TIM: Corruption has cost the country 4% of GDP value annually

FIGHTING corruption is the talk of the town today, considering that the new Pakatan Harapan government had a five-point anti-corruption manifesto, vowing to make Malaysia one of the “cleanest” countries in the world.

But before that, how much has corrupt practices in Malaysia cost the country? And what are the remedial steps that can be taken?

According to Transparency International Malaysia (TIM), corruption had cost the country about 4% of its gross domestic product (GDP) value each year since 2013.

Added together, this amounts to a very high figure of some RM212.3bil since 2013.

For 2017 alone, that figure was 46.9bil.

So how did TIM come up with this?

“This is our estimate. It is likely to be higher in reality. Remember, there are many unsolved high profile corruption cases in Malaysia,” says TIM president Datuk Akhbar Satar.

Last year, Malaysia fell seven places to 62 from 55 among the 118 countries in Transparency International’s Corruption Perception Index (CPI). This is the worst score in the last five years and lowest ranking since the introduction of CPI in 1994.

In TIM’s press release issued in February, it said: “...issues surrounding 1MDB Malaysia and the RM2.6bil donation, Felda scandal, Sabah Water scandal were among the reasons why Malaysia slipped seven places in the CPI ranking.”

Akhbar adds that one key source of the corruption is the use of direct negotiations and inflated pricing of some government contracts in Malaysia.

In the developing world, he points out that it is not uncommon to see a 25% inflation of contract prices due to corruption. But in Malaysia’s case, he says the increase in the cost of the contracts has been mind-boggling between 100% and 200% of the original value.

Recent reports have indicated that the East Coast Rail Link (ECRL) project may have been inflated by almost 100% to RM55bil from the original estimated cost of RM30bil.

However, in defence, the previous government consultants have explained that the reasons given for the escalation in the ECRL price tag were due to the weaker ringgit against the US dollar and the extension of the alignment from the original projection.

Pakatan in revealing its manifesto last year laid out that it would do away with direct negotiation practices for all government contracts and procurement as well as amend the laws to ensure transparency for government deals.

Newly-minted Economic Affairs Minister Datuk Seri Mohamed Azmin Ali has reiterated on this stance.

Akhbar: There are many unsolved high profile corruption cases in Malaysia.
Akhbar: There are many unsolved high profile corruption cases in Malaysia.

Tan Sri Ramon Navaratnam, an economist and former senior civil servant says restricted tenders should no longer have a place in Malaysia.

“If you have open tender, you have free competition. Tenders must be transparent, put it on the websites, advertise it widely,” he adds.

Ramon says one of the key things in fighting corruption is for the country to quickly adopt the New Economic Model (NEM), saying that it wasn’t fully implemented fully although launched in 2010.

NEM’s aim to transform the country into a high-income nation with a paradigm shift from race-based to need-based affirmative action, guided by three principles – high income, sustainability and inclusiveness. The model was intended to replace the previous New Economic Policy (NEP), which Ramon helped to draft in the late 1960s.

Ramon opines that elements of NEP still existed in the previous government’s policies and that this needs to be eradicated by fully implementing the NEM.

“The Council of Eminent Persons (CEP) should fix a target date for the NEM to be implemented fully as this is at the heart of the problem. Otherwise, don’t talk about fighting corruption,” Ramon says.

Another key element to curb corruption is money politics, whereby money is used to buy election votes. Ramon again says this is something for the CEP and the new government to examine as it is a major source of corruption.

“New policies on restricting money used for lobbying politicians and buying votes should be implemented. Candidates must declare their bank accounts and if it is learnt that the candidate is spending more, you can go hard on them. These are the loop holes CEP can cover,” he says.

Ramon adds Malaysia can learn from Hong Kong in its fight against corruption, where the island nation used a three-pronged approach: punishment, education and prevention.

“Our laws are not tight enough. Look at Hong Kong, it was the most corrupt country, but then they shook the whole system by introducing new anti-corruption laws,” he says.

Akhbar notes that another area for improvement both in government and private sector is the area of recruitment.

“The process is weak in the country because employers aren’t able to gauge the ethics standards of employees.

In the corporate world, we estimated that 70%-80% of fraud cases are not reported and this is usually the case because companies do not want to have a negative impact on their brand name.”

Ramon says inefficiency of civil servants is also another form of corruption. These employees are not worthy of their wages, he says.

“A lot of civil servants do not do an honest day’s job. Look at the counters when you go to the government agencies, sometimes there are polite people, but other times there are rude people or no one is manning the counter.

“That’s a form corruption because tax paying citizens are the government’s customers, who then are not getting their money’s worth,” he quips.

The good news is the new Pakatan government is set on fighting corruption in the system.

While that may be an uphill task considering the current state of Malaysia, but it is a good start.

Corporate News , corruption