Enhance the Transparency and Integrity of the Budget and Budgeting Process
Cap on govt guarantee needed: AG
15 October 2019 – The government needs to put a cap on government loan guarantees. This was said by Nik Azman Nik Abdul Majid, the Auditor-General, during a press conference on 14 October 2019 after briefing the Public Accounts Committee on the recently released 2018 Auditor General’s report – Federal Government Financial Statement. He said currently there is no such cap or limit on the number of loan guarantees that the Federal Government gives out. In addition to that, the AG issues an Emphasis of Matter to the government for the first time on issues that they think is of concern. The report highlighted that the government paid RM2.84 billion for guaranteeing loans of five Minister of Finance Inc companies, whose ability to repay the advances was uncertain. The five companies are KL International Airport Bhd — which was set up to raise funds for the construction of the Kuala Lumpur International Airport — GovCo Holdings Bhd, Asset Global Network Sdn Bhd, Jambatan Kedua Sdn Bhd and DanaInfra Nasional Bhd.
Improve the transparency of Malaysia’s financial administration
23 Mar 2019 – To ensure transparency and budget integrity and budgeting process, it has been agreed that a mid-year budget review will be undertaken, criteria for off-budget allocation should be scrutinised, and every expense on public money shall be recorded promptly and carefully monitored in accordance with established financial procedures.
Implement a more responsible budget
11 October 2019 – The bipartisan Special Parliamentary Select Committee on the budget made eight recommendations for the government to strengthen management and transparency of the government. The recommendations are:
- The government to present the debt and liabilities exposure of the country to Parliament on a regular basis.
- A detailed report to be made on the commitments of government guarantees (GG), public-private partnership (PPP) projects, private finance initiatives (PFI) and Pembinaan BLT Sdn Bhd in the annual Budget Estimates to reflect the actual obligations.
- Review and assess government guarantees to determined the guarantees needs to be assisted.
- Setting up statutory or administrative limits on GGs.
- Reporting of actual commitment of debt service charge and its percentage of revenue in detail.
- The introduction of specific coding in the annual Budget Estimates for other financial commitments.
- Constant monitoring of the ratio of total debt and liabilities exposure to gross domestic product, Federal Government deficit to GDP and debt service charges over revenue.
- The debt level of Malaysia and other countries in the ASEAN region and developed nations to be analysed on a regular basis
C4 Center Executive Director, Cynthia Gabriel responded with the following;
Generally, it is a positive looking Budget for anti-corruption and improving enforcement accountability.
However, we hope the funds can also be allocated for structural reforms in the MACC and related institutions like the attorney general’s office so that they can be more effective and independent.
We note with some concern that several mega big-ticket projects will continue. We understand the government needs to boost the economy, but it must be sustainable.
We hope more can be done to ensure more transparency and accountability in the implementation of these projects.
11 October 2019 – Finance Minister, Lim Guan Eng, tabled the 2020 Budget in parliament themed around “Driving growth and equitable outcomes towards shared prosperity”. The Federal Government has allocated RM297 billion, of which RM 241 billion is for operational expenditure and RM 56 billion for development. Click on this news excerpt to see a more detailed breakdown of the budget.
11 October 2019 – Budget 2020 Highlights
2 November 2018 – Budget 2019 Highlights
31 March 2019 – To improve transparency and budget integrity as well as budgeting processes, a mid-year budget review has to be made. Criteria for off-budget allocation should be scrutinised. All money spent must be promptly recorded.
23 March 2019 – To ensure transparency and budget integrity and budgeting process, it has been agreed that a mid-year budget review will be undertaken, criteria for off-budget allocation should be scrutinised, and every expense on public money shall be recorded promptly and carefully monitored in accordance with established financial procedures.
Implement accrual accounting system to better manage government expenditure
24 May 2018: The Ministry of Finance (MoF) has provided a breakdown of the federal government’s RM1.087 trillion financial obligations as highlighted by the Prime Minister Tun Dr Mahathir Mohamad previously.
In a statement today, Finance Minister Lim Guan Eng said the total amount of government liabilities included Federal government debt, Government Guarantees, and lease payments for Public Private Partnership (PPP) projects such as construction of schools, hostels, roads, police stations, hospitals, etc.
7 October 2019 – Prime Minister Tun Dr Mahathir Mohamad said the government started reviewing the poverty line from March to give a truer picture of the poverty situation in the country. He told the Dewan Rakyat sitting today that it is being done with the cooperation of the Statistics Department, Health Ministry and the relevant departments and agencies. Dr Mahathir explained that the poverty rate in Malaysia in the past was based on data obtained from the Household Income Survey (HIS), which followed international standards maintained by the United Nations Statistics Division (UNSD).
