organizational structures -- how can finance ministry
TRANSCRIPT
Organizational structures -- how can finance ministry respond to new
challenges?
“CASE OF MALAYSIA”
FINANCE MINISTRIES IN THE 21ST CENTURY: Challenges, Institutions and Capabilities 25-26 March 2015, Johannesburg, South Africa
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MOHD SAKERI ABDUL KADIR National Budget Office
Ministry of Finance, Malaysia
2
Traditional
PPBS
MBS
OBB
Detailed
Controls &
Discipline
Programs &
Performance
Accountability,
flexibility &
delegation
1957 - 1968
1969 - 1990
1990 - 2012
• Incremental
line item
budgeting
• Disaggregated
Budget
• Budget
Ceilings
• Program
Agreements
• Exceptions
Reporting
• Evaluation
• Program
Performance
• Program-
Activities
• Performance
Indicators
• Evaluation
Intro: Malaysia’s Budgetary Reform Initiatives
3
Need to shift focus from outputs to outcomes
Lack of vertical and horizontal integration
Cross cutting issues among agencies, overlapping
programs, increasing redundancy
Focus on compliance (budgeting) as opposed to
performance
Lack of systematic monitoring system and poor
information system
Evaluation done on an ad hoc basis
New Challenges in Managing the Public Sector
Performance in Malaysia
3
Inland Rev.
Board
Customs
Dept. Policy
Sys. &
Control
Ministry of Finance
4
P1 P2 P4 P5
1. Tax Analysis
2. Econ & Int’l
3. Nat. Budget
Office
4. Loan & Fin. Mgt
1. Gov Invest. &
MoF Inc
2. Monitoring and
Control
3. Strategic Fin.
4. OBB Project
Team
1. Govt Procurement
2. Housing Loan Mgt
3. Remuneration
Policy, Public
Money & Mgt
4. IT Mgt
5. Fed Treasury
(Sabah)
6. Fed Treasury
(S’wak)
7. Customs Appeal
Tribunal
8. Income Tax
Appeal Comm.
1. Inland
Revenue
Board
Acc. Gen.
Dept.
Accountant
General
Department with
seven (7) Sub-
Programs
Under MBS, MOF’s Programming Structure is
Based on the Organizational Structure
SECTOR/ PROGRAM
Valuation
Dept.
Mgt.
Services
P3 P6 P7
1. Management
2. Customs services
3. Enforcement
1. Valuation
Services
2. Training &
Research
3. National Asset
& Properties
Info. Centre
ACTIVITY/ SUB-PROGRAM
Note: Not all MOF’s programs/sub-programs are included in the above structure
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Traditional
PPBS
MBS
OBB
Detailed
Controls &
Discipline
Programs &
Performance
Accountability,
flexibility &
delegation
1957 - 1968
1969 - 1990
1990 - 2012
2012 >
• Incremental
line item
budgeting
• Disaggregated
Budget
• Budget
Ceilings
• Program
Agreements
• Exceptions
Reporting
• Evaluation
• Integration
• Alignment
• Budgeting for
results
• Results
Reporting
• Evaluation
• Program
Performance
• Program-
Activities
• Performance
Indicators
• Evaluation
Integrated
Approach
Outcome Based Budgeting (OBB)
Activity/Sub-Prog
Activity Outcome
KPI
Activity Output
PI
Activity/ Sub-Prog
Activity Outcome
KPI
Activity Output
PI
National level
National Strategic Thrusts
National Outcome
Key Performance Indicator
National Programme
Ministry level
Ministry’s Outcome
Key Perf. Indicator
Programme
Ministry level
Ministry’s Outcome
Key Perf. Indicator
Programme
Program level
Prog. Outcome
KPI
Activity
Program level
Prog. Outcome
KPI
Activity
Program level
Prog. Outcome
KPI
Activity
Program level
Prog. Outcome
KPI
Activity
Activity / Sub-Prog
Activity Outcome
KPI
Activity Output
PI
Activity/ Sub-Prog
Activity Outcome
KPI
Activity Output
PI
Activity/ Sub-Prog
Activity Outcome
KPI
Activity Output
PI
Activity/ Sub-Prog
Activity Outcome
KPI
Activity Output
PI
Activity / Sub-Prog
Activity Outcome
KPI
Activity Output
PI
Activity/ Sub-Prog
Activity Outcome
KPI
Activity Output
PI
Activity/Sub-Prog
Activity Outcome
KPI
Activity Output
PI
HORIZONTAL
LINKAGES
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Integrated Approach under OBB
VE
RT
ICA
L
AL
IGN
ME
NT
MIN
ISTR
Y/A
GEN
CY
Activity/Sub-Program Heads as Activists
Top Management as Champions and Sponsors
Trainers as Coaches
Focal Persons & End Users
NA
TIO
NA
L Awareness & Briefings
Structured Training Programmes
Forum & Seminars
MyResults online system
7
OBB Implementation Strategy (O
BB
Team
)
OBB Strategic Programming Worshops
8
Ministry-level
outcome
Program
Ministry-level
outcome KPI
Effective fiscal management Prudent public financial management
• Deficit to GDP
