Politicians should not be appointed to run government-linked
companies (GLCs) to keep graft in check, said Malaysian Anti-Corruption
Commission Advisory Board Chairman Tunku Abdul Aziz Tunku Ibrahim.He
said politicians holding GLC positions might face conflicts of interest,
leading to abuse of power and responsibility.
ABOUT a month before Malaysia’s parliamentary election in May, then-opposition leader Tun Dr Mahathir Mohamad raised concerns over the role that government-linked companies (GLCs) were playing in the economy, being “huge and rich” enough to be considered “monsters”.
Data support his description – GLCs account for about half of the benchmark Kuala Lumpur Composite Index, and they constitute seven out of the top-10 listed firms in 2018. They are present in almost every sector, sometimes in a towering way. Globally, Malaysia ranks fifth-highest in terms of GLC influence on the economy.
Calls to do something about GLCs have increased since the election following the release of more damning information, although most of it relates to the GLCs’ investment arm: government-linked investment companies (GLICs).
Some experts have proposed the formation of an independent body with operational oversight for GLICs, after institutional autonomy is established and internal managerial reforms are introduced. Unlike most GLCs, GLICs are not publicly listed and face little scrutiny. The same applies to the various funds at the constituent state level, which need to be looked at too.
For GLCs, the answer is less straightforward. PM Tun Mahathir claims that GLCs have lost track of their original function. Before the Malaysian government decides on what to do, it needs to examine the role GLCs should play – as opposed to the role they currently play – and to examine their impact on the economy.
In Malaysia, GLCs were uniquely tasked to assist in the government’s affirmative action program to improve the absolute and relative position of bumiputras. The intention was to help create a new class of bumiputra entrepreneurs – first through the GLCs themselves, and then through a process of divestment.
Given the amounts of money involved and the cost of the distortions introduced, the benefits to bumiputra were unjustifiably small and unequally distributed. The approach of using GLCs as instruments of affirmative action failed because it led to a rise in state dependence, widespread complacency and even corruption, as Tun Mahathir himself recognised in his memoirs, A Doctor in the House, and again more recently. There is also empirical evidence that GLCs have been crowding out private investment, a concern raised in the New Economic Model as early as 2011.
Additionally, the new government has correctly highlighted the need to include certain off-balance-sheet items and contingent liabilities, such as government guarantees and public-private partnership lease payments, in any complete assessment of debt outstanding. The use of offshoot companies and special purpose vehicles (SPVs) in the deliberate reconfiguration of certain obligations mean that traditional debt calculations underestimate Malaysia’s actual debt.
All these factors combine to place new impetus on reconsidering the extent of government involvement in business. Divestment will not solve Malaysia’s debt problem, but it can help if there are good reasons to pursue it. So how should the government proceed?
It is important to recognise at the outset, that there is a legitimate role for government in business – providing public goods, addressing market failures or promoting social advancement. And like in most other countries, there are good and bad GLCs in Malaysia. If a GLC is not crowding out private enterprise, operates efficiently and performs a social function effectively, then there is no reason to consider divestment. But a GLC that crowds out private investment in a sector with no public or social function, or one that is inefficiently run, should be a candidate for divestment. In this regard, one has to carefully study why GLCs should be present in retail, construction or property development, for instance.
In assessing performance, one needs to separate results that arise from true efficiency, versus preferential treatment that generates artificial rent for the GLC. The latter is a drain on public resources and a tax on consumers. Divestment in this case, will likely provide more than a one-off financial injection to government coffers – it will provide ongoing benefits through fiscal savings or better allocation of public resources.
The divestment process should be carefully managed to ensure that public assets are disposed at fair market value, and does not concentrate market power or wealth in the hands of a few. This has allegedly happened with privatisation efforts in the past.
The new government has committed itself to addressing corruption and improving the management of public resources. As part of this process, one must re-examine just how much government is involved in business. This is one of the many tasks that the Council of Eminent Persons is undertaking in the first 100 days of the new government.
To be done correctly, would require a careful study of GLCs and their impacts. This could then rejuvenate the private sector while enabling good GLCs to thrive, and fortify Malaysia’s fiscal position in the process. This is what Malaysians should expect – and indeed demand – of the “New Malaysia”.
Jayant Menon is Lead Economist in the Economic Research and Regional Cooperation Department at the Asian Development Bank. This is an abridged version of an item that first appeared on the East Asia Forum.
Related articles
On the rise: A man walks past the Employees
Provident Fund headquarters in Kuala Lumpur. Remuneration of GLC chiefs,
senior management and directors have been on the uptrend following a
transformation initiative to make them more competitive commercially.
