CASE STUDY ANALYSIS (Written Assignment) (20%)

Students are required to form groups of 5-6 students. Student need to choose one case from a list of
cases (Refer Appendix 1). Each group is required to produce a written report based on the
questions related to the case. The case that is given will be a case that is related to the context of
public finance issues. Rubrics on the requirements for the case study is presented in Appendix III.
Marks will be given based on the adherence to the guidelines and requirements. All students in the
group will receive the same mark. Minimum page for the case study is 10 pages.

CASE STUDY 5
31,000 possible tax evaders identified, says LHDN
FMT Reporters - 14 Jun 2022, 2:11pm

PETALING JAYA: The Inland Revenue Board (LHDN) has identified 31,598 entities,
comprising individuals, businesses, companies and others, who have yet to declare their
income.
LHDN said these entities, which include nearly 24,000 individuals, were identified based on
asset ownership and their ability to secure loans and securities valued at RM500,000 and
above.
“The tax losses suffered by the government are estimated at RM665 million. This is a
significant amount and can adversely impact the country’s economic stability if not
addressed immediately,” it said in a statement.
The agency advised the 31,598 entities, particularly the 23,751 individuals, to voluntarily
appear at the nearest LHDN branches to register their income tax files and declare their
income.
“They will be given a grace period of one month from June 15 to July 15,” it said.
Upon the expiration of the grace period, the agency said it would carry out civil and criminal
investigations as well as enforce tax audits against those who had failed to file the tax
declaration forms.
“Criminal probes would result in charges being filed in court under the Income Tax Act 1967
for tax evasion,” it said.
QUESTION 1
What is the magnitude of tax evasion in Malaysia, and how does it impact the government's
revenue and ability to provide public services?
QUESTION 2
What role can civil society organizations and the media play in uncovering and reporting on
tax evasion practices, and how can they work with government and other stakeholders to
promote greater tax compliance?
1.0 UNDERSTANDING ON TAX EVASION
2.0 IMPACTS OF TAX EVASION TO GOVERNMENT’S REVENUE AND PS
2.1 LOSS OF TAX REVENUE
2.2 INCREASE GOV SPENDING ON TAX REINFORCEMEMT
2.3 CORRUPTION WITHIN TAX AUTHORITIES
2.4 TRUST IN GOVERNMENT DECREASED
3.0 WAYS TO UNCOVERING TAX INVASION
3.1 EQUITABLE DISTRIBUTION OF WEALTH IN ANNUAL BUDGET
3.2 TRANSPARENCY IN WEALTH DISTRIBUTION
3.3 ENHANCING THE EFFICIENCY OF TAX COLLECTION
3.4 FORMULATE MTRS
CONCLUSION
REFERENCES

NEWSPAPER PRESENTATION (Video Presentation (25%)

Students are required to form groups of 5-6 students. Student needs to choose one newspaper
cutting from a list of newspaper cuttings (Refer Appendix II). Each group is required to produce a
presentation video. Student needs to read and understand the issue of the news and relate it with
relevant theory. Rubrics on the requirements for the presentation is on Appendix IV. Marks will be
given based on the adherence to the guidelines and requirements. All students in the group will
receive the same mark. The duration of the video should not be more than 15 minutes. Presentation
may start by Week 6. Students need to consult with the class tutor on the medium of submission.

TOPIC
The government is taking measures to save public expenditure by postponing or not continuing any
project that has yet to commence, to enable money to be channelled for the welfare of the people,
apart from efforts toward the country's economic recovery.
Minister in the Prime Minister's Department (Economy), Datuk Seri Mustapa Mohamed (pic), said that
the move was in response to a directive issued via the Malaysia Treasury Circular - Guidelines on
Public Expenditure Savings.
"I have held meetings with the Public Works Department (PWD) and the Implementation Coordination
Unit (ICU) on the financial position, to see the projects that have yet to commence.
"Hence, if it (project) is just about to start, there is no need to continue, while if something has already
started, we will discuss which developments we need, either to defer or cancel,” he said.
He said this to reporters after the closing ceremony of the Labour Market Seminar, and the
Presentation of the findings of the state Outreach Job Seeker Profiling 2022, in conjunction with the
Keluarga Malaysia Career Carnival at Universiti Sains Malaysia Health Campus, here on Sunday
(July 17).
Also present were the Social Security Organisation (Socso) Employment Information Analysis
Services (EIAS) Division head, Ummar Jai Kumar Abdullah, and the Kelantan Socso director, Nora
Yaacob.
On Friday (July 15), the media reported that all ministries, departments, agencies, federal statutory
bodies and companies limited by guarantee (CLBG) were instructed, via the Malaysia Treasury
Circular, to implement internal austerity measures by optimising expenditure.
ISSUES
An Association Of Contractors has voiced uneasiness over a minister’s statement that the
government intends to defer or cancel new projects to allow it to channel funds to welfare
programmes.
“It sends the wrong message” to investors and the stock market, said Malaysian Bumiputera
Contractors Association secretary-general Zaharani Yusof Omar.
Zaharani said Mustapa seemed to have forgotten that the economy was recovering from the Covid-19
pandemic and his announcement would deter foreign direct investment and have a negative effect on
the stock market.
“The big projects should go on in a sustainable manner as postponing or cancelling them will have a
big multiplier effect,” he told FMT.
He also said Mustapa appeared to have contradicted finance minister Tengku Zafrul Aziz, who had
said the International Monetary Fund was optimistic about Malaysia’s growth prospects and was
confident the country’s gross domestic product would increase by 5.75% this year.

