Washington-based financial watchdog Global Financial Integrity (GFI) in its latest annual report ranks Malaysia as world number four in the world’s top 10 countries of illicit capital outflow coming behind Russia, China and India. USD 54.18 Billion was siphoned out of Malaysia in 2011. This astronomical amount is alarming but does not come as a surprise since Malaysia was ranked number 2 in the 2010 ranking with USD 64.38 Billion of Illicit capital outflow.
If calculated on a per capita basis, Malaysia illicit capital outflow is still world number one in 2011 at USD1,852.94 per capita, ahead of Russia USD 1,331.99 per capita, China USD 112.03 per capita and India USD 68.66 per capita.
In fact, in this year annual report GFI has addressed the re-exports from Hong Kong in estimating trade misinvoicing by Malaysian Traders making this year report more accurate and reliable. This would mean that Malaysia illicit capital outflow in 2011 could potentially be a larger sum than in 2010.
The GFI report proves that the Bank Negara Malaysia (BNM) move to set up a task force in 2010 to stop illicit funds leaving the country yield futile results.
According to GFI annual report, Malaysia illicit capital outflow more than doubled from 2009 USD 34.51 Billion to 2010 USD 64.51 Billion and USD 54.18 Billion in 2011. One cannot stop to ponder if this huge jump of illicit capital outflow coincides with the impending 13th General Election which was due in 2013.
Malaysia cannot afford to lose such astronomical amount of money from illicit capital annually, especially in a period where the government is trying to cut back on subsidies on essential goods. Finance Minister, Najib Tun Razak must put a stop on this leakage and walk his talk by promoting openness and transparency in the country financial system.
Among the popular techniques use to siphon illegal funds out includes a web of anonymous shell companies coupled with complicated multi-layered transactions and funds transfer. If Najib is sincere in tackling the illicit capital outflow and stop the bleed, he must follow the footstep of UK by creating a central public registry of corporate beneficial ownership information.
Under this move, all firms register in the country have a legal obligation to hold accurate and current information on the ultimate owner who benefits from the company which will be place on a central register maintained by the Companies House.
By creating a register of beneficial owner, the true owner of these anonymous shell companies will be make public hence making the cracking down of these ultimate beneficiary and tracking of funds transfer easier.
With Malaysia almost hitting the federal debt limit of debt GDP ratio of 55%, Najib must take a firm and urgent response to stop the siphoning of illegal funds out of the country. Will Najib have the courage and political will to walk the talk and stop the bleed?
Media Statement by Chong Zhemin, DAP Perak Economic Development Bureau Chief and Political Secretary to Taiping MP on 12th Dec 2013