Overpaid CEOs and social duties of GLCs set for review
The new government has clearly said that there is a need to review the role of GLCs and the remuneration paid out to their top executives
A GLANCE at one of the annual reports of the country’s government-linked companies (GLCs) reveals that its chief human resource officer earned close to a million ringgit or about RM80,000 per month, last year.
Other senior personnel were also compensated with generous remuneration, with its chief executive taking home over one and the half million ringgit in financial year 2017.
More importantly, this was at a company that had courted much controversy in recent times over allegations of mismanagement and under-performance.
Such a scenario, however, is not uncommon at GLCs, where remuneration of key executives tend to run in the millions but performances sometimes leave much to be desired.
By definition, GLCs are companies where the government has a direct majority stake via their entities such as Khazanah Nasional, Employees Provident Fund, Permodalan Nasional Bhd (PNB), the Armed Forces Fund (Lembaga Tabung Angkatan Tentera) and the Pilgrims Fund (Lembaga Tabung Haji).
In recent years, remuneration of GLC chiefs, senior management and its directors have been on the uptrend following a transformation initiative to make them more competitive commercially.
The thinking behind this is that in order to attract talent – subjective as the definition of that may be – top dollar should be paid.
Some, however, argue that GLCs should in fact prioritise national service a little more.
Universiti Malaya’s Faculty of Economics and Administration professor of political economy Edmund Terence Gomez says GLCs have social obligations.
“What this essentially means is that GLCs cannot operate in a purely commercial manner as they also have to look at the social dimension,” he says. “The GLC professionals have many times articulated that they are doing national service. Going on that alone, one can argue that they shouldn’t be paid private sector salaries,” Terence adds.
And so it is now, there is a disquiet building up among GLCs following the change in government.
The new government has clearly said that there is a need to review the role of GLCs and the remuneration paid out to their top executives and senior management.
In this regard, the Pakatan Harapan government is understood to be mulling over making drastic changes in the appointment and remuneration of key directors at GLCs which include government agencies.
It was reported recently that the Council of Eminent Persons, headed by Tun Daim Zainuddin, who was Finance Minister in the 1980s, has requested details of the salaries of some of the top executives at GLCs as part of the review.
Already, there have been a couple of GLC chief executives who have left and more of this is expected to materialise over the coming weeks.
“It appears to be a purge of Tan Sri Nor Mohamed Yakcop’s boys,” quips an industry observer, referring to the veteran politician who was instrumental in the revamp and transformation of Khazanah which started in 2005 and subsequently, driving the GLC transformation initiative.
UM’s Terence says if the new government is to appoint new individuals, it must ensure that the process is transparent.
“If you are removing these people, who are you replacing them with? More importantly how are you selecting these people?
He adds there needs to be a transparent mechanism in the appointment of this new breed of professionals that will be brought in and what must also be looked into is the kind of check and balances being put in place to ensure governance.
“There should be a debate on these things,” he says.
Economist Yeah Kim Leng believes that a review is timely and appropriate as part of a deeper institutional and structural reform.
“The broad aims are firstly, to reduce excessive payoffs which don’t commensurate with performance and secondly, to address the widening wage and benefits gap between the top and bottom rungs of the organisation,” he says.
Such rationalisation will result in a more equitable salary structure as well as raise the generally depressed wages of middle management and support staff which form the largest number of most organisations, Yeah adds.
Unfair advantage
The role of a head honcho, be it at a GLC or non-GLC, is seldom a walk in the park.
CEOs make critical operational decisions that affect everything from future business directions to the health of a company’s balance sheet and employee morale.
The job generally entails long hours and tremendous pressure to meet expectations of shareholders and stakeholders.
But again, while local GLCs have been key drivers of the economy, one key feature is that they are ultimately owned by the government.
This, some argue, give GLCs unfair advantages such as access to cheap funding and political patronage over their private counterparts.
So, is running a GLC more of a stewardship role as opposed to an entrepreneurship role?
Therein lies the issue that in turn will have a bearing on the remuneration levels of GLC heads.
Minority Shareholders Watch Group (MSWG) chief executive office Devanesan Evanson puts it this way.
“Entrepreneurs have their skin in the game in that there are often the major or substantial shareholder in a company.
“It is in their direct interest to perform as this will be translated into share price appreciation which will impact the value of their shareholdings – this is motivation to grow the entrepreneurial spirit,” he says.
On the other hand, GLC heads do not have their skin in the game save for their limited shareholding through ESOS or share grant schemes.
“If a GLC loses money, the impact on them is limited. They may be prepared to take perverse risks as the eventual loser is the government-linked investment companies or GLICs (and the minority shareholders of the GLC), which eventually are the people who are the members or subscribers of the GLICs.