Last month, Tengku Zafrul said government subsidies on consumer necessities were projected to hit
an all-time high of RM77.3 billion this year.
Of the amount, RM51 billion is for essential supplies such as petrol, diesel, cooking oil, flour and
electricity.
Another economist, Barjoyai Bardai of Universiti Tun Abdul Razak, said the policy makers’ intentions
were well-placed, but added that they should not be thinking about improving the people’s welfare at
the cost of economic development.
He said a sharpened focus on targeted subsidies would help those most in need.
He also said policy makers should also be working on how to increase household income by boosting
productivity and implementing reskilling and retraining programmes.
Both Nambiar and Barjoyai pointed out the risks of penalties and other costs the government might
have to incur as a result of deferring or cancelling projects.
A key example is the Kuala Lumpur-Singapore High-Speed Rail project, which was axed on Jan 1,
2021. As a result, Malaysia had to pay Singapore RM320 million in compensation, an obligation under
the bilateral agreement.
https://www.freemalaysiatoday.com/category/nation/2022/07/21/govts-move-to-defer-cancel-projects-
sends-wrong-message-says-group/

besides, the construction of Merdeka 118 also has been continued and finish during the pandemic.
https://thetowerinfo.com/buildings-list/merdeka-pnb-118/
(content lebih lanjut rujuk pdf merdeka 118)
At first, it was a good move when the construction was temporarily on hold from mid March 2020 to
mid May 2020 due to the COVID-19 pandemic.
However, the construction get continue again In July 2020 which has estimated to cost RM5 billion of
total construction, approximately equals to US $1.5 billion.
Therefore, we view this continuation of project as negative. We also view the government did not
follow their own intention to cut cost for prioritizing the welfare of the citizens instead. We believe that
Merdeka 118 is just building for new income for PNB- a Government-owned investment company.

Now this thread was obviously intended as a “flex” to make Malaysians prouder of our achievements
as a nation but the plan backfired…tremendously.
Netizens poured in with their comments bashing the building as they felt like it was unnecessary and
would be a mere “white elephant” and that the money could’ve been used for something more
substantial.
“The higher the buildings, the higher the poverty gap. The gap in education and employment
opportunities is even higher. Please help.”
Even former CEO of PNB, Jalil Rasheed commented on the issue saying that the building was
approved and halfway through completion before he even took charge.
“This is why a decision was made to not get involved in real estate development hereafter. KL has
enough skyscrapers. We need more public parks.”
https://worldofbuzz.com/tall-buildings-but-the-rakyat-are-still-poor-netizens-bash-worlds-second-
tallest-tower-being-built-in-msia/

the netizens also questioned the security of the building because of the two Russian daredevils climbs
up the building. https://www.thestar.com.my/news/nation/2022/12/28/daredevil-duo-scale-merdeka-
118-question-of-security-arises

Najib said cancelling projects had been Pakatan Harapan’s method and it was proven to adversely
impact and hinder economic growth.
"The way to help the people in a time when world inflation is high is not only by giving subsidies to
control the prices but also by raising the people's salaries, building the people's wealth through the
stock market and creating opportunities for businesses.
Therefore, he said projects that led to greater economic returns or did not directly utilise the
government’s funds should continue.
https://www.thestar.com.my/news/nation/2022/07/18/cancelling-projects-to-concentrate-on-subsidies-
not-feasible-in-long-run-says-najib

