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Economic Audit - Auditor-General's report

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Category: Ramblings
Published Date Written by Jason Loo


With the recent revelations by the A-G's report on the financial conditions of the various government agencies, i believe this has become a hot topic among the Malaysian society. The A-G's report is considered a bold move in transparency. Although it has revealed the 'anomalies' surrounding the usage of taxpayer's money, there hasn't been any revelation on how to resolve the overall situation.

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We know that these activities are happening all over, be it government or non-governmental organizations. For example, look at the WorldCom case and the Watergate scandal.

The viable solution would be to introduce strict operational policies governing the disbursement of funds and proper tracking of the funds' use. There should be an auditor for each government agency that conducts an audit every quarter to detect any discrepancies. Financial reporting should be up-to-date and available at any point in time.

I remembered during my days in a Multinational company where I was working on an application for the reporting of the global Account reconciliations that was examined by the relevant authorities every month. This was in accordance to the strict laws after cases like WorldCom happened.

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Financial mismanagement and improper reporting of funds is a common activity that happens all around. Case in hand, my former employer (from another company) was jailed by the FBI for improper reporting of investor funds, resulting in the loss of millions.

With the advent of technology, the government should look into ways to govern internally using the full extent of technology available to them. I am talking about a massive overhaul of the entire governance of government agencies by using technology as the enabler.

According to the report, on top of the cases involving misuse of funds and inflated prices, Malaysia’s public debt rose by 12.3 percent or RM44.72 billion to RM407.11 billion last year compared to RM362.39 billion in 2009. A total of nine ministries were identified to have overspent RM 3.73 billion.

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In the past, i have never questioned why there were additional taxes, increase in taxes and decreased subsidies (petrol) ... but i can't help but wonder if all the taxes we are paying is going off to fund some rich fraudster pockets .... viva la  Malaysia !

References :

http://www.freemalaysiatoday.com/2011/11/13/govt-mismanagement-its-not-your-fathers-money/

http://malaysiansmustknowthetruth.blogspot.com/2011/11/uniforms-shoes-did-not-reach-sabah.html

http://www.theborneopost.com/2011/10/29/auditor-general%E2%80%99s-report-trim-wastage-and-minimise-corruption/


Budget 2012

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Category: Ramblings
Published Date Written by Jason Loo

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I am sure many of you have waited for and seen the results of the Budget 2012. I originally had a post ready before the announcement but i decided to wait till after.

The unpublished post goes something like this ... "in light of the growing awareness of the rising prices of goods and increasing cost of living .. there needs to be a associative action to be implemented by the proper authorities .. this actions includes arresting the rise in prices by encouraging more local quality produce and competitive pricing with foreign products, encourage innovation among local businesses and promoting local entrepeneurs to go global".

There was also an article written by S.M. Thanneermalai in The Sun Daily on what the Budget should focus on. The gist of it .. "focus on fiscal policies dealing with key challenges facing Malaysians. They are the rising cost of living, create local demand, balancing fiscal needs and provide confidence to citizens on the government's continued efforts to maintain growth and steer out of an economic slowdown".

Furthermore, an interesting point that was brought up was "For the middle-income group, cash can be released to them via widening tax bands at the lower level of incomes, say up to RM30,000 not subject to tax and extending the highest band of tax rate of 26% to apply only at the chargeable income of RM250,000 instead of RM100,000."

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I stop here to highlight the need for awareness on the middle-income group.

If you are interested to read further, please go to http://www.thesundaily.my/news/167800.

Back to the recent Budget announcements.... here are some of the highlights of interest (http://thestar.com.my/news/story.asp?file=/2011/10/7/nation/20111007162147&sec)

1. RM100mil SME Revitalisation Fund offering loans up to a maximum of RM1mil for entrepreneurs will be available from Jan 2012

2. Full exemption of import duty and excise duty on hybrid cars and electric cars will continue to be given until 2013

3. Enable SMEs to commercialise research products a Commercialisation Innovation Fund totalling RM500mil will be established

4. abolish payments for primary and secondary education, making these free for the first time in our history

5. Govt will extend the compulsory retirement age from 58 to 60 years old to optimise civil servants' contribution

6. The Govt is mindful of the plight of the rakyat due to rising food prices and will take measures to address this

7. The National Agro-Food Policy 2011-2020 will be launched and RM1.1bil allocated for the development of the agriculture sector

8. My First Home Scheme will be expanded to increase the limit of house prices from a maximum of RM220,000 to RM400,000

9. Senior citizens aged 60 years & above will be exempted from outpatient registration fees in Govt hospitals & health clinics

10. One-off assistance of RM500 to households with a monthly income of RM3,000 and below will be provided

11. For those in private sector earning RM5000 and below, employers' EPF contribution will increase from 12% to 13%

12. Book voucher worth RM200 will be given to Malaysian students in all private and public institutions of higher learning

13. Compensation of 2% on the amount to be refunded effective from the year of assessment 2013 for the late refund of income tax by the Inland Revenue Board (IRB)

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Besides that, there was the usual allocation for government expenditures in operations, infrastructure and other sectors, the most to benefit is probably the education sector.

Overall, I would say the budget is fair to all. However, as S.M. Thanneermalai's article highlighted, some focus must be given to the middle income group as well as the rising prices of goods. One of the policies that is still 'pending' for so long now is the introduction of GST in the economy. If the govt is afraid of its implications, why not just introduce in certain sectors and see how it works from there. As of now, citizens are in limbo and while prices are rising everywhere, there seems to be open-ended delays on implementation of a proper policy that will keep prices in check.

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On the middle-income group, the education incentives are a boon the the education of our children and the hybrid cars will certainly benefit the automotive sector. However, nothing has been mentioned on relief to be enjoyed by the middle income group and this would perhaps be a disappointment for the majority of citizens in this category.

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I believe local enterpeneurship has also been given a boost in light of more funds made available to all citizens. This includes the Innovation Fund as well as SME revitalization Fund.

Sports is also seen an essential community or social catalyst with allocation of funds on the building of more futsal courts.

What is lacking is the direction of how the govt is going to tackle rising inflation, the growing disparity between income groups and the needed measures to monitor and put a check on goods and services. I hope that more details can be shared by the Govt later on.

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