“In that way, we are not comparing apple to apple and yet, we need talent to run GLCs.
“So we can conclude that, we need to pay for talent at GLCs but it should not be as much compared to what one would pay the CEO of a firm which he started,” Devanesan says, noting that remuneration of some of the GLC heads have risen too fast in recent years.
Rising remuneration is a given, others say, as the government had recruited top talent from the private sector to helm these companies.
A case in point is Axiata Group Bhd, which has done relatively well with the infusion of the “entrepreneurial spirit” under the helm of president and group CEO Tan Sri Jamaludin Ibrahim, who has helmed the Khazanah-owned telco since 2008, they point out.
Prior to that, Jamaludin was with rival Maxis Communications Bhd, a private company controlled by tycoon Ananda Krishnan.
Other GLCs which have performed consistently over recent years include banks like Malayan Banking Bhd
and CIMB Group Holdings Bhd which have expanded their operations out of Malaysia, carving a brand name for themselves regionally.
Under a 10-year transformation programme for GLCs initiated in 2005, companies were given quantitative and qualitative targets to meet as measured by key performance indicators.
Now, the 20 biggest GLCs currently make up about 40% of the local stock market’s market capitalisation.
One of the principles under the programme was also the national development agenda, which emphasised the principle of equal growth and development of the bumiputra community with the non-bumiputras.
Asian Strategy and Leadership Institute (ASLI) Centre of Public Policy Studies chairperson Tan Sri Ramon Navaratnam says the purpose of establishing GLCs to encourage bumiputras to participate in business has largely been fulfilled.
“Now that the bumiputras are on a strong footing in the corporate sector with able leaders who have wide experience, it (GLCs) could be seen as an erosion to the welfare and progress of the smaller and medium-sized industries, particularly those where other bumiputras are involved,” Ramon says.
Having said that, he says although many GLCs are doing well, they have performed well “mainly because of protective policies and monopolistic practices”.
“The time has come in this new Malaysian era for more competition and less protection.”
Benchmarking
Still, if simplistic comparisons are to be made, the CEOs of the country’s two largest GLC banks, Maybank and CIMB for instance, took home less than the CEO of the country’s third largest bank, the non-GLC Public Bank Bhd
last year.
In 2017, Public Bank’s managing director Tan Sri Tay Ah Lek took home some RM27.8mil in total remuneration while Maybank’s Datuk Abdul Farid Alias earned RM10.11mil and CIMB’s Tengku Zafrul Abdul Aziz made RM9.86mil.
Across the causeway, a survey of CEO remuneration of Singapore-listed companies by one financial portal shows that Singaporean GLC CEOs earned 31% more than their non-GLC counterparts in 2017.
Singapore’s Temasek Holdings-owned DBS Bank, which is Singapore’s largest bank, paid out S$10.3mil (RM30.36mil) to its head honcho, while in the telecommunication sector, SingTel’s remuneration to its top executive was some S$6.56mil (RM19.34mil) for the most recently concluded financial year.
By definition, Singapore GLCs are those which are 15% or more owned by the city-state’s investment arm Temasek Holdings.
UM’s Terence does not think Singapore should be a benchmark for Malaysian companies.
“Singapore is a much smaller country and the manner in which they operate in is also different ... their GLCs are deeply conditioned by their holding company, which is the Minister of Finance Incorporated,” he says.
MSWG’s Devanesan notes that determining remuneration is “not exactly science” as there are many parameters to be considered.
Some of the factors to note include whether the companies are in a monopolistic or near monopolistic position and the performance of the GLC heads over the years.
“Based on these parameters, we can instinctively know if a GLC head is over-remunerated,” he says. Over in China, state-owned Industrial and Commercial Bank of China (ICBC), the country’s largest lender by assets, paid out about 63.43 yuan or about RM39mil in total remuneration before tax for the year 2017 to its top executive.
Notably, the Beijing-based ICBC’s net profit’s was at a whopping US$45.6bil (RM182bil) in 2017.
Sources: Gurmeet Kaur and Yvonne Tan The Star
GLC singers sing a different tune
Some officials singing 'Hebat Negaraku'.
Swan song for some after 'Hebat Negaraku' post-GE14 - CEO think video to showcase musical talents
Several heads of government-linked companies (GLCs) have come together
in a heartwarming music video titled "Hebat Negaraku" (my country is
great).
The heads of government linked companies (GLC) who sang a song that later became the theme song for the Barisan Nasional’s election campaign have distanced themselves from the controversial music video.
Those who sang and played musical instruments in the music video titled “Hebat Negaraku” (my country is great) said they did not know the video or the song was going to be a political theme song.
