For the past seven months Paul Low must be sleeping on his job not being able to come up with a solution to Malaysia illicit capital outflow problem

On Saturday, Minister in the Prime Minister Department, Paul Low responded to the annual report by Global Financial Integrity by saying, “They are just telling the figures without a solution. Like someone telling your temperature, and then you have to figure out whether to take penicillin or something else.”

Paul Low is not only clueless and ignorant but he must be sleeping on his job as a minister for the past seven months, not being able to come up with a solution to Malaysia illicit capital outflow. The illicit capital outflow is not a recent problem as the world has been made aware of Malaysia notorious ranking as world number two in illicit capital outflow in 2010 as reported by GFI in December 2012.

If Paul Low wants to rely on GFI to come up with a solution to Malaysia illicit capital outflow problem, he might as well give up his ministerialship perks and rewards to GFI as he should be the one responsible to come out with a solution.

If Paul Low is incapable to figure out a solution to Malaysia illicit capital outflow problem, DAP Perak Economic Development Bureau is ready to step in and prescribe the dosage of “penicillin” needed to cure Malaysia’s “high temperature”.

DAP Perak Economic Development Bureau recommends the following five-point policy solutions

1. Establish a central public registry of corporate beneficial ownership information

Pass a law so that all firms registered in the country have a legal obligation to hold accurate and current information on the ultimate owner who benefits from the company. This information on the ultimate beneficial ownership of companies must be kept in a central public registry to facilitate effective due diligence by financial institutions and to prevent companies from being used as shields of anonymity to transfer funds.

2. Transparent and public disclosure of trade data

Publish all trade statistics online on a monthly basis and identify products traded by the 10 digit Harmonized System identifications. Harmonized system identifications is a method of classifying traded products developed and maintained by the World Customs Organization. By publishing the price norm of all the trade products it will be easier to curb abusive transfer pricing and trade mispricing. Malaysia should also urge her trade partners to do the same, especially the regional trade partners like Singapore, Thailand and Indonesia.

 3. Banking and financial reform

Bank Negara should tighten up the regulations of banks and financial institutions. Banks and financial institutions should increase scrutiny on identification transactions of a suspicious nature. Bank Negara should also make it mandatory for all bank staffs to undergo anti money laundering training to identify suspicious transactions.

4. Customs and immigration reform

Customs should be equipped by sophisticated software to analyse international trade price norm. This together with more transparent trade data will help the customs detect any transaction not at arm’s length or outside the range of international price standards. Immigration should also maintain a roll of “politically exposed person” and monitor their movement in and out the country. Financial institutions should also treat “politically exposed person” with greater scrutiny. A “politically exposed person” is a person who has been entrusted with a prominent public function, or an individual who is closely related to such a person.

5. Establish Malaysia Financial Police to combat illegal capital flight

Malaysia’s dire and disastrous situation where RM1.2 trillion was lost to illegal capital flight in the last ten years warrants the establishment of Malaysia Financial Police. Ideally this specialized financial police force would be placed under the Finance Ministry to combat illegal capital flight and white collar crime. This would also make cracking down on the illegal money changers and money laundering activities more effective.

The ball is now in Paul Low’s court. Will he finally swallow the bitter pill or will he come up with more lame excuses and continue to be in denial mode?

Media Statement by Chong Zhemin, DAP Perak Economic Development Bureau Chief and Political Secretary to Taiping MP on 16th Dec 2013


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