Implementation of Outcome Based Budgeting (OBB) in the Malaysian Public Sector

Preliminary Briefing for Senior Ministry Officials

results matter!

Scope of Presentation

Budgeting in Malaysia through the years Recent Trends in Budget Structure Issues in Modified Budgeting System Outcome Based Budgeting Implementation Timelines

Briefing to and Consultation with Senior Ministry Officials

Malaysias Budgeting System in Perspective

PPBS MBS (RBM)
PPBS Disaggregated Budget Budget Ceilings Program Agreements Exceptions Reporting 1990 - 2010 Accountability and Flexibility 2011 > People First Performance Now

OBB
PPBS RBB/OBB IDP M&E MIS

Program Performance INCREMENTAL LINE ITEM BUDGETING ProgramActivities Perf. Indicators Evaluation
1957-1968 Detailed Controls & Discipline 1969 - 1990 Programs & Performance

Briefing to and Consultation with Senior Ministry Officials

Scope of Presentation

Budgeting in Malaysia Through the Years Recent Trends in Budget Structure Issues in Modified Budgeting System Outcome Based Budgeting Implementation Timelines

Briefing to and Consultation with Senior Ministry Officials

Scope of Presentation
Budgeting in Malaysia Through the Years Recent Trends in Budget Structure Issues in Modified Budgeting System Outcome Based Budgeting Implementation Timelines

Briefing to and Consultation with Senior Ministry Officials

Modified Budgeting System

Strategic Features Other Features :
Program Based but Output Focused Decentralization of Authority Accountability is Assigned Use of a Performance Agreement Focus on Program Evaluation Performance Reporting by Exception

Budgets are Reviewed based on Recurrent, New and One-Off Policies

Briefing to and Consultation with Senior Ministry Officials

MBS and the Program Results Chain

Setting Natl Priorities & Goals Revenue policy Macroeconomic Planning RMK9 Debt policy Outcome planning Budget Formulation MBS Performance Budgeting

Summative Evaluation Formative

Audits Accounting

Program Delivery

Program Implemenn ABM1-8 Performance Monitoring

Delegation and accountability

Expenditure Management

Briefing to and Consultation with Senior Ministry Officials

MBS and the Program Results Chain

Setting Natl Priorities & Goals Revenue policy Macroeconomic Planning RMK9 Debt policy Outcome planning

Two Tier Process of National Planning, LongLong-term and Annual Weaknesses in Strategic Alignment of National Priorities Development Budget decided by EPU, Operating Budget decided by MoF Insufficient Data to Determine Real Performance Lack of Coordination, focus on Activity

Budget Formulation MBS

Performance Budgeting

Briefing to and Consultation with Senior Ministry Officials

VISION 2020
NATIONAL MISSION 2006-2020

THRUST 1
Strategic Objective Strategic Objective

THRUST 2
Strategic Objective

THRUST 3
Strategic Objective

THURST 4
Strategic Objective

THRUST 5
Strategic Objective

KRA RMKe-10 1

KRA RMKe-10 2

KRA RMKe-10 3

Outcome 1 Strategy KPI

Outcome 2 Strategy KPI

Outcome 3 Strategy KPI

KRA RMKe-10

KRA RMKe-10 Ministry

KRA RMKe-10 Ministry

KRA RMKe-10 Ministry

Outcome 1 Strategy KPI

Outcome 2 Strategy KPI

Outcome n Strategy KPI

KRA RMKe-10 Ministry Level

Thrust Thrust Thrust Thrust Thrust Source : EPU

1: Moving Up the Value Chain 2: Rising the Capacity for Knowledge & Innovation & nuturing first class mentality 3: Addressing Persistent Socio Economic Inequalities 4: Improving Quality of Life 5: Strengthening Intuitional & Implementation Capacity
Briefing to and Consultation with Senior Ministry Officials

MBS and the Program Results Chain

Redundancy and Overlapping Programs Lack of Clarity and alignment in the Role and Contribution of Program Managers to Ministrys Goals and National Priorities Difficulty in Establishing Accountability for Results
Program Implemenn ABM1-8 Performance Monitoring
Briefing to and Consultation with Senior Ministry Officials

Outcome planning Budget Formulation MBS Performance Budgeting

Delegation and accountability

Expenditure Management

Program Activity Structure

Collated Agreement signed with the Budget Director (ABM1)

WORKS MINISTRY
PROGRAM 1 PROJECTS PROGRAM 2 MAINTENANCE ACTIVITY 2 Engineering
SUB ACT.3 CORE BUSINESS Bridge Designs FUNCTION 3 Coastal

Program Agreement prepared at Activity Level and signed with the Controlling Officer SUB ACT.1 ICT/ADMN FUNC

