Implementation of Results
Based Budgeting
(RBB) in Malaysian Public Sector
Koshy Thomas
Deputy Under Secretary
Tax Analysis Division
Ministry of Finance
Ministry of Finance, Malaysia
1
Presentation
• History
• Benefits of the Modified Budgeting
System (MBS)
• Features of The MBS
• Program Agreement Under MBS
• RBB as an Evaluation Tool
• The Integrated Approach
Ministry of Finance, Malaysia
2
EVOLUTION OF BUDGETING
SYSTEMS IN MALAYSIA
• 1957-1968---TRADITIONAL BUDGETING SYSTEM
Line Item Budgeting
• 1969-1989---PROGRAM PERFORMANCE BUDGETING
SYSTEM (PPBS)




To Meet Development Challenges
New Administrative Initiatives
Following Trends in World Budget Development
Budgeting Based on : Program and Activity,
Objectives, Performance Monitoring and
Evaluation
Ministry of Finance, Malaysia
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EVOLUTION OF BUDGETING
SYSTEMS IN MALAYSIA
• 1990 until now---MODIFIED BUDGETING
SYSTEM (MBS)
 Was Reviewed From1988 Until 1989
 Modified With Emphasis On Empowerment
and Accountability
 Decentralization and Delegation Of Authority
Ministry of Finance, Malaysia
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Presentation
• History
• Benefits of the Modified Budgeting
System (MBS)
• Features of The MBS
• Program Agreement
• RBB as an Evaluation Tool
• The Integrated Approach
Ministry of Finance, Malaysia
5
Benefits of the MBS
At the Central Agency Level the benefits include:
• Improve identification of priority expenditures
• Shifting the focus of budget examination from micro
management to aggregate controls
• Allowing more time for discussion of new policy proposals
and saving proposals
• Providing Budget Division with better information on
program performance and enabling it to be more effective in
hold departments accountable for program performance
• Assisting review agencies to carry out their role more
effectively.
Ministry of Finance, Malaysia
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Benefits of the MBS
At the Department Level :
• Increasing the Opportunity for Departments to Use Strategic
Planning As the Basis for Budget Preparation. Enabling a
More `Top-down' Approach to Budgeting
• Enabling Controlling Officers to Play a More Active Role in
Budgeting and to Use Budgets As a Management Tool
• Enabling Improved Communication of Top Management's
Priorities to Lower Level Managers and Staff
• Allowing Finance Divisions to Become More Involved in
Matters of Program Policy and Program Evaluation and Less
in Matters of Line-item Control.
Ministry of Finance, Malaysia
7
Presentation
• History
• Benefits of the Modified Budgeting
System (MBS)
• Features of The MBS
• Program Agreement Under MBS
• RBB as an Evaluation Tool
• The Integrated Approach
Ministry of Finance, Malaysia
8
The Modified Budgeting
System (MBS)
A
SYSTEM OF MANAGEMENT
DESIGNED TO FOCUS
ATTENTION ON THE
RELATIONSHIP BETWEEN
INPUTS
OUTPUTS
Ministry of Finance, Malaysia
OUTCOMES
9
The MBS Is Based On Two
Fundamental Management
Principles:
• Let Managers Manage:
Managers Nearest To Where Outputs
Are Produced Should Be Given As
Much Flexibility/Authority As
Practicable.
• Authority Must Match
Accountability.
Ministry of Finance, Malaysia
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Excerpts From World Bank Report On
“Public Expenditure Management : How
Malaysia Performs” (1999)
“The Modified Budgeting System
(MBS)….provides greater managerial
flexibility and
accountability…….performs on par with
international best practice and is being
used in some developing countries as a
model”
Ministry of Finance, Malaysia
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Presentation
• History
• Benefits of the Modified Budgeting
System (MBS)
• Features of The MBS
• Program Agreement
• RBB as an Evaluation Tool
• The Integrated Approach
Ministry of Finance, Malaysia
12
Strategic Alignment in M’sia
 Vision Plan (Vision 2020)
 Outline Perspective Plan (OPP)
 Sector Plans
 Five Year Plan or Medium Term
Framework (MTF)
 Annual/Budget Year Plan
Ministry of Finance, Malaysia
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Main Components Of MBS
• Expenditure Target
• Program Agreements And
Exception Reports
• Program Evaluation
• A More Generalized Approach to
Expenditure Control
Ministry of Finance, Malaysia
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Program Agreement
A Program Agreement is an Agreement
which Determines the
Level of Performance
that can be Achieved for a Given Budget
Year with the Allocation Approved
Ministry of Finance, Malaysia
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Benefits Of Program
Agreement
• Mission and Result Driven Budget
• Links Performance to Budget
• Treasury Focuses on Outputs and
Impact
• Develops a Culture of Performance
• Sets Challenging Performance Targets
