Tricia Yeoh

First published in theSun on 10 November 2016, here.

Malaysia woke up last week to find that its government had signed not one, but 14 bilateral agreements with China worth RM144 billion in total, in addition to a RM55 billion East Coast Rail link project. China is one of Malaysia’s largest trading partners for both exports and imports, but these new deals are extremely large and unprecedented.

Some have commented to me that they think this might help elevate the status of the Chinese in Malaysia. But will this new-found relationship between Malaysia and China really change how local Chinese in Malaysia are viewed by the state? I’m not so sure about this.

The Chinese minority in Malaysia is one of the largest Chinese minorities in the world outside of China, and to a large extent has flourished well in this country. But perceived discrimination is real, due to the affirmative action policy for the bumiputras.

In September 2015 when the ambassador of China made a statement alluding to protecting local Chinese in the face of the Red Shirt rally, this presented an awkward situation for many Malaysian Chinese. Having a foreign entity speak up for my rights made me rather indignant at this gesture.

First, the notion that the relationship with China will draw attention to the rights of ethnic Chinese at home already takes a rather narrow-minded view. If we were concerned about minority rights, we should also be looking out for the interests of all minorities including the orang asli, Indians and indigenous people of Sabah and Sarawak.

Second, China has faced international criticism over its failure to promote good governance and human rights in countries it has invested heavily in, including several countries in Africa. In the past, its policy of non-interference in domestic politics — and hence also its looking past dismal human rights practices within those countries — lent weight to the argument that China was only interested in economic returns and geopolitical self-interest.

Of course, there are always counter arguments, one of which is that China has in fact contributed to development aid for health and education initiatives, apart from infrastructural projects, in poor countries.

A study by AidData, an organisation specialising in global development aid research, stated that Chinese aid is strongly oriented towards poorer countries. But Malaysia is apparently no longer stuck in the middle-income trap, according to Pemandu (Performance Management and Delivery Unit), where Malaysia is reportedly only 15% away from the high-income economy benchmark.

But the main questions that all Malaysians should be asking the government should have much more to do with the welfare of the nation as a whole, not nitpicking about which ethnic community is going to benefit more out of this.

For instance, how might domestic economic policy change as a result of Chinese state-owned enterprises flocking the market? Most of the 14 deals signed are with Chinese SOEs, and this will most certainly have an impact on our public procurement policy. Based on the deals, it looks like the government will be awarding procurement contracts to foreign Chinese companies as opposed to local companies. If the selection is done based on merit and quality, then well and good.

In fact, one of the most controversial chapters in the Trans Pacific Partnership Agreement (TPPA) that Malaysia signed earlier this year was precisely that of public procurement. Malaysia successfully negotiated that a substantial portion of government procurement would be exclusively for bumiputra contractors, to be lowered over time. Are we in fact making exceptions for mainland Chinese companies?

Further, will these new deals be subject to provisions under the TPPA, particularly those related to governance of procurement – will the procurement processes be non-discriminatory, standardised and transparent? Will there be open and competitive tenders? Will the firms be subject to domestic review procedures under a to-be-established procurement review authority?

Second, how will this relationship change Malaysia’s geopolitical positioning vis-à-vis South China Sea? Will this influence Malaysia’s voice in siding with China against its neighbouring Asean countries over any sea and land dispute that takes place? In fact, would this bilateral relationship with China affect regional trade agreements like the Asean Free Trade Area (Afta) in any way?

Finally, and perhaps most importantly, what is the financial burden that the future generations of Malaysians will be strapped with in the years to come? The Edge reported over the weekend that the RM55 billion East Coast Rail Line (ECRL) could be “one of the most expensive interstate rail and cargo lines to be built in the world”, at RM91.67 million per kilometre. What do the current agreements have to do with China’s deal to buy 1MDB energy assets worth RM9.83 billion in December 2015?

The recent decisions by this administration are a game-changer. If they come to pass, this means that we are opening up our market, which in itself is a good thing, but in this case we are selectively opening it to a single market of foreign companies. It has the potential to change our indebtedness to any foreign entity — recall that we very proudly rejected IMF funds during the 1998 financial crisis — in a way we never have before. And it has the potential to reshape Malaysia’s geopolitical interests in the region, and related to that, the power dynamics in Southeast Asia as a whole.

(First published in theSun on 27 October 2016 here).

MUCH is made over the budget speech tabled by the prime minister in Parliament in October each year.

And rightly so, since it is supposed to be the government’s financial blueprint for the following year: how much goes where, to whom and for what.

What most Malaysians do not realise is that the budget speech is not the budget.

The speech is meant to articulate an overarching theme, specifying which areas are given emphasis in the coming year.

