New Emergency law introduced, allows Malaysian government to approve additional spending without going through Parliament

In the new law titled Emergency (Essential Powers) (Amendment) Ordinance 2021, it amends an earlier Emergency ordinance gazetted on January 14 by allowing such approvals without requiring the usual scrutiny by Parliament. — Bernama pic
In the new law titled Emergency (Essential Powers) (Amendment) Ordinance 2021, it amends an earlier Emergency ordinance gazetted on January 14 by allowing such approvals without requiring the usual scrutiny by Parliament. — Bernama pic

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KUALA LUMPUR, March 31 — A new law gazetted today will temporarily allow the Finance Ministry to approve additional spending of the federal government’s funds beyond the initial Budget without going through the usual route of seeking Parliament’s approval, during the nationwide Emergency in Malaysia.

Malaysia has been put under a state of Emergency from January 11 until the expected end date of August 1 unless lifted earlier. During this period, Parliament and state legislative assemblies — which typically play the role of checks and balance on the executive branch of the government — have been suspended until further notice.

In the new law titled Emergency (Essential Powers) (Amendment) Ordinance 2021, it amends an earlier Emergency ordinance gazetted on January 14 by allowing such approvals without requiring the usual scrutiny by Parliament.

According to the new law, mentri besar and chief ministers of states in Malaysia will similarly be able to approve additional spending in state government funds beyond the initial budget without having to get approval of state legislative assemblies.

This was done through the new law’s introduction of Section 10A into the original Emergency Ordinance, with this new provision titled “Temporary financial provisions”.

Under Section 10A, the Treasury can approve any supplementary expenditure or withdrawals from the Federal Consolidated Fund — which would require the Dewan Rakyat to pass resolutions and to enact an Act of Parliament on — in a manner provided by any written law or any Treasury Instructions or Treasury Circulars that are in force, despite any provisions in the Federal Constitution on government expenditure from the Federal Consolidated Fund.

Similarly, under Section 10A, any supplementary expenditure — that would require approval via a state enactment or resolutions from state legislative assemblies — and the withdrawal of funds from a state’s Consolidated Fund can also be made with the approval of a mentri besar or chief minister of a state.

Under Section 10A, the temporary financial provisions would apply as long as the Emergency remains in force.

This new law, which was promulgated by the Yang di-Pertuan Agong on March 25, takes effect from today (March 31).

Typically, Parliament’s approval is needed for the federal government’s Budget spending through a Supply Bill that has to be passed in Parliament.

Supplementary expenditure refers to situations when the amount allocated in the approved federal government’s Budget via the Supply Act is insufficient or when the money spent is more than allocated in the Budget or when a need has arisen for spending for a purpose which had not been allocated for in the Budget.

In such situations, estimates of the supplementary expenditure required or spent have to be presented to the Dewan Rakyat for approval.

Also under the new Emergency ordinance which introduced Section 10B into the initial January 14 ordinance, Section 4(b) of the Government Funding Act 1983 (Act 275) and Section 2(2)(b) of the Treasury Bills (Local) Act 1946 (Act 188) — which relate to procedures for application of moneys raised or received — will not apply as long as the Emergency is in force.

Under the Government Funding Act which enables the Malaysian government via the finance minister to raise funds in line with Shariah principles, with Section 4(b) relating to the payment of such funds into the federal government’s Development Fund with the prior approval of the Dewan Rakyat via resolutions.

Under the Treasury Bills (Local) Act 1946 which empowers the finance minister to borrow money by issuing Treasury Bills in Malaysia, Section 2(2)(b) provides for the payment of such money raised — with the Dewan Rakyat’s prior approval via resolutions — into the federal government’s Development Fund for the purposes of the Development Fund.

In other words, the usual procedure where the Dewan Rakyat’s approval is needed before funds borrowed by the federal government can be channelled into the federal government’s Development Fund would be suspended during the Emergency.

The suspension of these procedures during the Emergency will also take effect from today (March 31).

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