The Finance Ministry will introduce zero-based budgeting process to prevent structural inflation in the future annual budget, said Tony Pua.

Pua, who is the special officer to Finance Minister Lim Guan Eng, told a forum in Kuala Lumpur today that the process would see budget applications by government agencies made based only on what they need.

This, he added, would be in contrast of the "copy and paste" budgets previously practised by government bodies, which saw identical items appearing in their budget applications each year.

Citing the Royal Customs Department as an example, Pua said the agency was found to have excess stocks of shoes in store but yet continued to buy more every year.

"Why did this happen? Because of the way budgets are being prepared and designed," he told the audience at Seminar and Report Launch event organised by the Centre To Combat Corruption and Cronyism (C4), titled “Procurement As Part Of Good Governance in New Malaysia”.

Pua said the new process would be reflected in the government's Budget 2019, which would be tabled in the next few months.

"Every year, what they do is take the budget from previous year and put in new numbers.

"Increase the number for same items, and then submit to MOF to seek approval for the budget. And of course, they add in a few more items they want to do that year.

"That is why the budget automatically continued to increase every year," he said.

Pua said the new process would be reflected in the government's Budget 2019, which would be tabled in the next few months.

He admitted that the new process would be a more challenging task, but it had to be done to curb financial wastage on unnecessary expenditures.

"What is the solution to this? It is something that we know has created wastages, and caused structural increase of budget every year. It creates automatic inflation mechanism into budget requests.

"(So), this year we are starting a new process, zero-based budgeting. This means that you start (working on annual budget) from scratch.

"You do not go by previous budget structure, you start from zero and think of what you are going to do next year, and you write the items," he said.

On the same topic, Pua also said that there would be changes in the implementation of projects for Bumiputera contractors.

He said while the policy to allocate tenders for Bumiputera contractors remains as what was practised by the BN administration, the changes would see projects be tendered for competitively among the contractors.

Pua however did not reveal how it would be tweaked, but mentioned that the move would "breed more successful Bumiputera contractors instead of breeding cronies".

C4's suggestions to the gov't

The event today saw C4 launching their findings and 17 recommendations on government procurement practices.

Copies of the reports were handed to Pua, who represented the Finance Ministry, as well as Works Minister Baru Bian, who delivered the event's keynote address.

Among the suggestions was the need to establish a Parliament Select Committee on Defense to review reports on needs, assessment, cost and benefit analysis and market survey submitted by the Defense Ministry.

For financial reports that do not involve sensitive information on national security, C4 suggested for the reports to be made publicly available.

The center also wants the federal government to publish decisions on awards of contracts, as well as the justification for the selection or rejection of bidders.