There have been repercussions on the CEOs who appeared in the music video. They have come under scrutiny for making a song that was used as propaganda by Barisan in the last general election.
Three of the GLC bosses in the video have either retired or resigned since the new government took over.
Several more have been speculated to leave in the coming weeks or months but nothing is cast in stone. Sources said this is because most of the CEOs are not known to have campaigned openly for either Barisan or Pakatan Harapan.
“None of the CEOs had a clue it would become a political song. Do you really think the CEOs would have done it if they knew it would become political?” asked one of the CEOs who appeared in the video but declined to be named.
“We have said no to so many things, and we could have easily have said no to this if it was political.’’
Another CEO said he was approached and felt it was “more of a patriotic song and nothing more.”
“At that point in time, we did not think much (of the repercussions). Hebat Negaraku was announced as Barisan’s campaign theme long after the recording was made. We did not know that.’’
Another CEO added: “We thought it was a casual thing when we were approached as some of the CEOs have their own band.’’
It all started when several CEOs were called to be part of a music video and they thought it was to showcase the musical talents of 14 GLCs heads, plus staff members of the 20 key GLCs.
The song is about the greatness, advancement and inspiration of Malaysia. It was released on YouTube on March 22 but has since been taken down.
But fingers have been pointed at the GLCs bosses who made the music video because it became a political video.
Datuk Seri Shazalli Ramly has been said to be the main orchestrator for the group in terms of making the music video. He was also said to be the branding chief for Barisan’s elections campaign.
Barisan lost the elections held on May 9 to Pakatan, which has since formed a new government and is scrutinising all the performance, processes, remuneration and procurement of the government and GLCs.
Shazalli quit his job as group CEO of Telekom Malaysia Bhd (TM) on June 6. Malaysian Resources Corp
Bhd (MRCB) group managing director Tan Sri Mohamad Salim Fateh Din has retired as group MD last week and it was something he had planned to do. Malaysia Airports Holdings Bhd
Datuk Badlisham Ghazali did not get his contract renewed. All three were in the music video.
There is a GLC secretariat that now comes under the purview of TM, which was earlier parked under Khazanah Nasional Bhd. The secretariat organised the making of the music video, according to sources. The CEOs were called to attend a session and within a few hours it was all done with no prior rehearsals.
“When you are called, it could be difficult not to comply since it is the secretariat that called you. We have to oblige but we really did not know it was going to be a campaign slogan. This is really unfortunate that it has turned out like this.
“We were surprised when we found out it was a party slogan but it had already been done and what can we do, we are in the picture,’’ said another CEO.
Not all CEOs who were invited took part in the video. Prior engagements were the reason used for declining to appear. - By b.k. Sidhu The Star
LATELY, we have been seeing many photographs and a lot of video footage of handcuffed men and women in orange T-shirts bearing the words “Lokap SPRM”.
These are people who have been arrested by the Malaysian Anti-Corruption Commission (MACC) in connection with its investigations. Lokap SPRM is the Bahasa Malaysia term for the MACC lock-up. Some of these men and women have been or will be charged in court for offences such as offering or soliciting bribes and abuse of power. If they are guilty, they will be punished.
But what if the wrongdoing is partly to do with how the private sector operates?
If businessmen believe that greasing someone’s palm is an acceptable way to get ahead of the competition, and if a company’s culture tolerates or even encourages corrupt practices, why should the employees be the only ones held accountable when the authorities enforce the law?
It is not easy, however, to prove that a company has criminal intent.
This will matter less if there are provisions in the law that deem companies responsible if employees commit certain offences in the course of their work.
This concept of corporate liability for the crimes of employees has been introduced in countries such as the United States, Britain and Australia.
Malaysia has long talked about introducing such provisions.
In July 2013, for example, Minister in the Prime Minister’s Department Datuk Paul Low said the Government wanted to introduce a “corporate liability law”.
The idea is to hold boards of directors and CEOs of companies responsible for bribes given by their employees unless it is proven that there are measures in place within the organisation to prevent corruption.
Since then, Low and senior MACC officers have several times brought up this matter.
It appears that the plan is to either amend the MACC Act or to come up with a fresh piece of legislation.
At one point, Low said the Bill would be tabled by March this year and that the new provisions would come into effect in 2018.
However, the draft legislation has yet to reach Parliament.
The latest update was from MACC deputy chief commissioner (operations) Datuk Azam Baki, who was quoted in a Sin Chew Daily report this week saying that the Cabinet had approved the Bill for the Corporate Liability Act and that it would be tabled in October.
It is understandable if the business community is less than enthusiastic about this.
There is always the fear that an employer will be unfairly blamed for an employee’s lack of integrity.
There is also the well-worn argument that complying with additional rules and regulations will increase costs amid already challenging conditions.