Perhaps the prime minister might point out anomalies, new schemes and goodies to benefit specific groups.

The problem arises when the speech is all that people use as a basis to assess the value of the budget’s various allocations. In order to truly have an accurate representation of the budget, one would need to carefully scour through the extremely thick, heavy document named “Estimates of Federal Government Expenditure”, or “Anggaran Perbelanjaan Persekutuan”.

But how many people would have the time or energy to do this unless it is part of their jobs to analyse the budget?

One example of how this can cause confusion is as follows.

Although the prime minister’s speech mentioned the government would allocate RM30 million for women to receive mammogram screenings and Human papilloma virus (HPV, or the virus that causes cervical cancer) vaccinations for free, these do not appear in the budget lines of the Ministry of Women, Family and Community Development unlike previous years.

Neither can the budget line be found within the Ministry of Health chapter.

You can download the individual ministry budgets from the Treasury website (www.treasury.gov.my) and see for yourself. The line items are simply not there.

This is not to say, however, that the budget speech was deceptive in announcing one thing and executing another.

At this point, the conservative view to take would be that it is in fact embedded in some other line item elsewhere. But this is the thing: the budget is supposed to be easy, not confusing, to read.

There are many instances in the budget documents where descriptions are general and vague at best. For example, line items like the coordination of “Special Projects” allocated RM320 million for 2017 under the Prime Minister’s Office – the specific projects are not listed.

Another example is the announcement of RM80 million being allocated to prevent and control dengue and zika, including the expansion of community health empowerment programmes, in the budget speech.

A quick check of the Ministry of Health’s “Disease Control” line item shows us a total allocation of RM721 million, presumably for all diseases.

The exact amounts allocated towards dengue and zika are not clearly broken down, a problem for those concerned with the rise of these diseases.

Another curious line item is found in the Ministry of Finance budget, which allocates RM204 million to “Various Equity Injections”. Which entities these equity injections are to be made is also unclear, although it does say an additional RM30 million will be raised via borrowings for the same purpose.

The government’s standards for presenting the budget to its Malaysian citizens are below par. And there is international evidence to show for it too.

In the Open Budget Index 2015 (OBI), Malaysia scored 47 out of 100, and is placed in the “Limited” category, which is classified as providing insufficient information.

We perform particularly poorly in the areas of public participation and budget oversight by legislature, or Parliament.

Based on the OBI, some of the weaknesses in the current budgetary process are that our budget does not contain information like the financial assets or total liabilities of the budget year (in this case, 2017) – and what the impact of these liabilities would be on the government’s financial situation.

The government also does not provide a medium-term fiscal strategy and forecast assessment of sustainability of current policies.

One could continue examining the budget thoroughly and find many places where the information is simply not detailed enough for us to have a
clearer picture. But this essentially goes back to the question of whether the government is keen on adopting openness as a practice or not.

At a conference last week on the Open Government Partnership, various speakers shared about how countries around the world including the UK, the Philippines and Indonesia – that have all signed up to this voluntary partnership that brings government and civil society together – are introducing amazing tools to first, improve public service efficiency and second, improve governance via transparency.

Open data is one such way to get there. Our government already has an open data initiative, currently being implemented by government agencies Mampu and MDEC, where selected open data sets are shared for free access at www.data.gov.my (open meaning they are publicly accessible, machine-readable and reusable).

But there is a mismatch here – where one arm of government attempts openness and transparency whilst another is deliberately vague.

One thing is clear: Anyone analysing the government budget cannot and must not restrict oneself to the budget speech alone; verifying whatever has been stated in the speech by cross-examining the actual federal government expenditure document is crucial.

To that end, a more detailed breakdown of allocations is needed in place of general aggregated amounts. This would allow people to verify whether what is announced is really being allocated funds, and in the following year, check that the funds were actually used for the purpose.

The prime minister in his speech said Malaysia is not a failed state because it has in fact implemented its responsibilities and basic functions of a government.

Well, this depends on what you consider to be government’s role. I would argue that government’s most important function is to secure the rights and freedoms of individual citizens.

And the right to information is key; in this case, budget information.

Let us truly not become a failed state, Mr Prime Minister.

(First published in theSun on 13 October 2016 here).

THERE are many ways to think about freedom. If you live with your parents and your parents impose a curfew on you to come home by midnight, you might say that you are not free to do as you wish. That may be true. But that is not the same thing as defining the freedom of a country or a particular system.

Let me put it another way. The state or the government plays an important role of facilitating things like healthcare, education, defence and foreign affairs. But the question is when the government takes on the role of making decisions on behalf of us as individual citizens that the state of our personal freedom comes into question. To quote from Hayek, “The more the state plans, the more difficult it becomes for individuals to plan”.

