Ideas: Malaysia needs institutional reforms in budgeting process


MALAYSIA needs institutional reforms to ensure sustainable public participation, oversight and transparency practices in the budgeting process, according to the Institute for Democracy and Economic Affairs (Ideas).

To ensure significant improvement in oversight, Ideas called for the government to accelerate reforms needed to make the country’s Parliament more professional and accountable.

“Our Parliament needs functioning, fully resourced parliamentary select committees, whereby extensive debate on spending, policies and administration can happen more regularly.

“The Parliament also needs to have a platform for more active public participation in oversight practices, such as public hearings for certain parliamentary select committees’ sessions,” the think tank said in a pre-event media briefing for Open Budget Survey (OBS) 2021 Global Release by the International Budget Partnership (IBP) on Monday.

The OBS evaluates the level of transparency, oversight and public participation in the budget practices of 120 countries.    

Based on the OBS results, Malaysia maintains its limited level of transparency, with the same score of 47 (out of 100) as in 2019, when the OBS was last released.  

Malaysia ranked at the 57th place out of 120 countries assessed in the 2021 OBS.

Despite its stagnation in budget transparency, Ideas said Malaysia successfully improved its performance in public participation and oversight.  

Malaysia’s public participation score increased from 17 to 26, placing itself at the second highest ranking after the Philippines in South-East Asia.

Meanwhile, the oversight score measures the extent to which Parliament and the National Audit Department can provide independent checks to keep the government accountable for financial management, increased from 31 in 2019 to 39 in 2021.

Commenting on the results, Ideas deputy research director Sri Murniati Yusuf said the increase in both the oversight and public participation scores is encouraging.

“It is a recognition of the transparency initiatives that the government has embarked on during the pandemic such as the publication of Economic Stimulus Implementation and Coordination Unit between National Agencies (Laksana) reports which update the public on the status of stimulus package implementation.  

“It is also a recognition of the lively debate that happened on the 2020 tabling of the budget, where the public witnessed several proposals to amend the budget, notably the Special Affairs Department’s budget,” she noted.

However, Sri Murniati said these improvements may not be sustainable, unfortunately, as they are occasional in nature and are not anchored on established practices yet.

Citing the Laksana reports as an example, she said the report is a remarkable example of public participation, but it is limited to stimulus packages; periodic updates on the implementation of the annual budget are not available to the public as yet.  

“The extensive debate on the budget in 2020 also happened due to the intention of the Opposition to prevent the 2021 budget being passed by the Parliament. 

“It did not happen due to the existence of established parliamentary select committees,” she added.

Therefore, Sri Murniati hoped that the stagnant score for transparency strengthens the government’s resolve to undertake comprehensive fiscal reforms.

She said Ideas recognises the government’s initiative to improve budget transparency through the publication of a pre-budget statement and pre-budget consultation papers, and calls for the government to accelerate the planned introduction of a Fiscal Responsibility Act (FRA).

“One immediate improvement that we encourage the government to take this year is to publish the Mid-Year Budget Review document, which reports the implementation of the annual budget to the public, including the update on expenditure and revenue as well as the performance of budget programmes,” she said.

Sri Murniati also emphasised that Ideas welcomes the inclusion of Open Budget Index (the transparency score of the OBS) as one of the targets in the 12th Malaysia Plan, which is to achieve score 61 by the end of 2025.  

She added that these new practices and the introduction of the FRA should mandate the publication of key budget documents, greater involvement of Parliament in providing oversight as well as comprehensive disclosure of fiscal risks and liabilities.

“This will help achieve this score and most importantly improve the overall fiscal governance in the country,” she said.