It is likely, however, that the new provisions are applicable only if the companies cannot demonstrate that they have done all they can to prevent the offences, or if they are negligent in addressing the risks of such offences being committed.
We will have to wait and see.
Meanwhile, businesses should examine their practices and procedures.
It is definitely in the best interest of a company to ensure that its employees understand well that corruption is not part of its corporate culture.
For that matter, corruption should not be part of any culture.
- Sunday Star Says
Amend MACC Act to give it more bite
TRANSPARENCY International Malaysia (TI-M) hails the call by the
Malaysian Anti-Corruption Commission (MACC) to amend Section 23 of the
MACC Act 2009 to give it greater clarity so that corrupt practices and
other related offences could be better tackled especially in state-owned
enterprises (SOEs).
As stated by MACC deputy commissioner (Operations) Datuk Azam Baki, MACC
needs more bite to act against corrupt public officials including
ministers, assemblymen and politicians.
TI-M also supports MACC on the recently proposed new law known as
“Misconduct for Civil Service Act”, where civil servants who caused
substantial financial losses to the Government due to negligent acts or
non-compliance with official policies or procedures would face criminal
charges under this proposed new Act.
TI-M has been advocating for these amendments to the existing MACC Act
for the past several years and hopes to finally see the light at the end
of the tunnel.
Section 23 of the MACC Act 2009 prohibits “an officer of a public body”
or public officials from abusing their power for any gratification for
themselves or for their relatives. TI-M shares Azam’s opinion that many
politicians are being appointed into SOEs and public interest entities
(PIEs).
In addition, TI-M is also looking forward to the inclusion of the
corporate liability provisions into the MACC Act 2009, which will
ultimately hold companies accountable for corruption cases involving
their employees.
Currently, when an employee is caught for corruption or bribery, he or
she will face the consequences and can be charged individually. The
company which the respective employee works for is not held liable for
its employees’ acts, as in law the company not being a human person is
not capable of having criminal intent.
With the introduction of the corporate liability provisions, companies
can be held accountable for their employees’ involvement in corruption
or bribery if they are found to have failed to take adequate steps to
prevent such corrupt acts by their employees.
When this becomes a reality, employers in the private sector would have
no choice but to initiate anti-corruption programmes in their
companies/organisations to mitigate and eventually eradicate corrupt
practices.
TI-M, meanwhile, has been encouraging companies in the private sector to
adopt the ISO 37001 Anti Bribery Management System as an initiative to
put in place all the preventive controls and systems while
simultaneously getting the top management to commit to the elimination
of any form of bribery in their organisations.
On the proposed Misconduct for Civil Service Act, any effort or law to
address misconduct which results in loss of taxpayers’ money should be
lauded.
However, we would like to raise the issue of whether the proposed law
should only apply to civil servants. What about instances where orders
or instructions come from politicians or persons in elected positions?
Should they not also be held liable if proven to be involved?
Any proposed law should fairly apply to everyone involved in the decision-making process, and that includes politicians.
Azam has been reported saying that each year, the AuditorGeneral’s
Report reveals a litany of malpractices among government departments and
agencies, some of which are outrageous, for which the civil servants
responsible should be charged with criminal offences instead of just
disciplinary action under the domestic rules applicable to them.
TI-M supports these new measures proposed by the MACC and hopes that the
Government will give due consideration and also fully support the same
by effecting the necessary changes in the law. This would ensure that we
plug the existing loopholes in our anti-corruption laws.
DATUK AKHBAR SATAR President Transparency International Malaysia
Ministers may face conflict of interest, says Tunku Abdul Aziz:
"If you have no power, you cannot abuse it. Civil servants have a lot more power than their political masters and ministers"
'With a population of 31 million, Malaysia has a ratio of one civil servant to almost 20 people.
'To compare, the news report cited corresponding figures for
several other countries: Singapore (1 to 71 people), Indonesia (1:110),
South Korea (1:50), China (1:108), Japan (1:28), Russia (1:84) and
Britain (1:118).'
To keep graft in check, politicians should not be appointed to run government-linked companies, said Malaysian Anti-Corruption Commission advisory board chairman Tunku Abdul Aziz Tunku Ibrahim (pic).
He said politicians holding GLC positions may face conflict of interest leading to abuse of power and responsibility.
In an interview with Bernama, he said: "Many appointments are made for political reasons. If you are appointed to a position with unanimous power, there are decisions you have to make on a daily basis, weekly, monthly and whatever.
"And in making these decisions, there will be some demands made on you because of your connections, your relatives, your friends and also your cronies."
Tunku Abdul Aziz said this trend of abusing power because of conflict of interest has been happening since long ago, and may be stopped if the appointment for a top post in a GLC was conducted with "proper selection and screening".
