By Shannon Teoh
The Malaysian Insider
Dec 15, 2011
KUALA LUMPUR, Dec 15 — Malaysia lost RM150 billion in illicit outflows in 2009, the fourth highest in the developing world, says US-based watchdog Global Financial Integrity (GFI).
According to its report on illicit financial flows from developing countries released today, Malaysia lost a total of US$338 billion (RM1.08 trillion) over the first decade of the century.
“This report should be a wake-up call to world leaders that more must be done to address these harmful outflows,” GFI director Raymond Baker said in a press release.
GFI had reported in January that RM930 billion flowed out of Malaysia from 2000 to 2008, growing to RM218 billion per year from an initial RM71 billion in that period.
It said the increase was “at a scale seen in few Asian countries.”
“The volume of illegal capital flight from Malaysia has come to dwarf legitimate capital inflows into the country in recent years,” it said earlier this year.
Today’s report titled “Illicit Financial Flows from Developing Countries Over the Decade Ending 2009” sees Malaysia maintaining its fifth place in the world in terms of total illicit outflows since the turn of the century.
In March, Bank Negara Governor Tan Sri Dr Zeti Akhtar Aziz said the Money Business Services Act would be tabled this year to enable the central bank to address the outflow of funds from the country.
The Act came into force on December 1.
The new law supports the development of a more dynamic, competitive and professional money services business industry, while strengthening safeguards against money laundering, terrorist financing and illegal activities, according to Bank Negara.
It said the new law introduces strengthened prudential requirements, focusing particularly on ensuring the effective oversight and control of the conduct and operations of licensed entities to safeguard the integrity of, and confidence in the money services business industry.
The GFI report, penned by economists Sarah Freitas and Dev Kar, a former senior economist at the International Monetary Fund, saw China maintain its position at the top with US$2.5 trillion in illegal outflows.
Malaysia’s closest-ranked regional neighbour was the Philippines, in 13th spot at US$121 billion.
Others like Zimbabwe (79th) and Myanmar (83rd) recorded US$3.9 billion and US$3.05 billion respectively in the list of 116 countries that GFI had full data on.
The Finance Ministry had said early this year that Bank Negara was probing the matter.
But the central bank has yet to make any statement on the progress of its investigations despite GFI offering its assistance.