KUALA LUMPUR (April 22): Political parties and election candidates must be required to record all donations — both direct and indirect — received during or outside of election campaigns under the proposed political financing bill, said the Institute for Democracy and Economic Affairs (IDEAS).

This is one of the key proposals in the independent think tank’s latest policy paper on political finance, released on Tuesday. The paper, using examples from countries like the UK, Latvia, and Canada, shows that transparency in political finance helps build public trust, reduce corruption, and strengthen democracy and political parties.

In a statement, IDEAS said the report highlights that although political parties and candidates in Malaysia are currently required to submit financial reports to the Registrar of Societies and the Election Commission (EC), these reports are not published and lack meaningful scrutiny.

IDEAS therefore recommends that these shortcomings be addressed in the upcoming legislation.

The think tank also proposes that the law clearly defines the type of reporting required, who is responsible for reporting, and when and how it should be done.

Additionally, financial reports should be made public in a “coherent, comprehensive, and timely manner over an extended period of time,” while also protecting individuals’ privacy, it noted.

“The (IDEAS) paper responds to longstanding concerns that greater transparency could expose donors and opposition politicians to victimisation. By showcasing international examples of political finance disclosure that minimise such risks, it makes a compelling case that transparency, when properly designed, can actually serve as protection rather than a threat,” said IDEAS chief executive officer Aira Azhari.

She also emphasised the need for an independent regulator to enforce the rules fairly and engage consistently with all stakeholders.

On Monday (April 21), Minister in the Prime Minister’s Department (Law and Institutional Reform) Datuk Seri Azalina Othman Said noted that discussions have been initiated by her office with the Malaysian Anti-Corruption Commission (MACC) and the EC regarding the proposed political financing bill.

A 2022 draft of the bill proposed limits on political donations, including a ban on foreign contributions — except for training, skills, or policy support. It also capped donations at RM50,000 per individual, RM100,000 per company, and RM500,000 for a group of companies each year.

The bill also proposes setting up a political party fund, managed by a new independent commission. This fund would receive money from Parliament, donors, and assets recovered under the law.

The Political Financing Commission, whose members would be appointed by the King, would oversee how political funds are collected and spent.

Each year, up to RM130 million from the fund could be given to political parties, based on their region, number of votes, and elected women representatives. This amount would be reviewed every five years, and needs Parliament’s approval.

Anyone who breaks the rules could face a RM10,000 fine, six months in jail, or both.

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