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This Selected Issues paper analyzes saving to understand history and identify the drivers in Malaysia. IMF analysis suggests that Malaysia’s current account (CA) surplus is higher than warranted by medium-term fundamentals and desired policies. The changes in the corporate saving rate almost entirely reflect the changes within each group of firms of similar size or age. Leveraging firm-level data for listed firms, the paper focuses on the contribution to the CA surplus of private non-financial corporations. The trend analysis indicates a high dependence of listed firms in Malaysia on internal funds (savings) to finance their investments or, equivalently, a lower dependence on external funds. The results suggest that relaxing firms’ external financing constraints and lifting productivity growth could help encourage investment and reduce excess corporate saving. The regression results show that the transaction cost and precautionary saving motives, as well as their interaction with external financing dependence, could play an important role in explaining corporate net saving.
This technical assistance report on Malaysia highlights that the mission aimed to support the Malaysian authorities in improving government finance statistics (GFS) for decision making. The mission reviewed the progress in the implementation of the accounting project to introduce accrual financial reporting standards at the federal government level. The mission identified considerable potential for collaboration between Ministry of Finance (MOF) and Department of Statistics Malaysia (DOSM) with respect to fiscal data collection for other general government sublayers and public nonfinancial corporations. The mission concluded that the general ledger structure is sufficient to produce GFS on both cash and an accrual basis. The mission suggested that collaboration between MOF and DOSM going forward would be necessary to ensure data consistency and to facilitate the explanation of remaining minor differences to users. The mission recommends that the authorities verify the causes for inconsistencies based on recent annual data, and to formally align the collaboration between the institutions.
This technical assistance report on Malaysia explains the effort by the mission to support the Malaysian authorities in improving Government Finance Statistics (GFS) decision making. The mission achieved significant progress with respect to the development of a budgetary central GFS compilation system based on primary accrual accounting data. The mission, together with the authorities, successfully developed a compilation sheet to facilitate the largely automated compilation of a comprehensive set of GFS tables from the system. With respect to flows reported in the income statement, the analysis suggests that it is essential to build the survey around the balancing items (net) operative income and (net) comprehensive income. The analysis of the corporate balance sheets suggests that most accounting terms used by the public corporations can be grouped sensibly and linked to GFS classifications. With respect to the extrabudgetary units of central government, the mission proposed minor refinements of the survey and prepared preliminary GFS data.
This Technical Assistance report reviews the reforms undertaken by the Government of Malaysia for strengthening outcome-based budgeting (OBB). OBB builds on the previous output-based modified budgeting system, which was in place for more than two decades. OBB aims to improve the efficiency, the performance, and the prioritization of expenditures by aligning national and ministerial outcomes with programs and budgetary resources and by integrating planning, budgeting, and evaluation. OBB has made good progress. The National Budget Office has assisted nine pilot ministries to redesign their program structure to link to outcomes and has plans to assist all ministries. There is an increased awareness in government of the importance of outcomes.