• Ensuring Accountability for Results
Ministry of Finance, Malaysia
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FORMAT FOR
Agency Level Information (ABM 1)
•
•
•
•
•
Agency Objectives
Source of Authority of the Agency
Agency Strategies
Agency Financial Resources (Aggregated)
Agency Manpower Resources (Aggregated)
Ministry of Finance, Malaysia
KOSHY THOMAS MoF MALAYSIA
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Program and Activity Structure under the MBS and the
relationship of the outcome/output framework to
government policies
Government Develops a Range of Policies for the Nation
(National Policies)
Agency
(Agency Mission/Objectives Driven by Client Needs)
Dept1
Activity
1.1
Activity
1.2
Dept 2
Dept 3
Admin Function
2.1
Activity
3.1
Activity
3.2
Series of Processes and Tasks Driven by Activity
Based Strategies
Resource Allocation Based on Budget Year
Strategies
Ministry of Finance, Malaysia
© 2000-2006 CeDRE Malaysia
Societal
Indicators
Outcomes
Outcomes
/Outputs
Outputs
Task/Functions
Inputs
Dept.
Objectives
Med. Term
Strategies
Short Term
Strategies
18
Activity Level Information
as Required in the Program
Agreement (ABM 2)
Ministry of Finance, Malaysia
KOSHY THOMAS MoF MALAYSIA
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PROGRAM ACTIVITY STRUCTURE
ACTIVITY 1
DESIGNS
SUB ACT.1
ICT/ADMN FUNC
SUB ACT.2
CORE BUSINESS
Road Designs
SUB ACT.3
CORE BUSINESS
Bridge Designs
FUNCTION 1
Hill Terrain
FUNCTION 2
Wet Lands/Swamp
FUNCTION 3
Coastal
TASK 1
Taskforce Meetings
TASK 2
Design Preparations
TASK 3
Data & Research
All Aspects
of the
Activity
is
Documented
in the
Program
Agreement
MAN, MONEY AND METHODS EMPLOYED IN GENERATING THE
DESIRED OUTPUTS AT THE ACTIVITY LEVEL
Ministry of Finance, Malaysia
© 2000-2006 CeDRE Malaysia
20
COMPONENTS IN THE PROGRAM
AGREEMENT
1.
SUPPLY HEAD
:
2.
AGENCY
:
3.
PROGRAM
:
4.
ACTIVITY
:
5.
CODE
:
6.
SOURCE OF
POWER
:
7.
CLIENTS
:
DIRECT /INDIRECT CLIENTS
IDENTIFICATION
8.
OBJECTIVES
:
WHAT IS TO BE ACHIEVED IN
OVERCOMMING CLIENT NEEDS
/PROBLEMS ?
CODES AND HEADINGS AS APPROVED
AND PROVIDED FOR IN THE
ANNUAL BUDGET BOOK
ACT OF PARLIAMENT, AUTHORITY
CABINET DECISION, ETC.
COMPONENTS IN THE PROGRAM
AGREEMENT
9. POLICY/NEEDS :
ANALYSIS
i.
CLIENT PROBLEMS/ NEEDS ANALYSIS
ii. REASONS FOR & EXTENT OF PROBLEMS/
NEEDS FACED BY CLIENTS
iii. HOW TO ADDRESS PROBLEMS/ NEEDS
ALTERNATIVE
POLICY
STRATEGIES
:
ALTERNATIVE POLICIES THAT CAN BE
CONSIDERED
: i. ANNUAL YEAR 1/YEAR 2
ii. MEDIUM TERM
iii. LONG TERM
strategies that need to be frameworked in
order to achieve the objectives
COMPONENTS IN THE PROGRAM
AGREEMENT
10. FUNCTIONS
:
BROAD TASKS TO BE CARRIED OUT TO
PRODUCE DESIRED OUTPUT; work plans
detailing activities and task to be queued
here
11. RESOURCES
:
i.
ii.
12. OUTPUT
SPECIFICATIONS
:
SPECIFICATIONS OF GOODS OR
SERVICES PRODUCED measured by :
i.
QUANTITY
ii. QUALITY
benchmarked
iii. TIMELINESS
iv. COST
from
FINANCES
PERSONNEL
inputs
COMPONENTS IN THE PROGRAM
AGREEMENT
13. IMPACT
INDICATORS
: i. DETERMINE IMPACT INDICATORS
ii. ACHIEVEMENT OF OJECTIVES
14. EVALUATION
PLAN
: i.
WHEN WAS EVALUATION OF THE
ACTIVITY LAST DONE
ii. WHEN IS THE NEXT EVALUATION
PLANNED
iii. WHAT ARE THE ISSUES TO BE
EVALUATED
Presentation
• History
• Implementation of the Modified
Budgeting System (MBS)
• Features of The MBS
• Program Agreement Under MBS
• RBB as an Evaluation Tool
• The Integrated Approach
Ministry of Finance, Malaysia
25
PROGRAM AGREEMENT AS A MONITORING TOOL
ProLL CHART
© Rasappan 1996
EVALUATION
NEEDS
Beneficiaries
Clients
Needs/Problems
T
I
M
E
L
I
N
E
Needs
Fulfillment
APPRAISAL/
EX ANTE
Policies
Long Term
Strategies
Activities
Objectives
APPROPRIATENESS/
EFFECTIVENESS
Input
Process
Task
Short Term
Strategies
Outputs
Impact/Outcome
EFFICIENCY
IMPACT/
EX POST
PROGRAM AGREEMENT
CLIENT IDETIFICATION
• Client (Internal, External, Direct, Indirect)
• Stakeholders (Direct Indirect)
• Target Groups
• Service Providers (Internal & External)
NEEDS/PROBLEM ASSESSMENT
• Identify Real Needs & Problems
• Associate it with Clients Groups
• How to Address These Needs
Problems
POLICIES
• Activity Mandates (Legal/Administrative)
• Sectoral & National Policies
ACTIVITIES & OBJECTIVES
• Identification of Functions
• To Achieve Objectives
• To fulfill Needs & Overcome Problems
INPUTS & STRATEGIES
• Seek Money, Man & Methods by Function
• To Implement Activities by Function
• Through Specific Strategies
TASK
• Undertaken by Man using Money and
Methods
• Resource Optimisation key to Success
OUTPUTS
• Specification of Goods and Services in
• Qnty, Qlty, Time & Cost
IMPACT INDICATORS/EVALUATION
• Key Performance indicators
• Key Result Areas
• Proposed Evaluation Plan
(c) 2000 CeDRE Malaysia
© 2000-2006 CeDRE Malaysia
OBJECTIVE
ACHIEVED
26
Adv. Internal Evaluation MODEL

