Panel proposes new political funding law in Malaysia

Key proposals include ban on donations from foreign sources and removal of cap on campaign spending

A government-appointed committee yesterday proposed a new law in Malaysia to regulate political financing, and that would include a ban on donations from foreign sources.

Mr Paul Low, Minister in the Prime Minister's Department who heads the National Consultative Committee on Political Financing, said it will submit its proposal to the Cabinet in two weeks' time.

This is the first step towards regulating political donations following an uproar over revelations of a massive cash transfer made to Prime Minister Najib Razak's personal bank accounts in the run-up to the last general election in 2013.

Key among the recommendations for the new Political Donations and Expenditure Act is the ban on cash donations from foreign sources to a political party or politician. "We do not want outside influence on local political institutions as a means to safeguard the nation's sovereignty," said Datuk Low.

Datuk Seri Najib was found to have received US$700 million (S$954 million) in his bank accounts in early 2013. The Wall Street Journal has alleged that the money was from debt-laden state fund 1Malaysia Development Berhad.

  • RM3,000

    A recommendation: Political donations worth more than this amount must be declared

But Malaysia's Attorney-General Mohamed Apandi Ali cleared the Prime Minister of wrongdoing in January, saying the money was a donation from the Saudi royal family.

Another recommendation by the committee is for political donations worth more than RM3,000 (S$990) per year to be declared. The funds must be deposited into specially designated bank accounts with the party's records audited.

It also called for the removal of the cap on campaign spending, saying it was unrealistic because of varying requirements in the constituencies. Current laws limit the spending to RM100,000 and RM200,000 for state and federal seats respectively.

Another recommendation is for the creation of an independent body that will be tasked with monitoring political donations.

Mr Low, however, said it would take time before the new law can be implemented. The Cabinet needs to approve the proposal before a new statute can be drafted and tabled in Parliament. "If you ask me personally, I think within a year it should be up," he told reporters, but acknowledged that "the biggest challenge is to get the Act passed".

Mr Low said it was possible that the law may not come into force by the next general election, which is due by mid-2018. But he expects it to be fully implemented for the 15th general election, due by 2023.

Mr Ibrahim Suffian, director of independent pollster Merdeka Centre, said regulation of political financing is needed. "With more clarity and transparency, it makes for better politicians," he said.

Mr Najib yesterday said his coalition agreed in principle with the recommendations but they must first be studied. "Some of the recommendations we agree with, but there may be others where we need to recommend adjustments," he said.

Some opposition lawmakers expressed worries that requiring the disclosure of donors' identities may deter contributions to their campaigns. Seremban MP Anthony Loke told Malaysiakini: "You have to understand the mindset of small businesses. They are afraid that their licences and permits will not be accepted, and that an unseen hand will penalise them."

A version of this article appeared in the print edition of The Straits Times on October 01, 2016, with the headline 'Panel proposes new political funding law in Malaysia'. Print Edition | Subscribe