PETALING JAYA: Savings from improving the efficiency of government-linked companies (GLCs) and statutory bodies could be channelled into healthcare, housing and social welfare, with a public policy analyst proposing operating budget cuts of at least 10% for selected entities.
Economic historian and former United Nations regional adviser Dr Lim Teck Ghee said Budget 2027 presented an opportunity to strengthen public spending efficiency, streamline government-linked entities and address wealth inequality through targeted reforms.
“An across-the-board cut of 10% or more in the operating budgets of GLCs and some statutory bodies and reallocation of the funding to the health, housing and social welfare sectors would provide evidence of the government’s determination to do more than political reform rhetoric,” he told theSun.
Federal operating expenditure under Budget 2027, announced on Oct 9, rose 3.8% to RM376.84 billion from the revised RM363.06 billion for 2026.
Lim said a review of spending priorities could help ensure public resources were directed towards areas with the greatest social impact, particularly amid rising living costs.
He said the Finance Ministry had emphasised continuity with the foundations laid by previous budgets, while suggesting that further improvements could be made to existing policies and systems.
“What’s clear is that some of these foundations have long needed overhauling, if not replacement,” he said.
Lim identified personal income tax and public sector procurement as two areas where reforms could improve the efficiency and effectiveness of public finances.
He estimated that abuses, leakages and mismanagement in procurement cost the country between RM40 billion and RM60 billion annually.
“Because public procurement accounts for roughly 40% of the government’s yearly public expenditure budget (spending upwards of RM150 billion annually), it remains the sector most heavily hit by systemic financial loss and corrupt practices.”
Lim said clearer legislative and financial frameworks could help streamline operating costs and make GLCs and the civil service more efficient.
One area for consideration, he said, was overlapping functions among federal statutory bodies and more than 500 GLC sub-entities.
Streamlining these functions could generate savings, improve transparency in public finances and reduce the risk of hidden subsidies or bailouts for underperforming state-linked corporations, he added. Lim also called for a review of personal income tax to strengthen its role in narrowing wealth inequality.
“We have a moderately progressive personal income tax structure on paper, but its overall ability to reduce wealth inequality is weaker than many regional peers and upper-middle-income developing countries.”