Introduction
Malaysia’s institutional reforms remain a distant dream, despite having gained widespread recognition post-GE14.
The establishment of the Institutional Reforms Committee (IRC) by the then prime minister Mahathir Mohamad signalled to Malaysians that the government acknowledged the urgency of the task at hand.
Buku Harapan, Pakatan Harapan’s manifesto document in the lead-up to GE14, contains a long list of institutional reforms that many in civil society have called for, such as the tabling of a Political Financing Act (PFA), the separation of the Attorney General (AG) from the Public Prosecutor (PP), the transformation of the Malaysian Anti-Corruption Commission (MACC), as well as the reform of parliamentary and electoral systems.
The short-lived PH1.0 government did not manage to see many of these reforms through, although the public’s awareness of the need for them has increased over the years since.
Today, Prime Minister Anwar Ibrahim’s administration has further mainstreamed the call for institutional reforms, albeit with scepticism about his commitment. While the administration has made some progress with regard to separating AG from PP, others have moved at a much slower pace.
Ensuring decisions are made based on transparent rules, as opposed to discretion or preferences based on partisan politics, is at the core of many institutional reforms Malaysia needs.
Against this backdrop, there is a necessity to push for the institutionalisation of a PFA and the distribution of Constituency Development Funds (CDFs) to ensure Malaysia’s democracy is practised on a level playing field for all parties.
Political Financing
The 1MDB corruption scandal brought to light many gaps in Malaysia’s governance structures and revealed the fact that it is one of the few countries in the world that lacks regulations on the funding of political parties.
This means that political parties are free to accept money and in-kind donations from any source and spend it in any way they want, with no obligation to declare it to any regulatory authority or the public.
Ironically, it was former prime minister Najib Razak who initiated the earliest step to draft regulations on political financing by setting up the National Consultative Committee on Political Financing (NCCPF) in 2015.
NCCPF published its report in August 2016 and outlined 32 recommendations. Recommendation 20 was the most problematic, where the Committee recommended no cap on the amount of money that can be donated to a party or a politician.
Subsequently, through the All-Party Parliamentary Group (APPG) on Political Financing, a draft Political Financing Bill was produced and then presented to the Legal Affairs Department, the finance minister and even the prime minister. A key element of the Bill is the introduction of public funding for political parties.
Public funding, which is already established in many countries across the world, refers to a system where the government allocates a certain amount of money to distribute to political parties. This is mainly intended to reduce parties’ reliance on wealthy donors or corporations, whose donations usually come with expectations for rewards that might result in corruption.
Unlike NCCPF’s recommendations in 2016, the aforementioned Bill contains explicit limitations to the amount of money that individuals, companies and groups of companies are allowed to donate. Most importantly, the principle underpinning political financing reform is the need for all political parties to declare the source of their donations to the public, with strict rules in place regarding permissible and non-permissible donors.
While public funding is the carrot, transparency and accountability are sticks that will help reduce political corruption.
Constituency Development Funds
Complementing political financing reform is the need to institutionalise the distribution of CDFs. CDF is the name given to a type of allocation given to members of parliament (MPs) and state assemblypersons (ahli dewan undangan negeri – Adun) to support grassroot-level projects in their constituencies.
These funds are controlled by the federal government through the Implementation and
The current CDF mechanism is problematic because it is not based on any objective criteria or formula and depends solely on the discretion of the prime minister. Indeed, it is this discretion that is being hotly debated right now, as opposition MPs have not received their CDFs, unlike government MPs who receive RM4.1m annually.
Unequal CDF allocations bear implications beyond constituents who do not receive the much-needed cash. In 2024, seven Bersatu MPs were sacked from their party for pledging support for the prime minister in return for CDF allocations. Anwar has openly mentioned the need for opposition MPs to negotiate with the deputy prime minister for their allocations.
Defiant voices have been raised as a result. The Muar MP Syed Saddiq Syed Abdul Rahman has always undertaken creative endeavours to raise the money he needs for his constituency, such as his infamous 200 km run from Muar to the Parliament last July.
Despite ongoing challenges, there are avenues that can be pursued to reform CDF distribution, which can be divided into short-, medium- and long-term goals.
In the short term, the executive discretion over CDF distribution should be removed. At both the state and federal levels, this can be achieved by clearly listing the CDF allocation in the annual budget.
Another short-term measure is to make CDF distribution equitable, based on a set formula that considers both constituent and demographic size. The formula should be made public and revised from time to time.
In the medium term, the institutionalisation of CDFs should be done through legislation, by enacting a CDF act.
The long-term goal is to revive local council elections, where CDFs will be managed by an elected local council and regulated through legislation. There is a long way to go for this to happen in Malaysia. However, at the state level, Perak is leading the way with the signing of a Confidence and Supply Agreement (CSA) that includes a commitment to equal CDF allocations. This CSA model is similar to what was signed during Ismail Sabri’s administration in 2021.
However, the CSA model is also discretionary and unsustainable. A CDF act removes the discretionary element of CDF disbursements and ensures allocations are made based on rules, rather than partisan politics.
A Long and Winding Road
There is a need to acknowledge that many institutional reforms are complex, both in terms of the sheer number of laws that either need to be amended or drafted from scratch, the constitutional amendments required, and the enormous amount of political courage needed to move the agenda forward.
Because these reforms are important and will fundamentally change the way politics operates, greater scrutiny is needed to ensure their feasibility and suitability.
As it is, MPs have very little time to scrutinise bills before they are tabled, and Malaysia has seen many examples of bills that were rushed through Parliament with little to no deliberation.
Therefore, it is important for the government to provide enough time for MPs to meaningfully engage in the reform process and, at the same time, communicate their efforts to the public as transparently as possible.
While it is easy to blame the slow pace of reforms on self-interested politicians and slow bureaucrats, perhaps there are more uncomfortable questions that need to be answered: do Malaysians really care about the state of our institutions? How many Malaysians understand the meaning and significance of institutions? Are they aware of the importance of keeping these institutions independent?
Corruption is despised by many, especially in the aftermath of 1MDB, but preventing another 1MDB from happening again is the true challenge. 1MDB was a crime that landed a jail sentence for a former prime minister, but serious institutional reforms require more concerted, strategic and systematic efforts that do not translate easily into catchy political campaigns.
There is also the undeniable reality that institutional reforms do not win votes, or at least, not the votes that matter.
Merdeka Center’s mid-term survey of the Madani administration, carried out in May this year, shows that respondents are most concerned about economic issues and cites the same as the country’s biggest problem. A similar survey from 2023 showed the same results, where inflation
These same surveys show that corruption, political instability and racial issues do trouble voters, but they are much less a concern compared to economic predicaments. The Madani government likely senses this sentiment, prompting Anwar’s surprise announcement of benefits for the rakyat—a move some interpret as an attempt to placate dissatisfied Malaysians who took to the streets for the Turun Anwar (Oust Anwar) rally just days later in July.
Is There Hope?
The lack of politica
However, it is important to remember that as Malaysian politics transitions into a mature multiparty democracy, it is in the politicians’ interest to ensure reforms are institutionalised, as there is no guarantee they will hold on to power after the next elections. Removing unfettered discretion from crucial decision-making processes, allocating rules and institutionalising systems do not only safeguard the peoples’ interests but also assure a more level playing field for all political parties. Strengthening Malaysia’s democracy depends on politicians recognising that the same rules apply to all, regardless of who is in power.
