A-G's Report: Federal Agencies Need To Reduce Dependence On Government Grants

KUALA LUMPUR, Feb 24 (Bernama) -- Federal agencies are advised to strengthen revenue generation efforts to ensure operational continuity based on continuous efforts thereby reducing dependence on government grants.

According to the Auditor-General's Report (A-G's Report) 1/2025 which was tabled in the Dewan Rakyat today, the recommendation is to improve the financial management of the relevant agencies. 

"In addition, the use of government grants needs to be optimised to improve the efficiency of federal agency services," said the report. 

Additionally, the report also suggested that the agencies review the direction and business plan of subsidiary companies that suffered losses for three consecutive years and did not provide appropriate returns.

"Evaluating and giving consideration to closing subsidiary companies with dormant or inactive status of more than five years so as not to burden the federal agency," it said.

The report mentioned that as of Dec 31, 2023, advances and grants given by 39 federal agencies to 94 subsidiary companies amounted to RM16.849 billion.

The amount consists of advances to 81 subsidiary companies amounting to RM14.105 billion and grants to 13 subsidiary companies amounting to RM2.744 billion.

The report lists the highest advances and grants by five federal agencies to subsidiary companies in 2023, namely the Employees' Provident Fund (EPF), Lembaga Tabung Haji (LTH), Federal Land Development Board (FELDA), PR1MA Corporation Malaysia (PR1MA) and Malaysian Timber Industry Board (MTIB).

The A-G’s Report said as many as 97 out of 142 federal agencies recorded a current surplus after tax and zakat amounting to RM73.886 billion while as many as 45 federal agencies recorded a current deficit amounting to RM2.011 billion.

"The audit analysis shows an increase in the total current surplus after tax and zakat in 2023, which is from RM55.842 billion in 2022 to RM73.886 billion in 2023 involving 97 agencies compared to 89 agencies in 2022.

"The five federal agencies that recorded the highest current surplus in 2023 were the EPF amounting to RM41.335 billion; Kumpulan Wang Persaraan (Diperbadankan) (KWAP) (RM9.651 billion); Bank Negara Malaysia (BNM) (RM7.162 billion); the Public Sector Housing Financing Board (LPPSA) (RM3.084 billion); LTH (RM2.330 billion); and others consisting of 92 agencies (RM10.324 billion)," according to the report.

Audit analysis shows a decrease in the current deficit from RM3.635 billion in 2022 to RM2.011 billion in 2023 involving 45 agencies in 2023 compared to 53 agencies in 2022.

The five federal agencies that recorded the highest current deficit in 2023 were the Inland Revenue Board (LHDN) amounting to RM0.735 billion; PR1MA (RM0.217 billion); Universiti Teknologi MARA (UiTM) (RM0.212 billion); Universiti Malaysia Sabah (UMS) (RM0.141 billion); and Universiti Putra Malaysia (UPM) (RM0.128 billion), as well as 40 other agencies (RM0.578 billion).

The report also listed five federal agencies that suffered losses for three consecutive years in a row from 2021 to 2023, namely UMS, UPM, Universiti Sains Islam Malaysia (USIM), Universiti Malaya Medical Centre (PPUM) and Solid Waste Management and Public Cleaning Corporation (SWCorp).  According to the report, as a whole, the current surplus of the federal agency is contributed from the income generation of the main activities and the addition or repayment of the federal government grant as well as the result of investment interest.

"While the current shortfall is due to a decrease in revenue, an increase in operating expenses and the impairment of the value of investments, loans and assets," it said.

-- BERNAMA