Malaysia’s Illicit Outflows

Prof. Jomo K. Sundram and Raisa Muhtar reported last year (Oct 2017) in an article entitled “Malaysia’s illicit financial outflows”.  A Global Financial Integrity (GFI) report estimated that Malaysia lost upto USD431 billion (RM1.8 trillion) in illicit outflows.  Even half of this was recovered, we could settle all outstanding loans/ guarantees that Malaysia currently has.  We were listed fifth amongst countries for illicit capital flight after China, Russia, Mexico and India.  On per capita basis, we were No. 1 – thanks to Najib, Jho Low, Taib Mahmud, Musa Aman and a whole host of other lesser luminaries.  Malaysia accounted for about 6% of total illicit outflows of all developing countries.

The estimates of illicit financial outflows from developing countries. ― Picture by Global Financial Integrity

According to the GFI study, 87% of illegal financial flows from developing and emerging economies, was due to fraudulent misinvoicing of trade.  In 2014 alone, illicit financial flows were from fraud, drug trafficking, illegal logging, human trafficking, illegal mining, illegal fishing and wild life trade, crude oil theft, weapons trafficking, organ trafficking and trafficking in cultural property.

To curtail misinvoicing (what a euphemism!), GFI suggested customs agencies scrutinize trade transactions involving a tax haven.  Governments should train customs and other authorities in detecting misinvoicing.  Cooperation with international agencies will also be helpful.

The Minister of Finance in his budget 2019 intends to strengthen MACC and also provide an amnesty for funds not previously reported to IRD.  That’s helpful but more needs to be done.  Why not engage private bounty hunters licensed by an authority, to share the loot on a “success” basis?  Or, we may use MBS method of confining some people at the Ritz Carlton until they give up some of the ill-gotten gains?

Reference:

Up to US$431b in illicit outflows from Malaysia over past decade – Malay Mail 02 May 2017

Malaysia’s illicit financial outflows – Jomo KS and Raisa Muhtar, FMT 19 Oct 2017