GFI figure 'overstated', Bank Negara says again

A Washington-based financial watchdog's report that Malaysia is the fourth largest illicit capital exporter in 2011 is overstated, Bank Negara Malaysia Governor Zeti Aziz says. 

National news service Bernama reported her as saying that stricter surveillance by the central bank has brought about improvements on this front.

This included clamping down on the illicit transferring of funds through money changers, by way of the Money Services Businesses Act.

"We have re-licensed money changers. So there is now stricter surveillance and a legal framework to deal with this," Zeti (right) told reporters on the sidelines of the BERSAMA Art Exhibition launch in Kuala Lumpur.

In March, Bank Negara said the Global Financial Integrity (GFI) in its report failed to take into account Malaysia's trade that is exported via Singapore and Hong Kong (re-export hubs) and that the estimate of trade mispricing between Malaysia and its top 10 trading partners were reduced significantly by about 70 percent.

Zeti was responding to the latest report report of the GFI, which ranks Malaysia as the fourth largest exporter of capital outflows in 2011, at RM174 million.

In March, the central bank also disputed the 2010 GFI figures as "overstated" as it did not take into account re-exports.

Discrepancies in trade statistics

"After taking into account Malaysia's trade that is exported via Singapore and Hong Kong (re-export hubs), the estimate of trade mispricing between Malaysia and its top 10 trading partners were reduced significantly, by about 70 percent," Bank Negara said in a statement. 

"Since the estimates in the report of trade mispricing do not take into consideration such discrepancies in trade statistics, the estimates of illicit flows are overstated."

In 2010, Malaysia came up second when close to RM200 billion of dirty money was siphoned out of Malaysia, giving the country the dubious honour of being the second top Asian country in the list, just under economic powerhouse China.

GFI has yet to obtain data for 2012 and 2013, but these will be included in future reports.

For 2011, Malaysia is behind giants Russia (US$191.14 billion), China (US$151.35 billion) and India (US$84.93 billion). Still, the level of illicit cash flowing out of Malaysia is second highest in the past decade.