercial fields; this includes procurement process which introduced e-Tendering in construction industry. e-Tendering concept is to engage lesser paperwork and provide higher transparency in every transaction of procurement process. The aim of this paper is to study ethical issues related e-Tendering in Malaysia construction industry. This paper reviewed previous and recent literature in order to identify the ethical issues and risk of corruption encountered in electronic commerce. Questionnaire survey was used to identify the current situation of e-Tendering involving ethical issues and factors that contributed to these issues. This study proposed potential initiatives to resolve the issues of procurement transparency that improve ethical behavior of parties in managing and bidding tender. This study utilized Average Index method and ideal solution (TOPSIS) for data analysis. TOPSIS which is one of the multi-criteria decision making methods for ranking the factors contributed to ethical issue in e-tendering and the potential initiatives for improvement. Results of TOPSIS showed that the most critical factor that contributed to the ethical issue in e-Tendering was cronyism, followed by lack of meritocracy, collusion, unpublicized process, long-term relationship, human greed and transparency feature of e-Tendering. In addition, from the result, it was concluded that the initiative that was known to be most potential in enhancing e-Tendering process was the features of the e-Tendering system and the ethical awareness among tendering authorities. © 2005 - 2014 JATIT & LLS. All rights reserved.