Malaysia’s Development Expenditure (DE) in the Federal Budget has stagnated in absolute terms, and decreased in percentage terms, during the course of Prime Minister Najib Razak’s tenure as Finance Minister between 2009 and 2018. This is especially concerning given Malaysia’s status as a developing country. We still require significant public investment in infrastructure, from roads to rails, to schools and hospitals.
Hovering beneath the surface of this aggregate statistic is the fact that a sharply rising share of DE (8.3% in the pre-Najib era, to almost 25% during the Najib era) is being diverted towards the Prime Minister’s Department (PMD), at the expense of DE allocations towards other Ministries that would naturally have a strong mandate to invest in developing the public infrastructure that our country needs. These statistics fortify the notion that under Najib, spending power is being increasingly consolidated under the PMD.
Compounding these concerns is the fact that between 2010 and 2018, almost 45% of DE allocations towards the PMD have in turn been diverted towards what Kluang MP Liew Chin Tong has described as “slush fund” projects. These projects all share a common characteristic – a severe lack of transparency. Details of these projects are not publicly available. There is no guarantee that the DE allocations towards “slush fund” projects – which totalled at least RM43.7bn during this period – are indeed being spent on development projects that would ultimately benefit the Rakyat. Were the “slush fund” to act as a Ministry of its own, its average share of total DE between 2010 and 2018 would exceed the shares of all other Ministries, aside from the PMD.
Adding further fuel to these concerns, these diversions of funding towards the “slush fund” has the effect of ‘crowding out’ DE allocations towards other Ministries. Coinciding with the increase in the size of the “slush fund” is a drastic decline in the allocations towards the Ministries of Education, Health, and Higher Education. Year-on-year increases in the size of the “slush fund” have been matched by very similar decreases in the allocations towards these three Ministries. This means that fewer new schools, institutions of higher learning, hospitals, and community clinics were built as a result of the “slush fund” allocation ‘crowding out’ the DE spending for these three key Ministries.
It is clear from this analysis that the pattern of federal budget allocations must be re-considered and re-prioritized. The amount of DE allocated to the PMD must be cut significantly, starting with the “slush fund”.
Media Statement – Analysing Malaysia’s Development Expenditure (DE) in the Federal Budget