Funding politics while protecting democracy

POLITICAL parties need money to organise, communicate with voters, campaign, and operate. The problem is not political donations themselves. The danger begins when political money is hidden, excessive, or used to buy influence.

As Malaysia considers legislation to regulate political financing, the key question is not simply whether donations should be allowed, but what system can provide legitimate funding while protecting the public interest.

The government is working with think tank Ideas (Institute for Democracy and Economic Affairs) and the All-Party Parliamentary Group Malaysia (a cross-party platform for MPs, academics, and NGOs to work together) on a proposed public funding model. However, international experience shows that public funding alone cannot ensure political integrity, as reflected in the low Corruption Perceptions Index scores of Uzbekistan and Tunisia.

Malaysia does not need to reinvent the wheel. Countries such as Canada, Denmark, Germany, and Sweden offer different approaches combining public funding, private donations, disclosure, spending controls, and oversight.

Canada provides a useful example of a mixed system. Contributions are regulated, foreign- and publicly-owned enterprises are prohibited from contributing, campaign spending is subject to limits, and financial information is publicly disclosed. Elections Canada reviews and audits financial returns, while enforcement is handled under the Canada Elections Act. The Organisation for Economic Co-operation and Development’s (OECD) 2026 assessment found Canada met 90% of its political- finance regulatory criteria and 86% in practice.

Germany also combines public funding with private contributions. State funding is linked partly to electoral support and parties’ own legitimate income. Large donations must be disclosed and published, providing greater public scrutiny.

Denmark and Sweden demonstrate that public funding does not necessarily mean banning private donations. However, both also show that transparency rules must be continuously strengthened. The OECD has identified gaps involving anonymous, foreign, and other forms of contributions in both countries.

Malaysia has already done considerable work on this issue. The National Consultative Committee on Political Finan-cing, chaired by then minister Paul Low, produced 32 recommendations in 2016, yet almost a decade later, nothing has come of them.

The lesson is clear: Malaysia should consider a hybrid model built on five principles.

First, reasonable public funding could be provided to parties meeting transparent requirements, based on objective criteria such as votes or parliamentary representation.

Second, regulated private donations should remain possible, but prohibited sources and reasonable limits must be clearly defined.

Third, full transparency is essential. For significant donations, the donor, amount, and recipient should be disclosed, with timely public reporting.

Fourth, independent oversight is critical. The regulator should have powers to audit, investigate, and impose meaningful penalties.

Fifth, continuous reporting should apply throughout the political cycle, not just during elections.

The fundamental issue is trust. Citizens should be able to ask four simple questions: Who gave the money? How much? Where did it go? And was any favour expected in return?

Political parties need money to function. But democracy needs rules to ensure that money serves politics and not that politics serves money.

And Malaysia needs the strong and sincere political will to act, not just the will to reform.

DATUK SERI DR AKHBAR SATAR

President

Malaysian Integrity and Governance Society