Of course there are many indicators that show where we stand as a nation internationally. Freedom House’s Freedom in the World 2016 report shows that Malaysia is “partly free”. Our press freedom status is considered “not free”, and net freedom is “partly free”. We perform particularly poorly in the areas of political rights (18/40), civil liberties (27/60), and Freedom on the Internet (43/100). The Economist’s EIU Democracy Index classifies Malaysia as a flawed democracy, ranked 68th place amongst 167 countries. Finally, Amnesty International’s report stated that in 2015 alone, 91 instances of the Sedition Act was used to arrest, investigate or charge individuals. That is nearly five times as many as the first 50 years of the Act’s existence.

So by international standards, we know we’re not quite hitting the mark. But critics will turn around and tell you that Malaysia is unique in its multi-ethnic, multi-religious, multi-cultural society. That we have our own way of doing things and cannot be compared with the rest of the world. “Itu bukan budaya kita” is what you hear a lot of the time especially when advocates of human rights and liberty confront conservative views.

The real question we are confronted with when living in Malaysia is balancing freedoms with communitarian values.

Malaysia has the highest scores in the world in the Power Distance Index, according to a study cited by the Iclif Leadership and Governance Centre’s Asian Leadership Index 2014. The power distance measures the extent to which the less powerful members of organisations and institutions such as the family accept and expect power to be distributed unequally. Countries’ high power distance may observe traits such as those in authority openly demonstrating their rank, politics being prone to totalitarianism and class divisions within society being accepted. Based on the study, society’s power inequality in Malaysia is endorsed by followers as much as its leaders.

Malaysians are highly intolerant when this delicate balance is tipped over, preferring not to rock the boat. A recent example is when nine Australian men were charged for public nuisance when they stripped down to reveal underwear with the Malaysian flag design. Or the four tourists who stripped naked on Mount Kinabalu. Malaysians responded harshly by saying they are disrespectful to local morals and customs. Public morality is held in high regard here.

Contrast this to how Malaysians responded when our foreign diplomat was charged with burglary and assault with intent to rape after following a 21-year-old woman to her home, or when a Malaysian student was sentenced to jail in the UK for possessing over 30,000 images and videos of child pornography. These were actual serious crimes, and yet there were Malaysians who felt sorry for them, saying we should bring them back and pardon them. The Malaysian High Commission originally sought diplomatic immunity for Rizal – and Mara initially supported their scholar to give him a chance because he was a “smart student”. Where was our public morality then?

In fact, someone who believes in liberty and freedom is not necessarily someone who calls for public nudity, free sex or public immorality. This is the wrong definition of the term liberty. In fact, our very Rukunegara has the term liberal in it: “Our nation, Malaysia, being dedicated to ensuring a liberal approach to her rich and diverse cultural traditions”.

What does “a liberal approach” in this context actually mean? It involves several key concepts, chief of which is individual liberty, which can be loosely defined as the belief that each human being is endowed with the faculties of the mind and capacity to reason. The concept of liberty presupposes a living, purposive, choosing human being. Second, the rule of law must also apply, where the government as well as individuals and private entities are equally accountable under the law. These laws should be applied evenly, ethically and justly in a fair, accessible and efficient manner.

In examining public morality while applying the principles of individual liberty and the rule of law, one might argue that an individual has the liberty of free speech to the extent that it does no harm on another individual. John Stuart Mill in his book On Liberty argued that “The only purpose for which power can be rightfully exercised over any member of a civilised community, against his will, is to prevent harm to others” – this is known as the harm principle. The only actions that can and should be prevented are those that create harm.

This is distinct from the offence principle. Harm is something that would injure the rights of someone else or set back important interests that benefit others. An offence, on the other hand, is something that we would say “hurts our feelings”. An offence causes discomfort but causes no harm. Offences are not universal, as what hurts someone’s feelings may not hurt another person’s feelings. And at the same time, there is the principle of ethical conduct and personal responsibility too – the golden rule of not imposing on others what we don’t want imposed on us. We should not be afraid of having differences of opinion. This is to be expected in any democracy of diverse people.

What is therefore important is that the state, or government, applies the rule of law to its citizens so that people are able to freely exercise their individual liberty without causing harm to other persons or communities. The problem comes about when the state becomes so strong that it restricts individual liberty under the guise of protecting communitarian interests and values, which is the third concept of a limited government.

The Pew Research Centre’s Forum on Religion and Public Life conducted a study in 2012 titled “The Rising Tide of Restrictions on Religion” and found that countries with government restrictions on religion exhibit higher social hostilities. Examples of government restrictions on religion were “very high government favouritism of religion”, “more than 200 cases of government force towards religious groups” and “no national government intervention in religious discrimination cases” and “government limits on religious conversion”. Malaysia falls into the category of having “very high” levels of government restrictions on religion. The more the government imposes laws and restrictions, the more social tension and hostilities emerge.

