FACULTY OF ADMINISTRATIVE SCIENCE AND POLICY STUDY

BACHELOR IN ADMINISTRATIVE SCIENCE (HONS)

SEPTEMBER 2014 TO JANUARY 2015

ADS652 PUBLIC FINANCE

HOW BUDGETING SYSTEM AFFECT GOVERNMENT PERFORMANCE

PREPARED FOR

: SITI YASMIN BADRUM

PREPARED BY

: PRIBOUDRIE MARK MATAUS

2012253602
AM228/PART 5

TABLE OF CONTENT

INTRODUCTION

RESEARCH OBJECTIVE

RESEARCH QUESTION

METHODOLOGY

FINDINGS

5-6

DISCUSSION AND CONCLUSION

REFERENCES

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INTRODUCTION

Budgeting system is a tools used by the government as a framework for their

spending and revenue allocation. To ensure the public resources are not wasted,
the government must be able to come out with an effective budgeting system. This
is important as it ensure that the outputs produced and services delivered achieves
the objectives (Xavier, 2001).

Organised budget will help to promote the effectiveness and efficiency in public
expenditure. Therefore, in this mini research I will covers the budgeting system that
can improve or affect the government performance in administering the country
economy.

Budgeting process in Malaysia are done in a political way, which it's mainly
processed in the parliament and will presented by the Prime Minister in the
parliament on the end of the year that is on October every year.

Budgeting system in Malaysia had gone through many evolutions as the country
developing. There is many budgeting system thats had been used by the
government to administering the country. The use of budgeting system in Malaysia
also depends on the resources available which it is scarce in nature. The use of
budgeting system also depends on the leader of the government which is the Prime
Minister. Current administer of the government are using the Modified Budgeting
System (MBS) as a framework for their budgeting allocation.

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OBJECTIVE

To knows the relation between the budgeting system and government activities in
term of administration performance.

RESEARCH QUESTION

To achieve the research objective there is one question that must be answered that
is how can a budgeting system of a country affecting the ways of government
performance in administer the country.

From the question, it is suggested that budgeting system used in preparing a budget
influencing the pattern of government expenditure. It is also show how the
government allocate their development expenses and administer expenses. The
characteristic of the budgeting system itself also will affect the government
performance. For example the Traditional Budgeting System (TBS) which is focusing
the output of spending and for Performance Based Budgeting System (PBBS) will
focusing on the performance of a programme or the activity, whether it is achieving
the objective.

Hence, the research on budgeting system relationship with the government

performance need to be studied to show whether a good budgeting system may
affecting it and to show how it will affecting the government performance.

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METHODOLOGY

The method used in carrying out this mini research was mainly based on secondary
data. Secondary data was a data that has studied and performed by previous
researcher and also from article and journal papers.

FINDINGS

From the data that related to my mini research I have point out several significant
effect that budgeting system shows on the government performance that is;

1. RESOURCES ALLOCATION
The identity of each budgeting system are different with one another,
therefore the budget allocation also will give different measure to how the
budget will be allocated. In the PBBS the allocation of resources are done by
maximizing the utilization in the effective and efficient ways as possible. For
example, instead of allocating the scarce resources to the whole country, the
government may utilize the resources by allocating the resources to the
sector or area which its can be used at maximum potential. For example the
creation of the Tun Razak Exchange. The area are being targeted as an area
which resources can be used at maximum where it will be the centre of new
economic hub which will become the leading international finance and
business (1MDB, n.d.).

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2. GENERATE INCOME
One of the side features of a budget is to provide a source of income to the
State. The national budget have been set-up to help the government
administers the State expenditures and at the same time also to generate
revenues. A good budgeting system will provide a good understanding on
how should the expenses must be done in an effective and efficient manners.
This will tell us whether the national budget will go on surplus or deficit budget.
When a government have a deficit budget this will force them to make a
public borrowing to support the expenditure on budget deficit. Malaysia
government budget recorded a deficit in 2013 equal to 3.9% in GDP
(Economics, n.d.). When there is a sign of budget deficit then the government
will try to make an alternative options by restructuring the taxation system as
tit is also one of the sources of government incomes. The budgeting system
will show how much the government can generate income whether it is a
short-run or long-run strategies.
3. PUBLIC RELATION
Budgeting system are also a tools for the government to shows their sincerity
and transparency to the citizen as a ruling party that will gives prosperity to
them. It is shows on the budgeting plans where the government will allocates
a public services budget such as to take the welfare of the community on the
rural especially the poor households. For example the government have
increased the BR1M or Bantuan Rakyat 1 Malaysia to those that qualify for
the assistance (BR1M, 2014). This will give the trustworthiness to citizens that
the ruling party are administers the government not only for the purpose to
developing the nation but as the same time improving the human capital as
well.

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DISSCUSION AND CONCLUSION

Government performance relation to the budgeting system are indeed have a

connections as an indicator to shows the effectiveness and efficiency of the
government in administering the resources available. The dependencies of
resources available are influencing the budgeting system that will used by the
government to encounter the problems that will arise. As for a developing countries
where the resources are limited the will likely to have a listing as preferences to
budgeting system in which priority come first, however for a developed countries
they will use zero-based budgeting system. It is a common for a nation to have an
increase in the expenditure as to the welfare of the society should be taken cares.
As the expenditure stretches, the amount of resources are also need to be add
more such as in taxation.
However there is some argument from the opposition on the treats by the
government by giving a BR1M as an assistance. There is some political agenda in the
methods used by the ruling party to gain the votes from the citizen by giving a
bribes where the BR1M is considered as a bribe given to the citizens by the ruling
party or Barisan Nasional (BN).

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References
1MDB. (n.d.). Retrieved from http://www.1mdb.com.my/about-us/current-business/tun-razakexchange
BR1M. (2014, October 22). BR1M 4.0. Retrieved from
http://bantuanrakyat1malaysia.com/2014/10/22/syarat-tarikh-bayaran-br1m-2015/
Economics, T. (n.d.). Malaysian Government Budget. Retrieved from
http://www.tradingeconomics.com/malaysia/government-budget
Hager, G., Hobson, A., & Wilson, G. (2001). Performance-Based Budgeting: Concepts and Examples.
Retrieved November 5, 2014, from www.lrc.ky.gov/lrcpubs/RR302.pdf
Robinson, M., & Last, D. (2009). A Basic Model of Performance-Based Budgeting System. Retrieved
November 5, 2014, from https://www.imf.org/external/pubs/ft/tnm/2009/tnm0901.pdf
Xavier, J. A. (2001). Budgeting for Performances: Principles and Practice. Kuala Lumpur: INTAN.

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