Organizational structures -- how can finance ministry respond to new challenges? CASE OF MALAYSIA

Transcription

1 FINANCE MINISTRIES IN THE 21 ST CENTURY: Challenges, Institutions and Capabilities March 2015, Johannesburg, South Africa Organizational structures -- how can finance ministry respond to new challenges? CASE OF MALAYSIA MOHD SAKERI ABDUL KADIR National Budget Office Ministry of Finance, Malaysia 1

2 Intro: Malaysia s Budgetary Reform Initiatives Accountability, flexibility & delegation Detailed Controls & Discipline Traditional Incremental line item budgeting Programs & Performance PPBS Program Performance Program- Activities Performance Indicators Evaluation MBS Disaggregated Budget Budget Ceilings Program Agreements Exceptions Reporting Evaluation OBB 2

3 New Challenges in Managing the Public Sector Performance in Malaysia Need to shift focus from outputs to outcomes Lack of vertical and horizontal integration Cross cutting issues among agencies, overlapping programs, increasing redundancy Focus on compliance (budgeting) as opposed to performance Lack of systematic monitoring system and poor information system Evaluation done on an ad hoc basis 3

4 Under MBS, MOF s Programming Structure is Based on the Organizational Structure Ministry of Finance SECTOR/ PROGRAM P1 P2 P3 P4 P5 P6 P7 Policy Sys. & Control Mgt. ACTIVITY/ SUB-PROGRAM Customs Dept. Inland Rev. Board Valuation Dept. Acc. Gen. Dept. 1. Tax Analysis 2. Econ & Int l 3. Nat. Budget Office 4. Loan & Fin. Mgt 1. Gov Invest. & MoF Inc 2. Monitoring and Control 3. Strategic Fin. 4. OBB Project Team 1. Govt Procurement 2. Housing Loan Mgt 3. Remuneration Policy, Public Money & Mgt 4. IT Mgt 5. Fed Treasury (Sabah) 6. Fed Treasury (S wak) 7. Customs Appeal Tribunal 8. Income Tax Appeal Comm. 1. Management 2. Customs services 3. Enforcement 1. Inland Revenue Board 1. Valuation 2. Training & Research 3. National Asset & Properties Info. Centre Accountant General Department with seven (7) Sub- Programs 4 Note: Not all MOF s programs/sub-programs are included in the above structure

5 Outcome Based Budgeting (OBB) Accountability, flexibility & delegation Integrated Approach 2012 > Detailed Controls & Discipline Programs & Performance Traditional Incremental line item budgeting PPBS Program Performance Program- Activities Performance Indicators Evaluation MBS Disaggregated Budget Budget Ceilings Program Agreements Exceptions Reporting Evaluation OBB Integration Alignment Budgeting for results Results Reporting Evaluation 5

6 VERTICAL ALIGNMENT Integrated Approach under OBB National level National Strategic Thrusts National Outcome Key Performance Indicator National Programme Ministry level Ministry s Outcome Key Perf. Indicator Programme Ministry level Ministry s Outcome Key Perf. Indicator Programme Program level Prog. Outcome KPI Activity Program level Prog. Outcome KPI Activity HORIZONTAL LINKAGES Program level Prog. Outcome KPI Activity Program level Prog. Outcome KPI Activity Activity / Sub-Prog Activity/ Outcome Sub-Prog Activity KPI Outcome Activity KPI Output Activity PI Output PI Activity/ Sub-Prog Activity/ Outcome Sub-Prog Activity KPI Outcome Activity KPI Output Activity PI Output PI Activity/Sub-Prog Activity/ Outcome Sub-Prog Activity KPI Outcome Activity KPI Output Activity PI Output PI Activity / Sub-Prog Activity/ Outcome Sub-Prog Activity/Sub-Prog KPI Outcome Activity Activity KPI Output Outcome Activity PI KPI Output Activity PI Output PI 6