Leaders in Malaysia are often faced with a dilemma of balancing freedom with communitarian values. Conventional wisdom holds that there is a conflict between freedom and harmony. “If you give people too much freedom, there will be conflict in society”, some may say. But research shows that for religious restrictions, greater freedom and greater harmony go together. I would extend this to include restrictions in other fields pertaining to ethnicity and the economy.

The promotion of openness – policies that encourage deregulation when it comes to race and religion in our highly diverse society to the extent that no citizen harms another fellow Malaysian – is in fact the best way to promote social harmony, political stability and economic prosperity.

(First published in theSun here, on 7 January 2016).

OVER the last few months, the Malaysian Anti-Corruption Commission (MACC) has been one of the few government bodies undergoing tremendous pressure. Most recently, rumours circulated that its chief commissioner, Tan Sri Abu Kassim Mohamed, might be replaced for health reasons, although this has since been denied by Abu Kassim himself.

This had initially raised some speculation, given that the MACC had just handed over its investigation papers to the Attorney-General’s Chambers on the RM2.6 billion donation to the prime minister’s personal bank account, and on the Finance Ministry’s wholly-owned subsidiary SRC International.

But if the rumour had turned out to be true, this should not in fact come as a shock. That the prime minister has sole discretionary powers to remove the head of a government agency is not too surprising; after all, the MACC is not really an independent body and still reports to the Prime Minister’s Department. I have also pointed out in an earlier column that much power is concentrated in the hands of this one man in the highest of positions, an unfortunately systemic problem we have inherited from previous administrations.

What is more disturbing is that the very institution tasked to unveil corruption is not in fact independent. One would have thought that such an entity must be given operational and financial independence to carry out its investigative duties in a neutral way, without fear or favour.

One only needs to recall the unceremonious manner in which the police targeted several MACC officers in August, when there were supposed information leaks related to the investigation into the 1MDB issue, as well as raids conducted on an MACC prosecutor’s office, with his documents taken away. Would all this have happened if the MACC were an independent institution?

Over the last year and a half, IDEAS, together with the Malaysian Bar and other civil society organisations like Transparency International and the Centre to Combat Corruption and Cronyism have worked to propose a complete revamp of the way in which the MACC is set up and run.

A public campaign of this proposal was launched at a public forum in Kuching last month with the support from local Sarawakians. Sarawak, too, has seen its fair share of corruption scandals having gone unaddressed, most of which are related to logging contracts. The campaign will continue in other cities across Malaysia over the months to come.

The proposal is essentially to create a new Independent Anti-Corruption Commission that is constitutionally mandated, with its own hiring and firing abilities. The members of this new IACC would consist of at least 40% civil society and industry experts, while the rest come from public service. More importantly, members of the IACC ought to be voted in by Parliament.

In this new model, the MACC’s existing oversight bodies (namely the Consultation and Corruption Prevention Panel, Complaints Committee, Operations Review Panel and the Anti-Corruption Advisory Board) would be incorporated and absorbed into the IACC, while the Special Committee on Corruption would be retained and renamed as the Parliamentary Select Committee on Corruption.

What is most important is that the IACC will have an expanded role and function, which is in setting policy and direction in combating corruption. A separate body, the Anti-Corruption Agency (which will report to the IACC), should be the actual body carrying out operational investigative work, and that will recommend whether to prosecute an individual or not.

Some may question whether or not it makes a difference even if the MACC (or the IACC, if this proposal is eventually taken up) is independent, since prosecutorial powers still lie with the Attorney-General’s Chambers. However, giving the MACC prosecutorial powers is not necessarily the solution.

In Malaysia, the Office of the AG is fused with that of the Office of the Public Prosecutor, which causes tension in the administration of duties and functions. The AG has sole discretion on whether or not to prosecute someone on a criminal case, which has direct conflict of interest with his role of public prosecutor, which is as legal adviser to the Cabinet. What would be more effective in the long run is a constitutional amendment to separate the two offices.

Many of these points are not new. Pushing for an independent Anti-Corruption Commission that reports instead to Parliament, and calling for the separation of the AG’s Chambers seems to be the most logical, basic thing to do – in a country run according to the rule of law, that is.

Given the political climate of our country, it is truly unclear as to whether there will be the political will to carry through any of these reforms so vainly put forward by those of us in civil society. But carry on we must, if only to educate the public, create awareness and popularise a reform agenda we must demand of our current and future leaders to advocate.

Without an independent MACC, Malaysians can rest assured we will continue to have high-level corruption scandals go unaddressed, to the detriment of citizens whose tax-paying public funds pour out into other undeserving deep pockets.