one has ownership over the evaluation process.

objective to improve not to prove.

facilitate using the process and results for program improvement
and decision making.

improved communication and shared understanding between
different groups

evaluation is ingrained in the day-to-day operations of an
organisation

evaluation is a developmental process, not just a report card
process

an important benefit of evaluation is organisational learning -- a
way for the organisation to assess its progress and to change in
ways that lead to greater effectiveness
Ministry of Finance, Malaysia
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Disadvantages of Internal
Evaluation
 less perceived credibility than an external evaluator
 objectivity may be questioned
 greater potential for bias
 potential for role confusion
 workload may delay completion of evaluations
Ministry of Finance, Malaysia
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FLOW CHART FOR PUBLIC SECTOR PROGRAM EVALUATION UNDER THE MODIFIED
MODIFIED BUDGETING SYSTEM (MBS)
PROGRAM EVALUATION
STEERING COMMITTEE
1
WORKSHOP 1
PLANNING
APPROVAL BY
CONTROLLING OFFICER
2
PARTICIPATION
ANALYSIS
3
EVALUABILITY
ASSESMENT
No
11
STEERING COM
ACTION PLAN
Yes
1
No
17
18
Yes
2
STEERING COM
INSTRUMENT
DATA
COLLECTION
4
INTERNAL
ASSESSMENT
5
PROGRAM LOGIC
6
KRA/KPI/CSF
7
OUTCOMES
HIERARCHY
8
STAKEHOLDER
ANALYSIS
9
EVALUATION
QUESTION
10
ACTION PLAN
WORKSHOP 2
INSTRUMENT/CONSTRUCT
1
ISOLATE M’ABLE
INDICATORS
12
IDENTIFY DATA
SOUURCES
13
DRAFT
INSTRUMENT
14
19
DATA ENTRY
FIELD TEST/
VALIDATION
15
20
DATA CLEANING
SAMPLING DESIGN
16
No
27
28
Yes
STEERING COM
DRAFT REPORT
FINAL REPORT
Cross Referencing
29
FOLLOW-UP
ACTION
1
2
Run Sequence Again
Ministry of Finance, Malaysia
© 2000-2006 CeDRE Malaysia
WORKSHOP 3
DATA ANALYSIS/REPORT WRITING
2
RUN BASIC STATS
21
IDENTIY CROSS-TABS 22
EVALUATION Q.
GROUPING
23
QUESTIONAIRE
ITEM ANALYSIS
24
CONCLUSION &
25
RECOMMENDATION
DRAFT FIRST
REPORT
26
29
Looking Forward
• Reviewing the strategic performance
agreement
• Establishing Linkages with an
integrated RBM framework
• Driven by an e-enabled system
• Integrated RBM to be an integral part
of an a larger Integrated Financial
Management System
Ministry of Finance, Malaysia
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International Scene
• A number of countries have
•
incorporated the model in totality or
in parts that are the integrated with
the existing system
These countries include India,
Mauritius, Zimbabwe, Botswana,
Mozambique, Namibia, Vietnam and
Bhutan to name a few…….
Ministry of Finance, Malaysia
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thank you
Ministry of Finance, Malaysia
32