7 MINISTRY/AGENCY (OBB Team) NATIONAL OBB Implementation Strategy Awareness & Briefings Structured Training Programmes Forum & Seminars MyResults online system OBB Strategic Programming Worshops Top Management as Champions and Sponsors Activity/Sub-Program Heads as Activists Trainers as Coaches Focal Persons & End Users 7

8 Under OBB, MOF s New Results Framework is being Developed Based on its Strategic Functions & Roles Ministry-level outcome Ministry-level outcome KPI Program Program Outcome & KPI Effective fiscal management Deficit to GDP Debt to GDP Credit rating (2 out of 3 rating agencies) Percentage Non-oil tax rev to total revenue P1 P2 P3 Fiscal Strategy Investment Strategy Attainment of Balanced Budget Total tax revenue Percentage gov expenditure to GDP Year-on-year growth of Gov Revenue to remain higher than Expenditure More effective public debt management Percentage FG debt interest payment to total OE Percentage of deferred liabilities to GDP Effective investment strategy Percentage NPL of strategic loans (excl. loans to state gov) Percentage gov guarantees issued in compliance to set criteria and within annual limits Percentage projected dividend vs target Public Finance Effective public finance services Percentage procurement >RM 500k awarded through tender in compliance to set policies No. of audit queries Fair & efficient public finance services Percentage decrease in negative feedback / appeals Prudent public financial management Auditor General s Accountability Index Composite client satisfaction index P4 Ministry Management Timely, effective & client- focused management services Total Mgt Service Cost / Total FTE Fulfillment of client charter High performance Treasury Achieved performance KPIs P5 Accounting Management Reliable and timely financial information Financial statements that comply with standards Effective accounting service delivery Impact Studies on training effectiveness Accountability Index Star Rating Client Satisfaction Index Act/Sub-Prog Act./Sub-Program Act./Sub-Program Act./Sub-Program Act./Sub-Program Act./Sub-Program 8

9 Treasury Transformation Program (TTP) Tomorrow s Treasury Today a more strategic and advisory role Largely operational with some strategic focus to greater strategic policy and advisory focus Competent central agency Largely finance-focused Efforts across core businesses and line agency operations More focus on year to year timeframe Heavy resourcing due to operational work Strategic CFO for the government Holistic focus on economy, fiscal and wellbeing Stronger focus on core business and greater empowerment to line agencies Longer term focus with increased strategic planning Streamlined Treasury 9

10 MOF s new Programming Structure is based on identified results areas and its strategic functions PROGRAM Ministry of Finance: Effective fiscal management Prudent public financial management P1 P2 P3 P4 Fiscal Strategy Investment Strategy ACTIVITY/ SUB-PROGRAM Public Finance Ministry Mgt. P5 Accounting Management 1. Fiscal & Economic 2. Tax Division 3. National Budget Office 4. Inland Revenue Board 5. Customs 1. Strategic Investment 2. Statutory Bodies Strategic Mgt 3. MOF Inc. 4. Public Asset Mgt 1. Govt Procurement 2. Housing Loans Div 3. Nat. Strategic Unit 4. Treasury Malaysia Sabah 5. Treasury Malaysia Sarawak 6. Customs Appeal Tribunal 7. Income Tax Appeal Commission 8. Valuation Dept 1. Remuneration Policy and Corporate 2. Strategic Corporate and Communication 3. IT Management Accountant General Department with seven (7) Sub- Program Note: Not all MOF s programs/sub-programs are included in the above structure 10 10

11 Challenges in Implementing OBB Understanding the concepts Role of management in strategy building Quality of information in the results framework Redefining the roles of budget review officers focus on performance & accountability Sustainable capacity building and frequent movement of OBB trainers Translating business requirements into an IT system planning, budgeting, results reporting, M&E Changes to the Ministry programming structure may require changes to the Ministry organization structure. 11

12 thank you terima kasih National Budget Office, Ministry of Finance Malaysia Level 6, North Block, Ministry of Finance Complex Precinct 2, Federal Government Administrative Centre Putrajaya Tel : ; Fax : sakeri.kadir@treasury.gov.my 12