First published in theSun here, on 10 December 2015.

THE 2016 budget came as a rude shock to some, since there were massive budget cuts in most of ministries, including education, energy, finance, urban wellbeing, housing and local government, as well as transport. It did not help that the Prime Minister’s Department actually had an increase in its allocation from RM19 billion this year to RM20.3 billion in 2016.

For many years, Malaysia was considered a nation blessed with oil; we have for a long time been an oil exporter. Whilst true that we escaped the “resource curse” or the “paradox of plenty”, where oil-dependent countries perform economically worse than their counterparts not similarly endowed all things being equal, one must admit that oil and gas resources have certainly been a lucrative contribution to the country’s development.

The contribution of oil and gas to Malaysia’s economy cannot be understated – Petronas has played a central role in the development of Putrajaya, the Formula One race circuit, the twin towers, among other major national projects.

At one point, oil revenues contributed 40% of our national budget, but this has steadily declined to an estimated 19% today. This proportion is expected to drop further to about 14% in 2016.

And so, it is fair that analysts have expressed concern given the sharp fall in global oil prices – this would directly affect the Malaysian budget and by extension, the ability of government to spend.

For instance, the 2015 budget was at the time formulated with the assumption of oil hovering around US$100 a barrel, but by January this year oil had fallen to below US$50 a barrel (Brent crude oil prices). The 2016 budget has assumed oil prices at US$48 a barrel, but the rate has actually fallen to a near seven-year low since 2009 to US$40.76 this week.

A roundtable discussion hosted by IDEAS recently discussed this very issue of how the fall in oil prices would affect the Malaysian economy. It was noted that the government had foreseen these challenges, and hence initiated its fiscal reform over the last year or so; implementing the goods and services tax, abolishing fuel subsidies as well as making the decision to freeze civil service recruitment this year.

Renowned economist and retired banker Tan Sri Dr Lin See Yan, however, presented a bleak global context in which Malaysia operates, one that is possibly on the verge of a global recession given deficient global demand and the slowing down of China and the emerging market economies. In such a scenario, the price of oil is only but one element in the world economy.

Given that oil prices are not expected to rise any time soon, this has several deep implications, namely the urgent need for the government to reduce any unnecessary expenditure.

First, there is obviously a need for more efficiency in government administration. It is good that there is a freeze on civil service recruitment, but the civil service is bloated and its size needs to be evaluated, which of course is a politically unpopular option. Emoluments – salaries and benefits for the civil service – form a whopping 26% of the entire expenditure amount.

Second, it is a tremendous opportunity for the government to examine its procurement contracting system. Research has shown that government can save a minimum of 4% of its expenditure by having transparent procurement processes.

In a policy paper published last year, IDEAS showed that there could be potential savings of between RM2.7 billion and RM4.5 billion a year if the government engaged in transparent practices, assuming that between one third to half of the existing public procurement is not currently transparent.

Finally, there ought to be a more coherent process of planning and coordination among various ministries. It is well known that even government officials find it difficult to obtain data and information from other agencies or ministries. If they cannot find the right data, what hope is there for researchers such as us?

It is positive that the Ministry of Finance will soon implement the outcome-based budgeting method in the year to come, but even this process needs to be publicly known – so much could be done with more stakeholders engaged in the process, including gaining the trust and feedback from citizens.

One part of the government is now embarking on an open data agenda via www.data.gov.my but perhaps not all ministries are aligned or willing to make their information publicly available.

Oil has certainly contributed to the rapid reduction of hardcore poverty in Malaysia since its discovery in the 1970s, and we must attribute our country’s success over the last few decades to it. But that era is over, and the government must now detach itself from depending on these revenues.

Our economy must be ready to jump into the deep end of the ocean, truly developing the non-oil sector in what is today a competitive and liberalised world.

This is what a new economy in a new world will be like in the near future – one in which the low oil price is here to stay, especially given global dampening demand and Opec’s refusal to cut production leading to a world glut of crude oil. Malaysia has little choice but to adapt and do so quickly.

First published in theSun here, on 26 November 2015.

LAST week, I was invited to speak at an OECD (Organisation for Economic Co-operation and Development) conference on the corporate governance of state-owned enterprises (SOEs), or in Malaysian terms, government-linked companies (GLCs). In this article I use the terms interchangeably.

This meeting was held in conjunction with the OECD’s newly released 2015 guidelines on corporate governance of SOEs, which provide for very high standards on how public enterprises should be managed and governed, to ultimately provide best value to citizens whose funds they run on.