• Debt to GDP
• Credit rating (2 out of 3 rating agencies)
• Percentage Non-oil tax rev to total revenue
• Auditor General’s Accountability Index
• Composite client satisfaction index
Fiscal Strategy Investment Strategy Public Finance
Services Ministry Management
Services
P1 P2 P3
Attainment of
Balanced Budget
• Total tax revenue
• Percentage gov
expenditure to
GDP
• Year-on-year
growth of Gov
Revenue to remain
higher than
Expenditure
Effective investment
strategy
• Percentage NPL of
strategic loans
(excl. loans to
state gov)
• Percentage gov
guarantees issued
in compliance to
set criteria and
within annual limits
• Percentage
projected dividend
vs target
Effective public
finance services
• Percentage
procurement >RM
500k awarded
through tender in
compliance to set
policies
• No. of audit
queries
Timely, effective &
client- focused
management
services
• Total Mgt Service
Cost / Total FTE
• Fulfillment of client
charter
More effective
public debt
management
• Percentage FG
debt interest
payment to total
OE
• Percentage of
deferred liabilities
to GDP
Program
Outcome &
KPI
Fair & efficient
public finance
services
• Percentage
decrease in
negative feedback
/ appeals
Act/Sub-Prog Act./Sub-Program Act./Sub-Program Act./Sub-Program Act./Sub-Program
Accounting
Management
P5
Act./Sub-Program
High performance
Treasury
• Achieved
performance KPIs
P4
Reliable and timely
financial information
• Financial statements
that comply with
standards
Effective accounting
service delivery
• Impact Studies on
training
effectiveness
• Accountability
Index
• Star Rating
• Client Satisfaction
Index
Under OBB, MOF’s New Results Framework is being
Developed Based on its Strategic Functions & Roles
... to greater strategic
policy and advisory focus
Largely operational with some strategic focus...
Competent central agency
Largely finance-focused
Efforts across core businesses
and line agency operations
More focus on year to year
timeframe
Heavy resourcing due to
operational work
Strategic CFO for the government
Holistic focus on economy, fiscal
and wellbeing
Stronger focus on core business
and greater empowerment to line
agencies
Longer term focus with increased
strategic planning
Streamlined Treasury
Treasury Transformation Program (TTP)
“Tomorrow’s Treasury Today” …a more strategic and advisory role
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Ministry Mgt.
Services
Public Finance
Services Fiscal Strategy
Investment
Strategy
Ministry of Finance: Effective fiscal management
Prudent public financial management
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P1 P2 P3 P4
1. Fiscal & Economic
2. Tax Division
3. National Budget
Office
4. Inland Revenue
Board
5. Customs
1. Strategic Investment
2. Statutory Bodies
Strategic Mgt
3. MOF Inc.
4. Public Asset Mgt
1. Govt Procurement
2. Housing Loans Div
3. Nat. Strategic Unit
4. Treasury Malaysia
Sabah
5. Treasury Malaysia
Sarawak
6. Customs Appeal
Tribunal
7. Income Tax Appeal
Commission
8. Valuation Dept
1. Remuneration Policy
and Corporate
Services
2. Strategic Corporate
and Communication
3. IT Management
Accounting
Management
Accountant General
Department with
seven (7) Sub-
Program
P5
MOF’s new Programming Structure is based on
identified results areas and its strategic functions
PROGRAM
ACTIVITY/ SUB-PROGRAM
Note: Not all MOF’s programs/sub-programs are included in the above structure
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Challenges in Implementing OBB
Understanding the concepts
Role of management in strategy building
Quality of information in the results framework
Redefining the roles of budget review officers – focus on
performance & accountability
Sustainable capacity building and frequent movement of
OBB trainers
Translating business requirements into an IT system –
planning, budgeting, results reporting, M&E
Changes to the Ministry programming structure may require
changes to the Ministry organization structure.
thank you terima kasih
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National Budget Office, Ministry of Finance Malaysia
Level 6, North Block, Ministry of Finance Complex
Precinct 2, Federal Government Administrative Centre
62592 Putrajaya
Tel : +603-88823850; Fax : +603-88823818
E-mail: [email protected]