Tunku Abdul Aziz said the selection process must include going through the candidate's background and track record.
He said there were always people out there who wanted special treatment, to have the advantage over their competitors.
"They don't care how it is done (as long as they get the job)... This is where corruption starts."
Tunku Abdul Aziz said that proper recruitment procedures and techniques could help achieve transparency and accountability, which are essential for top management.
"We can make corruption unprofitable business by making it more difficult to put your hand in the till."
He believes that corruption is now taking place at the operating level.
"Ministers cannot sign or award contracts. But directors in some departments can do it. This is where abuse of power takes place," he said.
"If you have no power, you cannot abuse it. Civil servants have a lot more power than their political masters and ministers (in awarding contracts)," he said.
He noted that the Malaysian Anti-Corruption Commission was now catching a lot more "big fish" than before the appointment of Datuk Dzulkifli Ahmad as the new head in July last year.
Tunku Abdul Aziz said MACC was a dedicated highly professional team focusing on the root causes of corruption while catching the crooks.
-- BERNAMA
Time to trim the civil service
FINALLY, the Government has itself described the civil service as bloated.
To his credit, Second Finance Minister Datuk Johari Abdul Ghani openly and honestly stated that the civil service, although bloated, will not be reduced but will instead be made to multi-task to improve productivity. This statement is serious but also worrisome.
We now have one civil servant serving 19.37 people. The ratio is 1:110 for Indonesia, 1:108 for China, and 1:50 for South Korea. We won’t compare ourselves to the low ratio of 1:71.4 in Singapore because it’s a small island with hardly any rural population.
But why is our civil service so bloated? Firstly, we recruited rapidly to give jobs to the boys when the output from the education system expanded. We even had an “Isi Penuh” programme at one time. That is we rushed to create jobs and filled them fast!
Secondly, unlike the private sector, we rarely retrench staff even in bad times. We hardly sack anyone for inefficiency and even wastage of public funds.
Thirdly, the civil service has become a sacred cow that has to be handled gingerly for fear of reaction against the federal and state governments at the ballot box!
Life is relatively comfortable especially at the lower levels of the civil service. Salaries are better than before, pensions are secure, health provisions are generous, and the drive to be more productive is soft. In fact, there is now a strong manja-manja attitude towards civil servants.
The demand to join the civil service is high but the supply of jobs is slowing down considerably.
The Government should decide to reduce the size of the civil service to prevent the strain on the budget deficits, especially in the future.
Salary and pension bills are going up whereas productivity is not publicly perceived to be improving. Those who deal with civil servants often tell us more about the undue delays, corruption and “tidak apa” or lackadaisical attitude shown on the ground towards the public.
The Government should appoint a high-level task force, if not a royal commission, to examine ways and means of trimming the civil service to an efficient and reasonable size.
To start with, the Government should revise its stand on not reducing “the 1.6 million strong bloated civil service.” If it finds it difficult to reduce the civil service, then please freeze recruitment or make it more sparing and definitely more selective. Please go for more quality rather than quantity!
The civil service is huge because the public sector has been designed to be inordinately large. This has evolved because the private sector has been denied and deprived of greater opportunities to serve the public.
There are many government services, facilities and works and supplies that can be provided more efficiently by the business sector. In fact, this could be the way forward for more bumiputra contractors and other races to participate more actively and competitively to serve our society better.
The cost of maintaining the civil service, at RM74bil in 2016 for salaries and allowances, is not sustainable.
The pension bill of RM19bil per annum, without any contribution to the GDP by retirees, is also unbearable in the longer term. At the same time, according to Johari, revenue from palm oil and other commodities have been falling drastically. So where do we go from here?
It is basic economic and financial logic that we cannot afford to cope with rising salary expenditure and lower revenue. It is much more difficult to raise revenue than to cut expenditure.
The Government has said that our fundamentals are strong. Indeed, they are reasonably healthy at this time. But at this rate of a growing civil service that is now acknowledged as bloated, we cannot afford to assume that the economic and financial fundamentals can continue to be strong for much longer.
My appeal then is for Government to more actively seek to reduce the size of the civil service and to act without undue delay. Our good economic fundamentals are being seriously threatened and we must preserve and protect them from further risks.
TAN SRI RAMON NAVARATNAM , Chairman Asli Center of Public Policy Studies
An effective civil service does not burden Govt
Civil Servants
IN a recent interview with a vernacular newspaper, Second Finance Minister Datuk Johari Abdul Ghani brought up a matter that is seldom highlighted publicly – the size of the Malaysian public sector.
He said the country’s 1.6 million government employees formed “the world’s largest proportion of civil service”.
