Mr Abdullah also tabled legislation that will appoint a nine-member panel to advise the premier on the selection of judges, in a bid to address criticism that the judiciary is corrupt and incompetent.
'It will give a level of confidence in these institutions, higher than before, and negative perceptions will hopefully be reduced as much as we can,' Mr Abdullah said of the two proposals.
'We have to deal with the perception by businesses and industry that corruption here is king, and the judiciary is unsatisfactory and is not credible as all of this will affect our competitiveness,' he told reporters.
The Anti-Corruption Agency which is being replaced has been criticised as toothless, and the new version is being promoted as having more independence and greater accountability.
However, activists say that the new commission should be also given the power to prosecute corrupt activities, currently the responsibility of the government.
Mr Abdullah has been forced to agree to stand down in March and hand over to his deputy Najib Razak, after the government was punished in general elections this year over his failure to introduce promised reforms.
The premier came to power in 2003 with grand plans to revamp the police and the justice system, and root out corruption from the ruling party, but his failure to act earned him a rebuke at the March polls.
The Barisan Nasional coalition which has dominated Malaysian politics for half a century lost control of five states and a third of parliamentary seats in its worst-ever electoral performance. -- AFP
M'sia harmed by corruption
Straits Times, Singapore