The Institute for Democracy and Economic Affairs (IDEAS) also noted that the entry cost for new parties is between RM30,000 and RM240,000.
“To support these expenses, parties rely on diverse and often informal funding streams, particularly individual and corporate donations,” the think tank said in a 34-page report authored by Sabrina Firdaus Aloysius, Nur Syazwan Zainal Abidin and Imamul Ariffin.
The publication, titled “How Costly are Political Parties?”, was funded by the Australian government through its foreign affairs and trade department.
The report adopts a qualitative exploratory design and draws from 18 key interviews with experts in political finance and people across Malaysia’s political parties.
“The findings show that political finance in Malaysia is large in scale,” said Sabrina.
The report said there was emerging evidence that the cost of politics in Malaysia extends far beyond election campaigns, with aspiring candidates from newer parties reportedly needing from RM40,000 to over RM1 million to contest seats, depending on the constituency.
It also said there were growing concerns that rising costs favour established political parties, creating barriers to entry and deterring participation from underrepresented groups like women, youth, ethnic minorities, persons with disabilities and low-income households.
Political financing system needs overhaul
The report recommended a comprehensive Political Financing Act to modernise Malaysia’s fragmented regulatory framework, including rules on donor restrictions, donation caps, public disclosure and public funding mechanisms.
It also called for reforms to constituency development funds, including depoliticising allocations, improving transparency, and ensuring fairer access for opposition representatives.
“Amend the Election Offences Act 1954 by updating candidate spending limits, recognising party-level campaign expenditures and requiring audited financial returns,” it said.
Other recommendations included public education campaigns to address entrenched voter incentives and vote-buying practices, as well as stronger financial transparency and internal governance within political parties.
“Financial capital should not be the leading influence on decisions on candidate selection,” it said.
Last year, law and institutional reform minister Azalina Othman Said warned that passing a political financing bill in time for the next general election would be challenging as more feedback was still needed.
In January, her deputy, M Kulasegaran, said the government was awaiting the results of a public perception study conducted by researchers from International Islamic University Malaysia before finalising the bill.
He said various proposals had been gathered following 20 stakeholder engagements with business chambers, civil society and academia, all of which would be consolidated to form the parameters of the bill.