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The Political Economy of Federal-State Relations
How the centre influences resource distribution to the periphery
Tricia Yeoh Fellow, IDEAS 20 May 2020
Perikatan Nasional (8 + 1) Pakatan Harapan (3 + 1)
The Political Economy of Federal-State Relations How the centre - - PowerPoint PPT Presentation
The Political Economy of Federal-State Relations How the centre - - PowerPoint PPT Presentation
The Political Economy of Federal-State Relations How the centre influences resource distribution to the periphery Tricia Yeoh Fellow, IDEAS 20 May 2020 Perikatan Nasional (8 + 1) Pakatan Harapan (3 + 1) Going back in time Wave 1 from
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Going back in time…
Wave 1 from 1959 Federal oversight into state bodies Wave II from 1971 DPM Tun Dr. Ismail “every govt policy is determined by party”; PM Tun Abdul Razak “kerajaan berparti” New Economic Policy Carving out of KL & Labuan as Federal T erritories Wave III from 1980s-1990s: Privatisation GLCs EPU
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Downward Resource Distribution
Grants and Loans Federal Ministries Politico-Bureaucratic Complex
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Grants
General Grants Tax-Sharing Grants Special Grants Only some are formula-based. Others are discretionary. National Finance Council
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Loans
1000 2000 3000 4000 5000 6000 Net federal loans
Net federal loans to all states
2010 2011 2012 2013 2014 2015 2016 2017
RM million
Source: Economic Report 2014
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Can State GLCs raise their
- wn funds?
Statutory bodies, like state governments, require federal approval. But not all state so explicitly. And many are formed as Companies. Federal government loan guarantees can be provided (Johor, Sarawak, Pahang) The case of the Penang Transport Master Plan.
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Federal Ministries
Public Hospitals Health Clinics Community Clinics District Health Offices State Police Contingents State Immigration Offices State Department
- f Environment
Public Schools District Education Offices State Edu Depts
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Politico-Bureaucratic Complex
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Federal ministries and agencies that disburse funds downwards
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Duplication of Village Committees
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Why do constituency development funds even exist?
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Policy Recommendations
Greater fundraising flexibility for state and local governments CDF allocations given regardless of political affiliation CDF Bill in Parliament Abolish duplicate MPKKPs across all states
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Greater fundraising flexibility for state and local governments
- Greater flexibility for state and local
governments to raise bonds and loans.
- Strict financial and regulatory
controls.
- Collaterals based on cash flow, state assets
- Joint determination of economic need.
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CDF allocations given regardless of political affiliation
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CDF Bill in Parliament
- CDFs to be coordinated jointly between state
govt and FDOs.
- State governments to be consulted on
CDFs.
- Formal committee chaired by MP on
development funds – state govt involved.
- Bipartisan parliamentary select
committee.
- Review CDF system in urban areas.
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Abolish duplicate MPKKPs across all states
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Thank You!
tricia@ideas.org.my www.ideas.org.my