Recalibrating MP’s remuneration scheme

Presently there’s no law prohibiting MPs from taking up extra-parliamentary positions.

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Published in Astro Awani, image by Astro Awani.

Being a Member of Parliament (MP) does come with certain perks and privileges. The issue isn’t the perks and privileges as such, of course, but whether these are excessive – beyond and above that which is necessary or reasonable in the first place. 

Or as expected by the rakyat. 

As an elected representative of the rakyat, MPs perform the fundamental and vital role of voicing the concerns and aspirations of their constituents as well as holding the Executive or government of the day to account in Parliament as the august legislative body of the land. Of course, for the Opposition MPs, they’re the ones who would be critical in “checking and balancing” the Executive and scrutinising the legislative process during the proceedings and at the committee stage. 

This entails the poring over of the Bills (that would become the Acts or legislation governing the nation), White Papers (that set out the policy intentions and aims of the government), and the other documentations which can just be as voluminous such as parliamentary standing orders that have to do with the regulation of the management of the affairs and conduct of Parliament under the supervision of the Speaker.

At the same time, the lawmakers also meet their constituents at their offices and walkabouts – to receive feedback, suggestions and complaints. 

In fact, our MPs are also expected to roll up their sleeve and attend to the “practical” aspect of their constituency work such as potholes, clogged drains, traffic congestions, factory pollution, helping to file police reports, monitoring and inspecting whether water pumps for flood management have been upgraded or repaired by the Department for Irrigation and Drainage (DID), etc. 

Some are of the view that MPs should stay aloof from such matters and leave it – in the name of some kind of “division of labour” – to the state assemblyperson and local councillor. 

Ideally, it should depend on the priorities and burden of the individual MP and the overall capacity to service his/her constituents. The MP should also work closely with the state assemblypersons and councillors to address and resolve the issues on the ground. A rigid demarcation wouldn’t be helpful and misconceived. 

After all, an MP would want to also deliver aid and necessities to the constituents and ensure that constituency funds from the government or private sector are allocated, distributed and channelled to the target/needy groups. 

Thus, the workload and burden of an MP is enormous. The future of the nation is in their hands. They have been vested and entrusted with the sacred mandate (amanah) by the rakyat. This serves as the basis and boundary of their heavy duty/responsibility back to the rakyat. 

MPs, therefore, deserve to be paid well and commensurately. 

Under Section 3(1)(b) of the Members of Parliament (Remuneration) Act (1980) as updated in 2015, MPs are entitled to a cost of living (“saraan”) allowance of RM16000 a month. Under the First Schedule, it’s confirmed that the cost-of-living allowance constitutes the salary (“gaji”) i.e., RM16000. In addition, the First Schedule also provides that an MP is entitled to a pension after only 36 months (= 3 years) of service. 

However, presently there’s no law prohibiting MPs from taking up extra-parliamentary positions. 

A prominent example would be where an MP is (politically) appointed by the Prime Minister to sit on the board of directors of a government-linked company (GLC) either as member or Chairman. Another prominent example which should equally be highlighted is the practice of (politically) appointing a sitting MP to head a statutory board or commission. 

Not forgetting too, the culture of appointing MPs as ambassadors – with the US and Indonesia as the two favourite hotspots, it seems. 

Then too we have the practice of appointing former MPs to be special envoys to the respective countries and region. 

These extra-parliamentary appointments – beyond the parliamentary special select committees and the caucuses – smack of cronyism and patronage which is about rewarding supporters and sycophants for their loyalty or securing their support. 

Thus, in addition to the “allowances” as an MP, there are also the salaries and other perks as, e.g., Chairman of a GLC involved in managing and operating the Klang Valley’s multi-modal public transportation.

Such appointments constitute a distraction for the MP from his/her role and function as lawmaker and people’s representative – where preferential treatment and, by extension, conflict of interest would arise, however remote or indirect or in principle. By being a part of that GLC, can the MP then prioritise and place the welfare of the rakyat above corporate interests? 