GLCs in Malaysia are owned by the federal government through seven government-linked investment companies (GLICs), namely Khazanah Nasional, Permodalan Nasional Berhad, Kumpulan Wang Simpanan Pekerja, Kumpulan Wang Persaraan, Ministry of Finance Incorporated, Lembaga Tabung Angkatan Tentera and Lembaga Tabung Haji.

Although a comprehensive list is difficult to obtain, it is estimated that these seven GLICs own more than 200 GLCs in Malaysia, contributing to 5% of the national workforce and accounting for 36% and 54% respectively of the market capitalisation in Bursa Malaysia and the Kuala Lumpur Composite Index.

GLCs have certainly contributed positively to fulfilling national development objectives, such as spearheading the government’s bumiputra agenda, providing employment and promoting inclusivity, apart from contributing to the national economy more generally.

In fact, during the recent graduation of the GLC Transformation Programme, it was reported that the top 20 GLCs targeted for reform in 2004 have now recorded increased profits and total shareholder return – all positive news. They also represent half of the top 10 companies on the FTSE4Good Bursa Index, which recognises Malaysian companies with good corporate responsibility practices.

But apart from these top 20 (in fact, now 17, after government divested shares in three of them) GLCs, not enough attention on governance practices is given to the other hundred or so entities. This is where the OECD guidelines come in, which should be a valuable reference for Malaysia.

Some of the key elements include a requirement for SOEs to ensure a level playing field and fair competition in the marketplace when SOEs undertake economic activities. This might come as a surprise to Malaysians, since we expect our GLCs to receive favourable financing, as they are “government-backed”, when in fact the best practice is to ensure SOEs are not in fact conferred any unfair advantage over private competitors. On the same note, SOEs should not give or be given preferential treatment when engaging in public procurement.

Second, the OECD recommends a clear separation between regulatory and ownership functions, to ensure that the same government entity does not both regulate and own the GLC in question. For the many GLCs owned by MOF Incorporated – like 1MDB and Pembinaan PFI Sdn Bhd – it is clear that the MOF performs both the regulating and ownership roles, providing for some obvious conflict of interest situations.

Third, the guidelines also recommends that SOEs should observe high levels of transparency and are subject to the same high quality accounting, disclosure, compliance and auditing standards as listed companies. Some of our GLCs do so, such as Petronas (which submits annual reports the way a listed company would). But for many others, this is not the case.

1MDB was reported as failing to file its accounts on time this year, for the reason that it was “given permission by the companies regulator to miss the September 30 deadline” (Financial Times, Oct 1). Subsidiaries were also seeking extension to deadlines for “further clarifications”. In this case, why should extensions be given to them on an exceptional basis?

Finally, the boards of SOEs should have the necessary authority, competencies and objectivity to carry out their functions, acting with integrity and being held accountable for their actions. Specifically, board composition should allow the “exercise of objective and independent judgment”, and mechanisms should be implemented to avoid conflicts of interests that prevent board members from acting objectively, and “to limit political interference in board processes”.

In Malaysia, many of our GLCs’ board members are linked to their main shareholders, whilst 1MDB has as its board of advisers’ chair the prime minister; the key question is whether the board composition allows them to act objectively and without political interference. This is where minority shareholders can play an active role (the Minority Shareholder Watchdog Group does well in being vocal), where legal rights should be duly given and exercised.

In fact, it was noted that SOEs can have non-commercial objectives but this needs to be made publicly known and adequately compensated by government. In Malaysia’s case, these “non-commercial” (ie public policy objectives) would be to fulfil bumiputra requirements. It would be interesting to ask how and to what extent governments should be compensating GLCs for carrying out their public policy objectives.

In the Philippines, the government set up a Governance Commission in 2011, whose role is to govern SOEs using performance scorecards, with an emphasis on transparency. Because they are an Open Government Partnership implementing country, this helped by making what they call an Integrated Corporate Reporting System, an online repository of information on all their SOEs, which adheres to open data standards – something our GLCs could surely learn from.

It is also impossible to speak of GLC reforms without recognising the impact the Trans Pacific Partnership Agreement (TPPA) will have on Malaysia, since one of the key chapters is that on reforming SOEs, namely “to ensure a level-playing field between SOEs and private entities that compete in the market”. Although there are some exceptions, the rule of thumb is that the government has to ensure SOEs act in accordance with commercial considerations (ie in a non-discriminatory manner) in its purchase or sale of goods and services.

Finally, what is interesting is that the new guidelines recommend that governments specify their rationale for state ownership. The OECD believes it is possible to have well-governed and efficient public enterprises, but perhaps one ought to question state ownership in the first place. It is a philosophical question of why the state exists in the market place: should the government not stick to what it does well, and not enter the domain of (and hence crowding out) the private sector? Even if GLCs can fulfil certain public policy objectives, what then if these are public policy objectives in the wrong direction?

