Horse trading in the quest for reforms?
The institutional reforms that Prime Minister Tun Dr Mahathir Mohamad is talking about would require amending the constitution. This means he needs to secure the support of two-thirds of the members of parliament (MPs).
At the moment, Dr Mahathir’s Pakatan Harapan has about 122 seats and would require the support of another 46 MPs to pull the reforms through. The prime minister is confident of getting the necessary support.
But in the process, would there be some horse trading? Would he need to compromise the position of the federal government?
The biggest bloc of MPs outside Umno is from PAS which controls two states – Kelantan and Terengganu. PAS has 18 MPs and has always sought for more autonomy to implement Islamic laws in the states. Will the federal government yield to the demands?
The other bigger bloc of MPs is from the parties from Sarawak. The biggest is PBB which has 13 MPs, followed by smaller parties. Collectively, the parties from Sarawak that are not a part of the Pakatan Harapan coalition have 19 parliamentary seats.
Sarawak wants a bigger share of the pie from its oil and gas (O&G) revenues. It also wants higher recognition for its own O&G body called Petroleum Sarawak Bhd.
The federal government-controlled Petroliam Nasional Bhd (Petronas) is against the formation of any parallel body that governs the O&G resources of the country. Petronas’ view is that there can only be one authority that is allowed to give approvals for all O&G-related matters in the country.
The responsibility, Petronas feels, should continue to be in its hands, as in accordance to the Petroleum Development Act.
However, Pakatan Harapan is riding on institutional reforms and plans for that to kick off in the next two years.
It is only a matter of time before laws giving Parliament more powers and oversight over the executive, separating the duties of the attorney general and public prosecutor, and making key heads of institutions such as the Malaysian Anti-Corruption Commission only be accountable to Parliament are passed.
The institutional reforms are the cornerstone of Pakatan Harapan’s reforms, but at what price to the federal government?
For years, the argument against raising the minimum wage has been the knock-on effect on the competitiveness of industry and wages. The claim was that higher wages would erode profits and also the ability of businesses to compete.
Guess what? The top-20 most competitive economies in the world are all high-income nations, with the most competitive being the world’s largest economy.
Such rankings show that it is not wages that impact the competitiveness of a company, or in this case a country. The challenge now for economies, though, is different than in the past. Previous industrial revolutions laid the foundation for many economies today and given the complexities of Industrial Revolution 4.0, those issues now will craft what competitiveness will mean for future economies.
The World Economic Forum said as much. It said the index integrates well-established aspects with new and emerging levers that drive productivity and growth and emphasises the role of human capital, innovation, resilience and agility, as not only drivers but also defining features of economic success in the Fourth Industrial Revolution.
Malaysia will craft new policies to deal with the nuances of what the future economic drivers will be. As it stands, Malaysia’s position in innovation capability was the lowest of its score when ranked as the 25th most competitive economy.
Human capital development, concentration on science and technology and the fostering of entrepreneurism need to be cultivated to push Malaysia’s ability in the new world. The steps taken by the government in the review of the 11th Malaysia Plan shows that it knows what to do. Reforming the way things are is the first building block towards improving the ability of innovation, where creativity and knowledge are the essential ingredients in driving the economy of tomorrow.
The cost of corruption
Leonard Glenn Francis, also known as Fat Leonard, is a Malaysian who made headlines globally for paying cash, liquor and prostitutes and other perks to US Navy officers for information to ensure the US Navy ships stopped at ports where his firm operated.
But the law has since caught up with him and he is awaiting trial for alleged corruption charges.
He is not alone. Several global companies, including telecoms equipment providers, have been brought to book for bribing government and political party officials, besides telecoms company officials, to win contracts to supply equipment across the globe.
There are laws in the US and Europe that charge not just individuals but also companies that bribe to procure contracts.
Both Datasonic Group Bhd and MyEG Services Bhd have come under the spotlight after former Deputy Prime Minister Datuk Seri Dr Ahmad Zahid Hamidi was implicated in graft charges recently. He was slapped with 45 counts of corruption charges involving RM114mil.
Datasonic and MyEG’s share prices have taken a beating, though Datasonic has distanced itself from the case saying that it did not pay any money to Ahmad Zahid. MyEG said it is not under investigation by the authorities.
Getting kickbacks for opening doors and getting privileged information to approve contracts is common in some markets, and Malaysia is no exception. There has been several cases of individuals who have been brought to book for receiving bribes.
The question is, if individuals are charged for taking money, which is seen as a bribe, are companies also liable for the corruption?
What action then can be taken against these companies if they are bribed directly or via a third party to get information or contracts?
A lawyer says “any company is treated exactly like a natural person if it pays bribes to a third party in order to secure any commercial contract. The company and the officers of the company from board members to senior management officers can be hauled up and charged in court. No individual can hide behind the veil of corporation, assuming the company paid the bribe money”.
Corruption in business can be anything from misappropriation of funds, bribery and misuse of office by company officials to dishonesty in financial matters. Corruption can hurt the image of a company and jeopardise the business.
Companies that pay to get preferential information or pay individuals to secure contracts should be taken to task by their respective regulators. Corruption can only be reduced or removed if all parties play their role, as otherwise, it will remain a mainstay to win contracts.
Transparency International’s “Corruption Perception Index 2017” released early this year placed Malaysia in the 62nd place in the overall ranking of 180 countries. In 2016, it was 55 out of 176 countries, and 54 out of 168 countries a year earlier. That needs to improve.
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