With a population of 31 million, Malaysia has a ratio of one civil servant to almost 20 people.
To compare, the news report cited corresponding figures for several other countries: Singapore (1 to 71 people), Indonesia (1:110), South Korea (1:50), China (1:108), Japan (1:28), Russia (1:84) and Britain (1:118).
Johari was making the point that a major challenge for the Government was the rising costs of running the public service system.
This is particularly tough when there is a decline in the taxes and other receipts collected from the oil and gas and palm oil industries.
However, he added that there were no plans to reduce the civil service head count.
The minister has won praise for bringing attention to an issue that many have long felt deserves public awareness and discussion.
Emoluments are by far the biggest component of the Government’s operating expenditure, and that cost has kept expanding.
Back in 2006, emoluments totalling RM28.5bil made up 26.5% of the operating expenditure. A decade later, the percentage is estimated to be 35.7%. To pay its employees this year, the Government has allocated RM77.4bil, which is 36% of the budgeted operating expenditure.
And let us not forget the retired civil servants. According to the Public Services Department, there were 739,000 public service pensioners in 2015, and every year, 23,000 people join this group.
In 2010, the Government spent RM11.5bil on pensions and gratuities, accounting for 7.6% of the operating expenditure. In the Budget 2017, retirement charges will come to RM21.8bil, about 10% of operating expenditure.
Although Johari did not appear to use the phrase in the interview, others were quick to talk about the “bloated civil service”.
It should be pointed out that measuring and comparing the sizes of the public sector can be tricky and misleading. There are different ways of defining a civil servant. And the width and depth of a public service system is very much determined by the country’s prosperity and policies.
The Organisation for Economic Cooperation and Development looks at public sector employment as a percentage of total employment. In 2013, the average among its members was slightly above 19%.
In Malaysia, civil servants represent 10.8% of our labour force. Perhaps, the public sector is not bloated after all.
On the other hand, we must bear in mind that the number of government employees is growing faster than the country’s labour force.
But we cannot discuss quantity and ignore quality. The issue here is not about how large our public service system is; it is whether the system is larger than necessary.
No matter how big, the numbers make sense if they yield excellent results and lead to robust revenue growth.
At a time when the Government is pushing hard in areas such as innovation, productivity and good governance, the civil service ought to lead by example.
There are already ongoing efforts to transform public service in Malaysia and surely the hope is that these initiatives will result in greater transparency and accountability, enhanced competitiveness, and a high-performance culture,
What is also absolutely clear to us is that the Government’s financial obligations are increasingly heavy, and much of this has to do with the emoluments and pensions it pays.
It is realistic to expect the Government to be more prudent in its hiring of new employees. It cannot afford to be the country’s default employer and young people are wrong to blame the Government if there are no civil service vacancies for them to fill.
The public sector’s primary role is to serve the country’s needs effectively and efficiently. It cannot do that if it is a burden to the Government and ultimately the people. -The Star Says
Jan 14, 2017 ...Fighting corruption a decade later: Wars on graft widens. “Power doesn't corrupt
people, people corrupt power.” William Gaddis. THE beginning ...
Oct 25, 2016 ... The Malaysian government can make further spending cuts if it reduces the size
of its “bloated” civil service, an economist said. File picture ...
Apr 5, 2016 ... Now, it has been proven that the administrative capital of Putrajaya has the ...
Evidently, obesity is manifested in the abdominal fat around the ...
Apr 6, 2016 ... So if both the US and Malaysian Governments couldn't stem the fat tide in their
respective countries, who can? ... Putrajaya the obese-city!
MACC deputy chief commissioner (prevention) Datuk Shamshun Baharin Mohd Jamil
MACC reveals 'worrying statistics'
KUALA LUMPUR: More than 50% of those arrested by the Malaysian Anti-Corruption Commission (MACC) in the past three years were aged below 40.
MACC deputy chief commissioner (prevention) Datuk Shamshun Baharin Mohd Jamil expressed concern over the finding and said it as an “alarming situation”.
Of the 2,329 people arrested since 2014, 1,267 were below 40.
“People in this age group are supposed to be nation’s backbone, who will shape the future of our country,” he said in his keynote speech at a public forum organised by the Institute for Democracy and Economic Affairs (Ideas) yesterday.
Shamshun said about 982 investigation papers were opened, 932 people were detained and 258 charged by the anti-graft body last year.
“MACC plans to engage with youths this year. The Gen-Y group always finds an easy way. We have to guide them from young and create awareness of what is happening around them,” he said.
On MACC seeking more allocation, Shamshun said the extra funds were for them to implement what they planned for the year.
“We need more whistle-blowers who can voluntarily come forward to report or provide information on corruption activities.”