First published in theSun here, on 12 November 2015.

TUN Dr Ismail Abdul Rahman’s life in politics has in two previous books been deeply analysed by academic Ooi Kee Beng (in The Reluctant Politician: Tun Dr Ismail and His Time and Malaya’s First Year in the United Nations), and the latest edition Drifting into Politics: The Unfinished Memoirs of Tun Dr Ismail Abdul Rahman continues the discourse but this time delves into the personal life and motivations of this great man, published 100 years after his birth in 1915.

Written from a first person point of view based on his personal writings (and edited by his son Tawfik Tun Dr Ismail and Ooi Kee Beng), the book offers insights into the reasons he left the medical profession to join politics at the persuasion of Tunku Abdul Rahman. Ismail’s writings are frank (sometimes shockingly so), succinct in weaving through the complex politics of his time and importantly, provides the reader with interesting background of the events and subtle negotiations leading to Malaya’s independence in 1957.

In his personal life, it is no secret that Ismail enjoyed women, which he admits in several entries such as the fact that “there were three girls in my life in Australia”, with details of each relationship and how he enjoyed interacting with people of the opposite sex, resulting in his friendship with non-Malays at a young age. Such admissions would certainly be frowned upon in today’s relatively more conservative society, but these interactions seem to have been warm and genuine.

Ismail writes extensively about the Tunku, whom he loved dearly. The Tunku had a “subtle brain which approaches political problems differently from others” and whose actions were “effective and practical”. He seemed fascinated by the Tunku wanting to recognise the Communists, at least on the grounds that they were “inspired by nationalism” (since he himself was not convinced), and how he was adamant to meet Chin Peng (an “unorthodox step”) to have a frank dialogue in order to end the state of emergency, although later realising it was impossible to find any mutual agreement. He later also writes about Tun Razak, whom he considered “an able administrator and a shrewd politician, … cautious and has the ability to handle people”.

The early formation of the Alliance (made up of Umno and MCA) is given a lot of attention. In fact, Ismail writes that it was local council elections that led to the Alliance’s success – an irony since it is the Barisan Nasional (which the Alliance morphed into) that now considers local council elections the most barbaric thing – and he emphasises this: “It would do well to remember that the formation of the Alliance at the national level took place after the success of the Alliance at the local council elections and that no prior conditions were laid down by either Umno or the MCA.” This would then lead to elections at the national level to push for independence. Local council elections were therefore formative to our nation’s independence, something so conveniently forgotten in today’s political discourse.

Ismail elaborates on the troubles of the Alliance, including Datuk Onn’s exit from Umno, which reflects upon Ismail’s multiracial politics. He seemed to despise Datuk Onn’s “inflammatory communal speeches in public” and in Parliament, predicting that “a racial clash was bound to occur” if this continued. It was clear that in the early years, Malaya was already dealing with racial conflict between the Malays and non-Malays, an issue that has unfortunately not been resolved.

The Alliance back then sought the help of the Commonwealth to set up an independent commission to draw up Malaya’s Constitution, namely since “the complexities of a multiracial society … could only be solved by an independent (and unbiased) commission”. The three main problems were essentially “citizenship, the national language, and the special position of the Malays”.

It is interesting to note that to Ismail, it was not the special position of Malays that the non-Malays had to be convinced about, but on the Malay language. For instance, “if the Chinese … were to be persuaded into accepting Malay as the national language, they should be granted citizenship as a quid pro quo”, which seems rather odd in today’s world in which Malay is universally accepted as our national language. It seems almost silly that this was a sore point of contention, since in present day it is the special position that is most hotly contested. National language, he argues, “was the real basis of the agreement … between the Malays and the Chinese”.

Ismail’s position on human rights may seem harsh to today’s activist, where despite his otherwise liberal views on democracy, he maintained that “the Internal Security Act is essential to the security of this country” and was convinced it was not contrary to the fundamentals of democracy. A caveat of course is that the Act would not have been abused if we had “vigilant public opinion via elections, a free press, and above all, by parliament”; the independence of these three institutions have been so heavily eroded today that one wonders if Ismail would still consider detention without trial necessary. Today of course, the ISA has since been abolished, but it is argued by many legal experts that the newly instated Security Offences (Special Measures) Act 2012 (Sosma) is being equally misused for preventive detention.

He writes surprisingly little of the 1969 racial clashes, perhaps because he was suffering from both cancer and a heart condition, for which he had to seek medical treatment. Nevertheless in reference to the bumiputra policy that was put into place, he strongly opined, “we should aim at a target period of 20 years”. It was his hope to see Malays participating in the commercial and industrial fields; a policy that he felt would determine the future of Malaysia, but it was important that this should be done “without unduly frightening the non-Malays”. Ismail understood the nuances and sentiments between the races, and it is unfortunate he had an early demise before the policy took on an ugly turn many decades later.