C4 – In late August 2019, the UN Special Rapporteur report on Malaysia has revealed that the Malaysian government have been using inaccurate measurements for poverty which might have lead to imprecise policies to help the poor in the nation. In response to the report, Prime Minister Dr Mahathir in the October sitting of Parliament has signalled that the government has started to review the poverty line earlier in the year to reflect a more accurate picture of the poverty situation in the country. This statement somewhat revealed the defensiveness of the administration towards this embarrassing revelation. Was the government likely to reveal that they are using old poverty measurements if the UN report did not state this fact? Revising the poverty line should be commended however suggests that the mechanisms to calculate the national budget is outdated and lacks transparency. This reiterates our earlier call for participatory budgeting as the involvement of citizens and civil society organisations will bring out inaccuracies within the budgeting process to light.
24 September 2019 – Ahead of Budget 2020, Parliamentary Caucus on Reform and Governance chairperson Anwar Ibrahim organised a seminar on poverty today in the hopes that lawmakers across the political divide would bring up the issue in their upcoming debates. Entitled the “Economy, Poverty and Disparity in Malaysia: Definition and Implementation”, the seminar featured presentations by economists Jomo Kwame Sundaram (Khazanah Research Institute) and Rajah Rasiah (Universiti Malaya Europe-Asia Institute).
C4 – The Parliamentary Caucus on Reform and Governance organised a seminar to enlighten lawmakers on the reality of poverty in Malaysia. This seminar can be seen as a move to add pressure for parliament and the executive to enhance the quality of reporting and integrity of the budget and the processes leading to it. This seminar was held in response to reports by Philip Alston, the UN Special Rapporteur on Extreme Poverty and Human Rights, that the government has been using outdated poverty line in their calculations in their policy planning. This action has severely underreported the number of the poor in the nation and may have affected the delivery of support to these communities. This move by Anwar Ibrahim is in line with Promise 29 of the PH manifesto to enhance the transparency and integrity of the budget and budgeting process.
“I often ask myself as to whether we want to hear the truth. We often “sugar coat” the reality. When VIPs and government ministers visit hospitals there is often a frantic “clean-up and touch-up” (wasted money) with a good front presented to suggest “no major problems”. I call these “potted plant visits” – putting out our nice plants for the VIP to view. Governments always want to hide or neglect the truth, which is the very antithesis of governing.”
C4 – It is time for the government to face the sad state of care government hospitals that our children receive. There is an urgent need for government agencies reporting to be truthful and transparent without fear or favour. The truth can be embarrassing and even painful, but the facts need to be laid out in the open. Without honesty and action, more Malaysians will continue to suffer.
27 August 2019 – The prime minister’s economic adviser Muhammed Abdul Khalid said it is a fact that the Economic Affairs Ministry’s (MEA) yardstick for poverty was outdated. “We shouldn’t feel embarrassed if a new yardstick shows high poverty rates. That is a fact. To resolve this problem, we should accept reality. Only then can a solution be conceived,” said Muhammed in a commentary published in Sinar Harian today. The former Khazanah Research Institute director said although the poverty line income (PLI) had reduced from 50 percent since 1957, an absolute measure of poverty can no longer be used.
C4 – C4 Center welcomes Muhammed Abdul Khalid’s response on the UN Special Rapporteur on Poverty report. There is a great urgency for the Malaysian Poverty line to be reassessed as it needs to reflect the current harsh economic realities that Malaysians are facing, especially the poor. Once corrected, this would give an accurate baseline for policymakers to more precise economic policies. The times of sugar-coating data to calm the masses is over, and the government needs to grow up and face the hardship that the rakyat face head-on. Hopefully, his comment and the UN Rapporteur’s report would burst the bubble that our policymakers and politicians are in, especially from the Ministry of Finance and Ministry of Economic Affairs, on the realities that Malaysians are facing.
23 August 2019 – Malaysia lays claim to the world’s lowest national poverty rate by using an unduly low poverty line that does not reflect the cost of living and by excluding vulnerable populations from its official figures, said UN human rights expert Philip Alston at the end of a mission to the country. “While Malaysia has achieved undeniably impressive growth in reducing poverty in the last 50 years, the official claim that poverty has been eradicated, or exists merely in small pockets in rural areas, is incorrect and has crippled policymaking,” said Alston, the UN Special Rapporteur on extreme poverty and human rights, presenting a report as his 11-day visit ended.
C4 – The UN Special Rapporteur report on Malaysia has revealed that the Malaysian government have been using inaccurate measurements for poverty which might have lead to imprecise policies to help the poor in the nation. This revelation is a disappointing and embarrassing development as brings the accuracy of the socio-economic data being used by policymakers into question. Hopefully, this report will garner a response from the administration and corrective measures will be put into place.