Monday October 26, 2009
Government: No more wasteful spending
PETALING JAYA: The Government has vowed to cut down on wasteful spending to lower its budget deficit, which this year is expected to hit 7.4% of gross domestic product (GDP or the sum of goods and services produced in the country).
The government policy is that all major public projects must go through the open tender process, according to Second Finance Minister Datuk Seri Ahmad Husni Mohamad Hanadzlah.
Exceptions are projects that involved the military and security issues. It is also understood that the threshold for open tender is for projects valued above RM500,000.
Datuk Seri Ahmad Husni Mohamad Hanadziah ...'All major public projects must go through the open tender process.' At a press conference last month, Husni said competitive bidding process for public contracts would result in significant savings for the Government.
He declined to give a figure, but said the target was to reduce government operating expenditure by 15% next year. Currently, the Government’s annual operating expenditure is about RM150bil. A 15% savings on that amount to RM22.5bil.
The Government is expected to spend RM33.8bil on subsidies this year, according to figures obtained from the 2008/2009 Economic Report. This compares with RM26.5bil allocated for procurement of goods and services for its ministries and agencies.
The two items combined account for 40% of the Government’s operating expenditure this year.
Meanwhile, the Federal Governmet development expenditure is budgeted at RM51.7bil this year. This excludes RM22bil of additional spending incorporated in the two stimulus packages launched since November last year to counter the impact of the global financial crisis on the local economy.
Bank Islam senior economist Azrul Azwar Ahmad Tajudin says it is unlikely the Government will cut public spending next year despite the huge budget deficit.
He said what the Government needed to do was to plug the “leakages” in the system. Husni said the Government was reviewing its food and fuel subsidy policy and improving its public procurement methods.
So how does one bid for government contracts?
The tendering process in Malaysia is largely decentralised, although the Government is expanding its electronic procurement system, called e-Perolehan, to improve transparency.
Husni said all government contracts were awarded by the respective ministries. The finance ministry’s tender committee will review contracts valued at RM100mil or more.
He said as part of the key results areas (KRAs) and key performance indicators (KPIs), each ministry must not only meet its targeted budget, but also be able to produce the required results for every ringgit spent.
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