As a memoir of his colourful life and personality, it seems to be lacking in content and depth; this could not have been helped since he himself seems to have been a brief writer, not having extensive elaborations upon key incidents. But the little that we do have is surely precious. We see of the man once again his reluctance to enter politics, preferring his medical profession, his love for people (both family and colleagues, especially the Tunku), his concern for his country (he spends most time writing about the issues of Malaya and what is needed to sort out its complex problems) and we wonder what the nation would have been had he survived longer.

It is not clear how Ismail would have interpreted the conditions of today’s society and the various racial and religious tensions, or what his practical solutions would have been. But what is evident is that Malaysia would have had the leadership of a thoughtful and careful politician who would dissect issues for the many layers we have. We would have had the privilege of being under a statesman who ultimately believed in a “just way of doing things in a multiracial society like Malaysia”.

First published in theSun here on 15 October 2015.

A MONTH ago, Otto Perez Molina resigned as president of Guatemala following an investigation that he and his aides received bribes in exchange for lowering taxes for companies importing products into the country. Just hours after his resignation, he was sent to jail.

Two years ago, French Budget Minister Jérôme Cahuzac resigned following investigations into allegations that he had a secret bank account in Switzerland.

In both cases, the perpetrators in question denied any wrongdoing at the outset.

One positive thing that emerged from the case in France, however, was the formation of a new government body tasked to tackle corruption in the public sector.

In my recent trip to Paris, I had the privilege of meeting with the High Authority for Transparency in Public Life (high authority).

Declaring assets publicly

Following the 2013 scandal, the government reacted to public demand for more transparency. Some might argue too little, too late.

But one must admit their present-day mandate is enviable and impressive; under new transparency laws, more than 9,000 leading public officials in France are compelled to declare their assets and any conflict of interest, including ministers, members of Parliament, local elected representatives and non-elected high-ranking officials.

This high authority works closely with the tax authority to verify whether or not the assets declared are accurate, and can seek information directly from public officials if there are incomplete statements.

Their practice is for ministers to declare all assets publicly, while members of Parliament only have their assets disclosed at governors’ offices, which local constituents are able to access.

In an IDEAS policy paper released earlier this year, we recommended a higher standard for assets of all public officials to be publicly disclosed. We made an exception, however, where if information is only made available to the public by request, Malaysia should first enact a Freedom of Information Act.

Conflict of interest

But the more interesting part of the high authority’s work is to compel public officials to also declare any conflict of interest they may have.

The Organisation for Economic Co-operation and Development (OECD) defines conflict of interest as “conflict between the public duty and private interests of a public official, in which the public official has private-capacity interests which could improperly influence the performance of their official duties and responsibilities”.

So public officials are required to fill out a long form that includes any business activity, compensation received, consulting activities, holdings in any private company, and even volunteer work that may conflict with their ability to carry out their functions in a neutral manner.

In France, the high authority has the power to issue injunctions against public officials to end any contentious situation when a conflict of interest has been established.

The laws even propose criminal prosecution for public officials who fail their obligations in matters pertaining to asset declaration or conflict of interest.

The Malaysian Anti-Corruption Act does not make conflict of interest explicitly wrong, and only spells out instances under which human actions are criminalised for corruption, such as Section 23, which makes it an offence for a public official to use his office or position for any gratification.

In fact, IDEAS together with the Malaysian Bar and several other NGOs have argued that this should be even expanded further to include all forms of gratification (not just financial) including abuse of office.

Apart from that, other government regulations, which apply to public officers, state that they should not allow their private interest to come into conflict with their public duty “so as to impair (their) usefulness as public officers”, or use their public position for personal advantage (Public Officers Conduct and Discipline Regulation, 1993).

There is also a code of ethics related to conflict of interest, which applies to those working within the Prime Minister’s Office, which states that all members of staff and officers in the Prime Minister’s Office “should ensure that no conflict of interest exists between the performance of their official duties and their personal matters” (The Code of Ethics of the Prime Minister’s Office”).

Officers and staff have to “obtain written permission from the Head of Department before pursuing an interest in a business or completing any transaction”.

One wonders which officers are subject to this apparently strict code of ethics, and to whom the officer of highest standing needs to obtain written permission before pursuing such business interests.

In France, Jérôme Cahuzac vehemently denied that he had a Swiss account when faced with those allegations. He resigned when legal proceedings for fiscal fraud were launched, eventually admitted he had hidden about €600,000 (RM2.88 million) and is now being investigated for tax fraud.

Obviously US$770,000 in a personal account of a minister is too much for the integrity of the French government.