THEORY
A cost-benefit analysis is a systematic process that businesses use to analyse which decisions to
make and which to forgo. The cost-benefit analyst sums the potential rewards expected from a
situation or action and then subtracts the total costs associated with taking that action. Some
consultants or analysts also build models to assign a dollar value on intangible items, such as the
benefits and costs associated with living in a certain town.
The main goal of cost-benefit analysis is to determine whether it is worth undertaking a project or task.
This decision is made by gathering information on the costs and benefits of that project. Management
leverages the findings of a cost-benefit analysis to support whether there are more benefits to a
project or if it is more detrimental to a company.
A cost-benefit analysis is the process used to measure the benefits of a decision or acting minus the
costs associated with taking that action.
A cost-benefit analysis involves measurable financial metrics such as revenue earned or costs saved
as a result of the decision to pursue a project.
A cost-benefit analysis can also include intangible benefits and costs or effects from a decision such
as employees morale and customer satisfaction.
More complex cost-benefit analysis may incorporate sensitivity analysis, discounting of cashflows,
and what-if scenario analysis for multiple options.
All else being equal, an analysis that results in more benefits than costs will generally be a favorable
project for the company to undertake.
Cost-Benefit Analysis
Pros
• Requires data-driven analysis
• Limits analysis to only the purpose determined in the initial step of the process
• Results in deeper, potentially more reliable findings
• Delivers insights to financial and non-financial outcomes
Cons
• May be unnecessary for smaller projects
• Requires capital and resources to gather data and make analysis
• Relies heavily on forecasted figures; if any single critical forecast is off, estimated findings will
likely be wrong.
Before building a new plant or taking on a new project, prudent managers conduct a cost-benefit
analysis to evaluate all the potential costs and revenues that a company might generate from the
project. The outcome of the analysis will determine whether the project is financially feasible or if the
company should pursue another project.
In many models, a cost-benefit analysis will also factor the opportunity cost into the decision-making
process. Opportunity costs are alternative benefits that could have been realized when choosing one
alternative over another. In other words, the opportunity cost is the forgone or missed opportunity as a
result of a choice or decision.
Factoring in opportunity costs allows project managers to weigh the benefits from alternative courses
of action and not merely the current path or choice being considered in the cost-benefit analysis. By
considering all options and the potential missed opportunities, the cost-benefit analysis is more
thorough and allows for better decision-making.
Finally, the results of the aggregate costs and benefits should be compared quantitatively to
determine if the benefits outweigh the costs. If so, then the rational decision is to go forward with the
project. If not, the business should review the project to see if it can make adjustments to either
increase benefits or decrease costs to make the project viable. Otherwise, the company should likely
avoid the project.
https://www.investopedia.com/terms/c/cost-benefitanalysis.asp

RECOMMENDATION
Najib said cancelling projects had been Pakatan Harapan’s method and it was proven to adversely
impact and hinder economic growth.
"The way to help the people in a time when world inflation is high is not only by giving subsidies to
control the prices but also by raising the people's salaries, building the people's wealth through the
stock market and creating opportunities for businesses.
Therefore, he said projects that led to greater economic returns or did not directly utilise the
government’s funds should continue.
According to theory of CBA:
- Must prioritize the establishment of project that emphasizes the social welfare such as the
construction of two new hospitals in Pasir Gudang and Kempas.
- Health minister Khairy Jamaluddin said the Pasir Gudang hospital, which was 40% complete
in August 2022, is expected to be ready by November 2023.
- Should not build Merdeka 118 instead

- Johor seeking allocation for new RM500mil hospital in Kempas including Hospital Pasir
Gudang which is on track for completion in 2024.
MERDERKA 118 KEMPAS HOSPITAL AND PASIR GUDANG
HOSPITAL
- Cost: 5 billion - Cost: 500 million
- Purpose: for PNB’s extra income - Purpose: welfare and health
- From 2014-2022 - From 2022-2024

- How to use up all the capacity for merdeka 118 to generate more income for government
1) For tourist attractions- museum
2) Shopping complex
3) Eating outlets
4) Education- kindergarten, tuition centre
5) Clinics
6) Marts
7) Gyms
8) Entertainment- cinema…
9) Hall rental
10) Art gallery etc
- Increase welfare:
1) Build more infrastructure. There is still a lot of welfare projects progress we don’t see in
news. Hopefully there will more be updates abt them
2) Continue important projects. E.g: Kuala Lumpur-Singapore High-Speed Rail project

GROUP PROJECT- VIDEO DOCUMENTARY (25%)

Students are required to form groups of 5-6 students. Students are required to choose any
Malaysian public finance issues under the topics of public expenditure, public revenue, public
accounting and public procurement. Students need to consult the topic of this project
assignment with their own tutor. Each group is required to produce a documentary video.
Students need to use their own creativity in exploring the issue. The duration of the video is 10-15
minutes. Students might include expert opinions, newspaper cutting, video excerpt and etc. Marks will
be given based on the adherence to the guidelines and requirements. All students in the group will
receive the same mark. Presentation will start at Week 9. Rubric for the video documentary is
presented in Appendix V.

1. Definition of tax evasion

- refer simen 1
2. Issues of tax evasion
- Refer docx tax evasion issue
3. Ways gov to curb the problems
- Refer simen 1
4. Recommendations from the group
- The gov and pub revenue authorities must be strict in tax collection enforcement
 Do auditing
 Declare assets and fortune
 List down name that have not paid the tax
 Inform the public of the consequences of tax evasion
 Reduce the payment of the tax
 Award the taxpayers
- Attitude of the taxpayers
 Aware of the consequences
 Learn the purpose of taxation in order to volunteer in paying taxes
 Know the benefits of taxation towards gov revenue