But seven years and four governments later – and the next general election scheduled to be held by September 2023 – there is still no sign of a political funding act.

On May 19, Prime Minister Ismail Sabri Yaakob said the Special Cabinet Committee on Anti-Corruption had agreed in principle to a political funding bill, adding that the proposal would be discussed in the Cabinet before further engagement with political parties.

FMT takes a look at what political funding is, why Malaysia needs a law to regulate this and how such a law could work.

What is a political funding law?

Political funding, or political financing, refers to how political parties and individual politicians raise money for election campaigns, daily operations and other activities.

A political funding law regulates how parties and politicians receive and use money by ensuring disclosure of the source of funds and donations as well as the amounts received.

Proponents of the law argue it is essential for holding political parties and politicians accountable, ensuring transparency over funds and preventing misappropriation, bribery, fraud or abuse of power where funding is concerned.

Countries with political funding laws

Germany has provisions to regulate party finance, centred around transparency. Its laws require parties to provide an annual report on all funds, including income, expenditure, debts and assets as well as disclosure of donor identities.

In Australia, political donations of A$1,000 (RM3,171) or more from foreign sources are banned, with a foreign donor being defined as a person who does not have a connection to the country or an entity that does not have a significant business presence in Australia.

Singapore has a political donation act to restrict foreign interference in its domestic politics, which also sees a ban on anonymous donations exceeding S$5,000 (RM15,975).

Does Malaysia need a political funding law?

Thomas Fann of electoral reform group Bersih said a law was essential to deal with corruption.

“If we do not regulate political funds, parties and politicians will continue to receive money from corporate or wealthy individuals, which could then lead to corruption through the award of lucrative contracts once they are in government,” he told FMT.

Fann said it was important to prevent funds from being exchanged for political favours, adding that a law could also help regulate “money politics” or cash handouts to voters during elections and prevent the likelihood of party hopping.

“Money is a major incentive for elected representatives to party hop. Though hard to prove, money is certainly a big reason why we are experiencing political instability,” he said.

What is important in a political funding law?

Fann said the law must be clear and unambiguous, and consist of disclosure, reporting, monitoring and enforcement and that it should cover parties and politicians alike.

Foreign funding, he said, should not be banned, as it might put smaller or newer parties at a disadvantage. Instead, it could be limited to a certain amount.

For donations from existing government suppliers, Fann proposed a limit of RM50,000 on donations from corporate entities to a political party or candidate.

He said the source must be named for any donation above RM500, but that donors could remain anonymous if they gave anything below that amount.

Government-linked companies (GLCs), Fann said, should be banned from giving any donation to politicians and political parties.

“GLCs are custodians of public wealth, it would be wrong for them to be aligned to any political party by donating to one and not another,” he said. “In any case, it is not their money to give for political activities.”

Who should regulate political funding?

Fann suggested the Election Commission (EC) be tasked with regulating, monitoring and enforcing the political funding law but that it must be independent from the executive branch.

He also called for the establishment of an independent ombudsman committee to provide another avenue for the public to report violations.

He said the Malaysian Anti-Corruption Commission and police should also be tasked with enforcement, adding that all these institutions should be accountable to a parliamentary select committee.