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Saturday, July 13, 2019

Housing woes: death spiral or virtuous cycle?

THE World Economic Forum estimates that the global cost of corruption annually is at least US$2.6 trillion (RM10.9 trillion) or 5% of global gross domestic product (GDP).

According to the World Bank, businesses and individuals pay over US$1 trillion (RM4.2 trillion) in bribes each year.

Corruption adds up to 10% of the total cost of doing business globally and up to 25% of the cost of procurement contracts in developing countries.

I gathered these shocking facts at a conference. There are other alarming statistics that shed light on the damage brought about by corruption and its dreadful impact on the economy.

Corruption leads to further impoverishment of the poor and other issues in many countries. The average income in countries with a high level of corruption is about one-third of those countries with a low level of corruption. In addition, corrupt countries have a literacy rate that is 25% lower.

The Corruption Perception Index 2018 released by Transparency International shows that on the scale of 0 to 100, where 0 is highly corrupt and 100 is very clean, over two-thirds of 180 countries score below 50, with the average score of 43.

In the index, Denmark ranked first in the world followed by New Zealand second. Finland and Singapore were tied for third with a score of 85. Malaysia was ranked 61st in the world, scoring only 47.

We were ranked the third highest in the Asean region, after Singapore and Brunei. Our country is doing better now with the ongoing investigation of the 1Malaysia Development Bhd scandal and other prominent cases.

In TI’s report, Malaysia is one of the countries on the watch with promising political developments against corruption. However, more solid action is needed in combatting all elusive forms of corruption.

According to Transparency International Malaysia, corruption had cost our country about 4% of its GDP value each year since 2013. Added together, this amounts to a high figure of some RM212.3bil since 2013. For 2017 alone, that figure was a whopping RM46.9bil!

As a comparison, our development expenditure in 2017 was RM48bil. If the value of corruption above was accurate, our development fund was almost “wiped out” because of corruption.

Transparency International Malaysia president Datuk Akhbar Satar said: “This is our estimate. It is likely to be higher in reality (on the value of corruption).”

No country can eliminate corruption completely. However, we can learn from good practices shown in some developed countries, such as the Scandinavian countries which all scored high on the Corruption Perception Index.

Corruption leads to poverty as money collected is not used for the welfare of the nation. As a result, the people end up suffering and paying for the leakage in the system.

If a country is corrupt-free, it will reduce the need for non-governmental organisations (NGOs). NGOs advocate for the rights of marginalised groups. The government can take care of those group when it has a surplus in the budget.

A clean government and system will have a positive impact on many aspects including affordable housing, one of the prominent needs of the people.

Whenever there is corruption, there is a compromise in the delivery of goods and services. The same situation applies to affordable housing.

Someone mentioned to me in the past that “the government isn’t interested in affordable housing as there is literally ‘no money’ to be made in it”!

Things have made a dramatic change for the better since May last year. Our new government is working on a platform of clean government and improving transparency. It plans to build one million affordable homes within two terms of its administration. To make this a reality, the government needs to put in real money to make it happen.

Corruption causes a death spiral that leads to various problems. Without it, a virtuous cycle grows that ensures every part runs smoothly and the marginalised in society are looked after.

With a promise of a cleaner government, we hope we will soon see a virtuous cycle that makes the one million affordable homes an achievable target.

By Datuk Alan Tong, who has over 50 years of experience in property development. He is group chairman of Bukit Kiara Properties. For feedback, please email bkp@bukitkiara.com. The views expressed here are solely that of his own.

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Monday, July 1, 2019

Declining performance of Malaysia's civil service, World Bank report

KUALA LUMPUR: The performance of Malaysia’s civil service has been declining since 2014, according to a World Bank report, which also expressed concerns about the sustainability of the country’s public sector wage bill.

The report, which came about following the visit of World Bank vice-president for East Asia and Pacific Victoria Kwakwa to Malaysia last December during which she met the Prime Minister, also ranked Malaysia lowly in its indicators for accountability, impartiality as well as the transparency and openness of its public service.

The report – which is included in the World Bank’s six-monthly economic monitor on Malaysia – will be formally launched today.

World Bank lead public sector specialist Rajni Bajpai said that while Malaysia was doing better than others in South-East Asia, there was a very “big gap” in the performance of its civil servants with Organisation for Economic Co-operation and Development (OECD) countries.

She said the report decided to compare Malaysia with the OECD countries as it was hoping to move from a middle-income status country to that of high-income.

“When you compare Malaysia with others in the region, Malaysia has been doing pretty well but we see that the performance has stagnated.

“If you look at the indicator for government effectiveness, Malaysia is still above in the region but in 2018, the performance is below that of between 1991 and 2014.

“If you take the average of that period between 1991 and 2014, it was higher than that in 2018, which means the performance is declining,” she said in an interview.

There were also some indicators in which Malaysia ranked even below the region, said Rajni, adding that this included accountability, impartiality and the openness of its public sector.

“There is a strong perception ... that recruitment of the civil service is not fair and neutral (with) Malaysia scoring very poorly on the indicators for impartiality in the government.

“It’s the lowest ranked, even below the region and way below the OECD,” she said, adding that the government in its election manifesto had suggested setting up an Equal Opportunities Commission meant to tackle discriminatory practices in both the public and private sector.

“Malaysia also scores very poorly on the openness indicators. Malaysia is not a very open economy in the sense that data sharing is a very big problem.

“The government does not share of a lot of data, even within its own departments or with the citizens. “And citizens’ feedback and voices are not factored by the government into the design of programmes,” she said, adding that the report would suggest the setting up of an institutional and legal framework for open data sharing.

Another indicator that Malaysia performed “not very well”, according to Rajni, was in digitisation and technological advances, which the government had not been able to integrate into its system to provide services.

The report, said Rajni, also focused on another critical element in Malaysia’s civil service, in that the recruitment, which was carried out by the Public Services Department, was overcentralised.

Describing Malaysia as one of the “most overcentralised”, she pointed out that in many countries, this function had been devolved to other departments and even state governments.

“Overcentralisation does not allow for the people who actually need the public servants to do certain jobs ... because they don’t have the right people or the recruitment takes a very long time,” she said.

OECD countries, said Rajni, had been using a competency framework for the recruitment of their civil service, which defined the kind of roles and skills needed in the public sector, rather than taking in people generally for everything.

Among the indicators that Malaysia performed very well were for the ease of doing business – for which Malaysia is ranked 15th – and the inclusion of women in its civil service.

“Women occupied almost 50% of the civil service although there are some issues with women in higher management,” said Rajni.

Other indicators that were highlighted in the report included political stability, regulatory quality, rule of law and control of corruption.

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