Columnists :: The Nutmeg Verses - By Himanshu Bhatt
Penang gets its numbers right

IT is said that if there is one official report that offers a relatively fearless and no-holds-barred examination of any government in Malaysia, it is that of the auditor-general.
So it must have come as a somewhat notable moment when the auditor-general, Tan Sri Ambrin Buang, personally praised Penang in January, for being the first state in the country to hand in its annual accounts for auditing not just once, but over the last three consecutive years. Mind you, the commendation reflected well not just on the current Pakatan Rakyat state government, but also on the previous Gerakan-led one which was responsible for the accounts prepared in early 2008.
And now, the state has just received another feather on its cap. In its latest report on Penang released this month, the auditor-general lauded the state government for producing sound and healthy financial standing for the year 2009. Calling the state’s financial condition "baik" (good), the report noted that the state authorities had exercised prudent expenditure, which was crowned by a financial statement that was professionally furnished with comprehensive documentation.
"With a good financial standing, the state government has been able to provide its people with services and contributions that are more effective," the auditor-general said in the latest annual report for the state.
The tone of the report must have come as music to the ears of Chief Minister Lim Guan Eng, a qualified professional accountant and graduate in Economics from Monash University. Lavishing praises on the state’s finance officer,
Datuk Farizan Darus, Lim attributed Penang’s strengthened financial condition to new budgeting procedures the state has adopted. These include the introduction of line-item accounting, outcome-based budgeting, open tender system and risk management.
What does it all mean in hard numbers? According to the state’s balance sheet, the state’s total consolidated funds at the end of 2009 came up to about RM1.1 billion, a 7.4% increase from the RM1.025 billion marked in 2008. What is significant about the accounts is that they reflect a record high in accumulated funds.
The latest figures do well to complement the financial resuscitation of the state, which has been demonstrated by the performances of the two municipal councils over the last couple of years. For example, following a series of deficits totalling RM230 million from 2000 to 2007, the Seberang Perai Municipal Council (MPSP) managed to chalk up a significant surplus of some RM14.57 million in 2009. The final accounting statement showed the MPSP’s reserves soaring by more than 50%, from RM29.07 million in 2008 to RM43.67 million in 2009.
Certainly, the surplus compared well to the eight consecutive years of losses that the MPSP had experienced under the previous government. Compare the latest RM14.57 million surplus to the incurred losses worth RM5.06 million in 2000, which then worsened steadily to RM39.04 million in 2003, and peaked in 2005 with an annual deficit of RM57.08 million.
The state government claimed that the MPSP’s recovery was due to resourcefulness in collecting revenue and saving on costs to help the council turn around its financial plight. "This has been a painful process, but now the council’s financial condition has been treated and it is well under recovery," Lim said.
It has been a healing experience. In June 2009, the state government ordered MPSP to appoint an independent audit committee to look into losses that it incurred from 2000 to 2007. The team then reported its findings and recommendations to Farizan, who is the MPSP’s previous president, for follow-up action.
Like the MPSP, the Penang Island Municipal Council (MPPP) also made a surplus in 2009 – RM49 million – which was a record for the body. It was an achievement Lim attributed to prudent expenditure and tightening of the council’s budget.
The figure marked a significant improvement from 2008 when the MPPP recorded RM20 million in surplus. It also compared well to the overall surplus and deficits from 2000 to 2009 that cumulatively came up to RM14.48 million, with the highest deficit for a single year recorded in 2004 at RM33 million.
The state’s difficult task now lies in collecting arrears, totalling some RM88.63 million, mainly from assessment rates, low-cost housing rentals and other revenues.
It is also not always that the auditor-general praises a government for the way it handles taxpayers’ money. And so Penangites may be forgiven for hoping that the auditor-general’s unusual commendations and good marks may
just be the sign they have all been waiting for in anticipation for the secure economic and administrative future they crave.

is theSun’s Penang bureau chief. Comments:

Thursday 28 October 2010