He said such individuals will be protected under the Whistleblower Protection Act 2010, that shields informants from action. – by Ashwin Kumar thesun
Weeding out graft among youths
KUALA LUMPUR: The Malaysia Anti Corruption Commission (MACC) will push on with efforts to eradicate corruption in the civil service in the face of budget cuts, says its deputy chief commissioner (prevention).
Datuk Shamshun Baharin Mohd Jamil (pic) told reporters that the commissions’ plan for 2017 would be to focus on Government agencies, as well as arresting the growing trend of corruption among youths.
Responding to questions on cuts to the MACC’s budget, he said it was an issue faced by all agencies, though the commission had appealed for more funding to carry out its plans.
“We can’t do everything at once because of (MACC’s) strength and budget. But my concern is also about how many of those arrested are under 40 years old,” said Shamshun Baharin, adding that 54% of those arrested (1,267 of 2,329 cases) were under 40.
He attributed the trend to the generation’s environment and wanting to take shortcuts, which MACC aimed to combat with the establishment of a corruption prevention secretariat in higher learning institutions.
During his keynote address at the Institute for Democracy and Economic Affairs (IDEAS) forum titled ‘Supporting the MACC in the fight against corruption’, Shamshun Baharin said 2016 had been a successful year for the commission.
He revealed that arrest numbers had gone up from 841 (2015) to 932 (2016), of which 258 suspects had been brought to court, as of Dec 15 last year.
At the event, IDEAS CEO Wan Saiful Wan Jan launched a signature drive under its #NyahKorupsi campaign, to support the MACC.
“Our goal is to have more Malaysians come out in support of the MACC because it has made more investigations and arrests of corrupt top officials. There may be a time when they will need our help,” he said.
He said IDEAS would collect as many signatures as possible before delivering it to MACC chief commissioner Datuk Dzulkifli Ahmad.
To sign the petition, visit www.change.org/p/sokong-sprm-perangi-rasuah.
The other forum panellist included Transparency International Malaysia president Datuk Akbar Satar, Centre to Combat Corruption and Cronyism executive director Cynthia Gabriel, Friends of Kota Damansara chairman Jeffrey Phang and Sinar Project co-founder Khairil Yusof. - By Qishin Tariq The Star/ANN
Just you wait, MACC boss warns corrupt politicians
MACC chief commissioner Datuk Dzulkifli Ahmad,
PETALING JAYA: The Malaysian Anti-Corruption Commission (MACC) has warned corrupt politicians to “be careful”.
Its chief commissioner Datuk Dzulkifli Ahmad, in a live television interview yesterday, said he had previously stated that he would take action on anyone involved in corrupt practices, including “politicians of any rank”.
“On my 100th day as MACC chief, I said that I will not be stopped from taking action against politicians.
“Tonight, I would like to say to corrupt politicians, just you wait (tunggulah),” he said.
Dzulkifli added that the MACC was not worried about “protected individuals” who committed systemic corruption.
“There is no issue about them being protected, I can guarantee that all those who commit corruption will not be left alone. I will take action against them without fear or favour,” he added.
But Dzulkifli admitted that the MACC had its limitations in terms of logistics.
“There are only 2,900 members and officers in the whole of the MACC, of which only 900 carry out legal enforcement as others are in the prevention and education departments, among others.
“Now if you look at the civil service alone, there are 1.6 million of them, so that is one.
“Besides that, is budget, that has been cut, and it is at its lowest since 2013,” he said.
Dzulkifli, however, added that he would not allow the limitations to stop the anti-graft body from carrying out its duties.
The Astro Awani interview is Dzulkifl’s first ever live interview since his appointment in July last year.
Dzulkifli, a veteran in the civil service, was the head of the National Revenue Recovery Enforcement Team of the Attorney-General’s Chambers before being appointed chief commissioner.
He took over from Tan Sri Abu Kassim Mohamed, and his tenure is until July 31, 2021.
Feb 24, 2016 ...Ideas chief executive Wan Saiful Wan Jan, in his speech said that the ... Ideas
was set up on Feb 8 to coincide with the birth date of Tunku ...
Sep 27, 2016 ...Wan Saiful Wan Jan is chief executive of the Institute for Democracy and
Economic Affairs (www.ideas.org.my). The views expressed here are ...
Wan Saiful Wan Jan
Thinking Liberally
Wan Saiful Wan Jan is chief executive of the Institute for Democracy and Economic Affairs (www.ideas.org.my). The views expressed here are entirely
the writer’s own.
Malaysia
world's No.1 highest civil servants-to-population ratio! Its tenure of
service legally vulnerable but notoriously difficult to dismiss 
