The goals set forth in the Madani Economy framework, are anchored on two key pillars: positioning Malaysia as a leading economy in Asia, and improving the quality of life for Malaysians.
Budget 2025 has broken away from tradition, drawing great attention to reform-specific areas covering institutional reform, combating corruption, Parliament, legislative as well as government administration and institutions.
The government has given its commitment to maintaining integrity, improving accountability, optimising resources and enhancing the quality of public services.
If the government can deliver its promises on system-wide reform, it could fundamentally change the delivery model of institutions, and public services, resulting in cost savings for the country and also ensuring the effective implementation of development expenditure for better outcomes.
The private sector and businesses too would benefit in terms of lower holding and hidden costs, resources savings as well as increases in productivity.
The federal government’s total operating and development expenditures makes up 20.2% of gross domestic product (GDP) in Budget 2025, while the total expenditure of consolidated non-financial public enterprises make up 29.6% of total GDP.
Given the role of the government and the size and contribution of the public sector in the economy, it validates the need to have good governance.
Economic, institutional and regulatory reforms are interconnected and reinforce each other to underpin sustained growth, improve the business environment.
Good governance, efficiently run institutions and continuity and predictability in policies offer a good business environment that enhances competitiveness, reduces the cost of doing business, leading to better returns on investment.
Effective and pragmatic regulations and laws that move with the times are vital to ensure a market that promotes competition and innovation, protects society and the environment and improves livelihoods.
The goals set forth in the Madani Economy framework, are anchored on two key pillars: positioning Malaysia as a leading economy in Asia, and improving the quality of life for Malaysians.
The government can achieve its targets through sound economic and the implementation of strategic plans such as the New Industrial Master Plan 2030, National Energy Transition Roadmap, the KL20 Action Plan and the National Semiconductor Strategic Plan.
The ministries, institutions and agencies implementing regulations and rules must be backed by effective enforcement of regulations that are easy for businesses, investors and citizens to comply with.
The regulations must also be cost effective and uncomplicated to enforce. Failure to achieve this could harm the economy and stifle entrepreneurs.
For example, inadequate consultation of businesses for regulatory reform could lead to undue burdens that cause apprehension and dissent.
Poorly designed and executed measures could stifle innovation while hampering policy goals.
Governance reform and optimisation of resources involve undertaking painstaking and unpopular economic and institutional change.
This includes eliminating the “entitlement and dependency” mindset and changing the rules and norms that govern public sector.
We must be open to constructive solutions to discard, rectify, revamp and enhance policies and regulations that have not worked well or are outdated.
At the top of the agenda is to table the Freedom of Information and Government Procurement bills, a positive move to increase empowerment and efficiency in the public sector.
Malaysia spends more than RM150bil, almost one-fifth of total GDP, each year in procuring goods and services. It is believed 30% could be saved if wastage is cut.
Mismanagement and fraud in public procurement as well as misappropriation of public money have enormous negative consequences as it diverts public funds into unproductive, inappropriate, and uneconomical projects.
Worse still, some of these abuses go undetected, resulting in unpaid taxes.
It is believed the Government Procurement Bill will reinforce the Public Finance and Fiscal Responsibility Act 2023 to help meet fiscal targets by ensuring transparency and open competition in tender exercises as well as minimising inefficiencies.
Many of the auditor general’s annual reports have detected issues concerning irregularities in public procurement.
These include myriad instances of wastage, overpricing, cost overruns, delays, and sub-standard quality in projects.
The budget’s specific priority to combat corruption is the amended Audit Act that will use a “follow the public money” approach, allowing the auditor general to track the whereabouts of public funds, including for companies receiving government guarantees.
This will ensure proper financial management of development projects using the public-private partnership (PPP) approach as outlined in the Public-Private Partnership Master Plan (Pikas) 2030. Pikas aims to increase private investments by RM78bil by 2030.
An allocation of RM200mil will be given to the National Audit Department to enhance its audits of nearly 2,000 companies and entities that receive government allocations and guarantees.
This is a positive move to improve governance and accountability in the public sector.
It is also critical to follow up on disciplinary action, including expanding the authority of the auditor general to allow direct reporting to the police or the Malaysian Anti-Corruption Commission (MACC) when elements of crime are found.
The MACC will be given an allocation of RM360mil to investigate and take action to bring offenders to justice.
Corruption should have no part in the decisions made by bureaucrats and political leaders as the resources of the public sector must be spent wisely to maximise the rate of return.
Achieving a high-quality public sector should be pursued at all costs to achieve better outcomes for the rakyat and to save time and lower costs for businesses.
In this regard, the government is committed to implementing public-service reforms through the Public Administration Efficiency Commitment Bill and its guidelines on the governance of federal statutory bodies and a secretariat for the rationalisation of federal statutory bodies with a clear focus on streamlining bureaucracy, accelerating processes, cutting wastage and improving efficiency.
Bodies to be streamlined include InvestKL Corp and the Malaysian Investment Development Authority (Mida); Razak School of Government and the National Institute of Public Administration; Halal Development Corp and Malaysian External Trade Development Corp (Matrade); the Malaysian Aviation Commission and the Civil Aviation Authority of Malaysia.
Prime Minister Datuk Seri Anwar Ibrahim said that four government bodies tasked to attract investment and tourism will be sharing offices overseas from 2025, in a move to help save costs and enhance operational effectiveness.
They are the Tourism, Arts and Culture Ministry, the Investment, Trade, and Industry Ministry, Matrade and Mida.
It is suggested that state governments can issue similar guidelines on the management and governance for state statutory bodies that have yet to introduce these guidelines.
All federal statutory bodies are now mandated to set up internal audit units focusing on cutting down redundancies, increasing efficiency and lowering operational costs.
The transformation and modernising services delivery requires top-down results-driven leadership and management, clarity of purpose, resources and involvement of the public.
While integrating new technologies such as artificial intelligence and Big Data has led to effective ways to interact with citizens and businesses while reducing costs and layers of government and local-authority processes, protecting citizens’ privacy and personal information is an important responsibility government given the increasing risk of data breaches.
The government is starting with the low-hanging fruit of reducing bureaucratic processes through “Reformasi Kerenah Birokrasi”, which translates to reformation of bureaucratic hassle.
The Special Task Force on Agency Reform (STAR), led by the chief secretary to the government, is responsible for coordinating efforts to address issues such as dilapidated schools and clinics, congestion in hospitals and immigration counters, as well as ease of doing business.
Finally, the government will form a legislative reform Taskforce with an allocation of RM309mil to spearhead the review of some 3,000 archaic laws, including the revision of commercial laws, such as the Contracts Act 1950, to align them with contemporary standards.
It is necessary to assess laws no longer relevant or appropriate for the digital era and update them to keep up with changing times.
Lee Heng Guie is Socio-Economic Research Centre executive director. The views expressed here are the writer’s own.
