KUALA LUMPUR, May 7 — The RM1 billion illicit funds flowed out of Malaysia as reported by Global Financial Integrity (GFI) may possibly be an over-estimated, the Parliament was told today.
Deputy Finance Minister Donald Lim said the over-estimation was due to two factors, which involved the failure of the report to factor in portfolio investments as well as other investments and systematic error in data compilation.
“Firstly, the estimated figure did not take into account portfolio investments as well as other investments, which represent an important component of financial flows for Malaysia’s Balance of Payment at present.
“Secondly, the illicit financial flow estimation through ‘Trade Mispricing’ may be due to systematic error in data compilation between Malaysia and its trading partners. There is a possibility the error in the figure was big due to trade disclosures as Malaysia has an open economy,” he said in Parliament here.
He said this when answering a question from Senator Mohamad Ezam Mohd Nor, who asked on the validity of the GFI’s claim that the amount had flowed out from Malaysia between 200 and 2009 due to corruption.
Lim said the government has implemented integrated efforts by establishing a committee that worked together to stem illicit funds outflows from Malaysia.
“Bank Negara has carried out several moves such as to enforce the Money Services Business Act 2011 as well as increase monitoring under the act.
“Bank Negara has also established international cooperation and information sharing with foreign law enforcement agencies to share investigation results and proof of cross-border transactions,” he said.
He said the Inland Revenue Board has taken firm steps to prevent tax evasion, which is usually linked to underground economy.
To a supplementary question from Mohamad Ezam, Lim said the government would take firm steps on foreign elements that tried to use incorrect facts to sabotage Malaysia’s economy. — Bernama