ACTIVITY 1 DESIGNS
SUB ACT.2 CORE BUSINESS Road Designs FUNCTION 2 Wet Lands/Swamp

FUNCTION 1 Hill Terrain

TASK 1 Taskforce Meetings

TASK 2 Design Preparations

TASK 3 Data & Research

Briefing to and Consultation with Senior Ministry Officials

MBS and the Program Results Chain

Lack of Systematic Monitoring System in Place for OE Performance Monitoring limited to Development Expenditure No Program approach to Monitoring Information Focuses on Institutional Performance Lack of information for Decision Making

Audits Accounting

Program Delivery

Program Implemenn ABM1-8 Performance Monitoring

Delegation and accountability

Expenditure Management

Briefing to and Consultation with Senior Ministry Officials

MBS and the Program Results Chain

Setting Natl Priorities & Goals Macroeconomic Planning RMK9

Summative Evaluation Formative Budget Formultion MBS

No Data Management System Evaluation carried out on an AdAdhoc Basis Lack of Capacity to Undertake Evaluation Lack of Clear Alignment Impedes Establishing Causality

Briefing to and Consultation with Senior Ministry Officials

Why Change is Required?

Greater Fiscal Challenges Lack of Vertical Integration-Limited Strategic Alignment from National Priorities Lack of Horizontal Integration, Existence of Silos Overlapping Programs, Increasing Redundancy Cross Cutting Issues Among Agencies Need to Shift Focus From Outputs to Outcomes Focus on Compliance as Opposed to Performance Lack of Systematic Monitoring System and Poor information system Evaluation done on an ad hoc basis

Mesyuarat Pegawai Pengawal

Scope of Presentation
Budgeting in Malaysia Through the Years Recent Trends in Budget Structure Issues in Modified Budgeting System Outcome Based Budgeting Implementation Timelines

Briefing to and Consultation with Senior Ministry Officials

OBB is a Subset of an Integrated Approach to Results Based Management

Results Based Budgeting

Integrated Development Planning

Integrated Performance Framework

Personnel Performance System

MIS and Integrating the Five Components using the IPF DSS
Briefing to and Consultation with Senior Ministry Officials

Results Based M&E

OBB will focus on..

RMK10 submissions and budget based on Programs Integration of Budget (DE/OE) into Program Budget Budget examination based on Program Approach Budget Performance linked with Substantive Program Performance under MoF oversight Interfacing with the Program-Activity Structures under current MBS Strengthening Program Monitoring and Evaluation System and Capacity Building for all Levels Structured Performance Monitoring/Reporting System

Briefing to and Consultation with Senior Ministry Officials

OBB some fundamentals

Further elaboration by consultants

Scope of Presentation
Budgeting in Malaysia Through the Years Recent Trends in Budget Structure Issues in Modified Budgeting System Outcome Based Budgeting Implementation Timelines

Briefing to and Consultation with Senior Ministry Officials

Time perspective for the Implementation of OBB

5 Budget Examination (May) 4 Agency Submission (Mar)

OBB Framework 2 Ready (May)

OBB will be Operational Starting (Jan)

Budget 2012 3 Call Circular (Jan)

Budget 2012 in Parliament (Oct)

2010
1

2011

2012

Budget Online Spec. Ready (May) Award Tender (Aug)

2

Data Migration Run Parll (Jul) Prototype Ready (May)

3

Consultancy Period

Roll Out Period

Briefing to and Consultation with Senior Ministry Officials

Way Forward: Roles and Responsibilities

MoF has engaged Consultants to help develop an Integrated OBB Framework MoF will commence engaging with all Agencies from March 2010 onwards All Ministries to setup OBB Implementation Committee Chaired by Controlling Officers Identification of two (2) Senior Trainers from each Ministry Identification of two (2) Focal Persons from each Activity and Program Roles and Responsibilities of Trainers and Focal Persons cover Capacity Building, Information Verification, Data Management and Performance Reporting. (will be discussed after the KPMG presentation)

Briefing to and Consultation with Senior Ministry Officials

21

Capacity Building and Awareness

Intervention Agencies Involved Tentative timelines
March and April 2010 Intermediate- April/May 2010 Advanced Aug/Sept 2010 Intermediate- April/May 2010 Advanced Aug/Sept 2010 Oct-Dec 2010

Awareness Sessions on MoF, KPMG, EPU and OBB ICU Intermediate Training for Trainers Advanced Training for Trainers Training for Focal Person Training for Focal Person Training of Down line Agencies MoF, INTAN, KPMG MoF, INTAN, KPMG MoF, INTAN, KPMG MoF, INTAN, KPMG MoF, INTAN KPMG, Trainers,

Briefing to and Consultation with Senior Ministry Officials

22

thank you terima kasih

myresults@treasury.gov.my www.myresults.treasury.gov.my

results matter!