Written by Nursabrina Mohd Firdaus Aloysius, Senior Executive, Research of the Institute for Democracy and Economic Affairs (IDEAS).

When Malaysians hear of proposals to provide public funding to political parties, their instinctive reaction is disapproval and distrust. Frequent and high-profile corruption cases have deeply entrenched concerns surrounding money politics and widespread opposition to the government funnelling money for political purposes.

In this context, the All-Party Parliamentary Group (APPG) Political Financing Bill, or APPG bill, faces a steep challenge in selling institutional reforms. The bill proposes allocating public funding to parties based on the number of votes obtained by eligible political parties in elections. The bill introduces a key element of sturdy political financing regulation: fair allocation of public funding to reduce political party dependency on private donors.

Public funding can serve several important functions when implemented effectively. Chief among them is reducing excessive reliance on private or opaque sources of money. When donations are regulated through caps and donor bans, public funding becomes a stabilising mechanism that helps maintain a level playing field, particularly for smaller or less established parties.

The money in politics

When politics is exploited for commercial gain, evidence shows that it encourages rent-seeking behaviour and results in governance that favours the few rather than the many. The running of political parties should therefore not resemble corporations with expansive budgets and ingrained financial interests. This risks undermining democratic norms.

Yet, political parties are organisations with bills to pay. There are banners to be displayed during elections and candidates’ deposits to be collected. In Malaysian culture, kuih and teh tarik to sweeten the deal or hiring of ceramah venues are often framed as operational expenses. However, when these become normalised, it blurs the line between campaign costs and undue influence on voters.

The cost of running a political organisation or member of parliament’s office is not known, but election campaign expenses are known to be increasing. Westminster Foundation for Democracy’s recent Cost of Politics in Malaysia report estimated that winning a parliamentary seat as a newcomer in 2018 required approximately RM68,000. In 2022, some campaigns went into millions of ringgit.

Steep costs pose a significant barrier to entry for both individuals and parties. Those with limited resources, particularly parties reliant on volunteers, often struggle to mount effective election campaigns.

Global benchmarks show that equitable public funding can help reduce these resource disparities and support a healthier, more inclusive democratic system. Across many democracies, public funding is used to support political parties and candidates in ways that promote level playing fields.

International Institute for Democracy and Electoral Assistance’s (International IDEA) Political Finance Database shows that over 70% of countries — including neighbours Indonesia and Thailand — provide some form of public funding. Most countries offer support during election and non-election periods, though there are exceptions such as Canada, where funding is available only for elections. In addition to direct financial support, there are countries that provide indirect public funding through the provision of free or subsidised media access for political parties.

As state resources are limited and funds should be used as intended rather than for political advantage, the eligibility and allocation should be carefully calibrated. International comparisons show at least six different models of eligibility. Two criteria dominate global practice. Around 38.1% of countries use vote share in the previous election as the qualifying benchmark, while 34.3% rely on parliamentary representation. Both aim to ensure that public funds flow to parties with demonstrated public support, but each carries trade-offs.

Vote-share thresholds are often set at relatively low levels to broaden access, yet funding is frequently provided as reimbursement, requiring parties and candidates to raise and spend funds without any guarantee of meeting the threshold. Representation-based (that is, parliamentary representation) thresholds similarly tie financial support to electoral popularity but may exclude smaller parties and can further entrench incumbency.

Another way to limit public funding abuses is to specifically earmark allocations to activities. These include allocation for policy research or for supporting women candidates. Targeted funding strengthens the performance of elected representatives. It shifts the focus away from the distorted expectation that elected officials must operate as troubleshooters or, as many lament, “ATMs” for their constituents.

Public funding does not mean giving politicians money with no strings attached. It means introducing clearer rules, higher accountability and greater public visibility over political finances. For example, the APPG bill includes requirements for public disclosure of how every ringgit is spent, with standardised reporting, audits and penalties for misuse.

What it cannot solve

In making the case for appropriately circumscribed public funding, policymakers should be clear-eyed about what it can and cannot do to improve governance. Public funding for political parties is not a cure-all for corruption — there is no proof of that.

Besides, providing funding does not satiate appetites to raise additional funds — that requires reining in increasing election costs.

Conversely, regulating funding through the banning of high-risk donors and setting donation caps alone may merely push parties to find new backchannels. When there is political will, parties will find ways to secure money — regulated or not.

Shifting political fundraising from the private to the public sphere supports more accountable spending and greater equality of democratic opportunity. It reinforces a norm where political parties and politicians must earn their keep.

While the idea may feel unfamiliar in Malaysia, it is time to redraw the lines: politicians are elected officials funded by the public, answerable to the public. Ultimately, the goal is to strengthen democratic accountability, shifting the focus away from fundraising and private donor influence, and back towards politics that serve the rakyat.

This article was featured in The Edge Malaysia, 23 January 2026

The views expressed in this article are solely those of the authors and do not necessarily represent the views or positions of IDEAS Malaysia. All opinions are the author’s own.