Appointment to the role of Chairman, among other positions, even if in a non-executive capacity, would also interfere and intervene in the work of being a MP since it involves non-constituency work. And when it comes to law-making, can the MP be objective enough to ensure that – again in prioritising the welfare of the rakyat – initiate or support a Bill that seeks to reform and improve the governance of that GLC or GLCs in general whether presently or in the future?

Furthermore, would the government of the day which is accustomed to such unhealthy practice have the political will to reform the governance of the GLCs – also learning from the fiasco and scandal of 1MDB?

Now, can an MP who has been appointed to the extra-parliamentary role be trusted to speak his/her mind or according to his/her conscience? 

In a country where cronyism in public life has become a norm, there’s a critical need to amend and recalibrate the Member of Parliament (Remuneration) Act (1980) to revamp and prevent such a culture of allowing MPs to take up extra-parliamentary positions from taking root. We need to ensure that politicians aren’t allowed to take advantage of the loopholes in the system and milking taxpayers’ money. 

There’s a need to strictly delineate the MP’s “allowance” as strictly regulated and limited to the provisions of the Act alone. That is, the MP isn’t allowed to hold a “part-time job” or even two jobs at once. 

A clear-cut provision should be incorporated whereby sitting MPs are barred or prohibited from being appointed to any statutory board, commission, public and private higher educational institutions (except as a guest lecturer or speaker), government-linked company (GLC), other private sector company, etc.  

Nevertheless, an MP should be allowed to join and hold positions in the Wataniah (Territorial Army), Rela (paramilitary volunteer corps), police volunteer reserve, etc. and receive the corresponding allowances at the same time. 

When it comes to pre-existing financial interests, the Act should concern only with partnership (general and limited liability) and companies (private and public limited). Perhaps, it can afford to be silent on sole proprietorships and cooperatives. Beyond these latter two business categories (profit and not-for-profit, respectively), any financial interests would have to be limited to shares ownership (minority shareholder) encompassing unit trusts, exchanged traded funds (ETFs) as well as bond ownership. As it is, these financial interests must be declared as part of the asset declaration. In addition, the Act must be amended to include a parliamentary registry so that these financial interests can also be declared and recorded and made publicly or openly accessible.

However, derivatives and futures should be excluded as these would be purely speculative in nature and would require the MP to actively take part in the transactions by shorting or long positioning a commodity. In turn, this would be a conflict of interest and breach of the MP’s role to uphold the public good, irrespective. 

Hence, financial interests shouldn’t be from any active (executive and non-executive) role or part beyond that as an MP. 

If need be, the Act would have to be amended to also enable the monthly allowance adjustments and allowable claims to be reviewed once every five years or less than that if a motion is passed in Parliament. Likewise, in addition to the current formula (for calculating the pension under the First Schedule of the Act), MPs’ pensions should also be reviewed every five years – formerly under the now repealed Members of the Administration and Members of Parliament (Pensions and Gratuities) Act (1971).

Lastly, there’s also a need to look into the pension entitlement of an MP. Should pension be given after only 36 months (= 3 years) of service? Perhaps the time of service qualifying for the pension should be reviewed with the view of extending it to five years corresponding to the length of a parliamentary life-cycle, or even longer. 

At the end of the day, the role and mandate of an MP is sacred/sacrosanct and should be kept inviolate from cronyism and political manoeuvrings. 

Equally, as a correlate, taxpayers’ money should also be treated with utmost respect and “reverence” (especially if one is supposed to be religious or a professor/confessor).

The State must always remember that the power it holds is in trust on behalf of the rakyat. 

And that the motivation is always and only public service, above all. 

This is the fundamental principle and this is why there’s a need to again revisit and amend the Member of Parliament (Remuneration) Act (1980).

Jason Loh Seong Wei is Head of Social, Law & Human Rights at EMIR Research, an independent think tank focussed on strategic policy recommendations based on rigorous research.

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