Political corruption detrimental to Southeast Asia

Published on Sep 27, 2022 01:07 PM IST

The article has been authored by Premesha Saha, fellow with the Strategic Studies Programme, Observer Research Foundation, New Delhi.

There is a perception that corruption has increased in Malaysia, especially after the exposure of scandals like the 1MDB and other recent major corruption scandals. Overall, the World Bank measures indicate that Malaysia whilst not amongst the most corrupt countries in the world still suffers from widespread corruption, creating a situation where much improvement is needed.(AFP File Photo)
There is a perception that corruption has increased in Malaysia, especially after the exposure of scandals like the 1MDB and other recent major corruption scandals. Overall, the World Bank measures indicate that Malaysia whilst not amongst the most corrupt countries in the world still suffers from widespread corruption, creating a situation where much improvement is needed.(AFP File Photo)
ByHindustan Times

Recently in August 2022, Malaysian ex-Prime Minister (PM) Najib Razak began his 12-year prison sentence after losing his final appeal in a case linked to the irregularities in the 1Malaysia Development Berhad (1MDB) state fund, with the top court unanimously upholding his conviction and sentence. This has again spurred up stories of corruption at the leadership and political levels affecting economic and political stability in Southeast Asian countries. 1MDB was a development fund that Najib set up shortly after taking power in 2009. Investigators allege at least $4.5 billion was stolen from the fund and laundered by Najib’s associates. Najib was found guilty in 2020 of seven charges of corruption for illegally receiving $9.4 million from SRC International, a former unit of 1MDB. Southeast Asian experts like, Bridget Welsh, at Malaysia’s Nottingham University have said, “For this decision, which is the first of many cases involving this particular scandal, to move in this particular direction really is a testimony to the rule of law in Malaysia, and the strengthening of the demands for the rule of law in Malaysia.”

There is a perception that corruption has increased in Malaysia, especially after the exposure of scandals like the 1MDB and other recent major corruption scandals. Overall, the World Bank measures indicate that Malaysia whilst not amongst the most corrupt countries in the world still suffers from widespread corruption, creating a situation where much improvement is needed. There have been a spate of cases in recent times. Examples include the Port Klang Authority concerning the Free Zone project, the Islamic Pilgrims Fund Board (Tabung Haji), the Sabah Water Department, the Federal Land Development Authority (FELDA), the State Government of Penang regarding the construction of the Penang undersea tunnel, and most seriously the 1MDB. These scandals have involved bribery, embezzlement, money-laundering, fraudulent transactions and extensive cronyism, often amounting to billions of ringgit.

But there have been measures to curtail these corruptive practices as well, in 2009 the Anti-corruption Agency (ACA) set up in 1967 was converted from a government agency into a commission—the Malaysian Anti-Corruption Commission (MACC). The MACC was established with an intent to empower the anti-corruption body with greater independence and autonomy to investigate cases. It could secure documents and witnesses, arrest and prosecute offenders, and propose reforms that would insulate key decisions from undue political interference. The reforms that took place in 2009 were partly in response to the growing frustration from the public and civil society over the overall quality of government, level of service delivery, problems around red-tape and lack of anti-corruption efforts. However, for several reasons, including gaps in policy or implementation most of these reforms have fallen short of achieving the desired outcome. Malaysia’s anti-corruption efforts received a major boost in 2018 with the election of the Pakatan Harapan government that came to power with the promise of a clean, accountable and transparent regime that resonated well with people following the 1MDB scandal. One of the first steps in this effort was to set up the National Centre for Governance, Integrity and Anti-Corruption (GIACC), as secretariat of the Special Cabinet Committee for Anti-Corruption (JKKMAR), reporting directly to the PM. The GIACC, in consultation with other agencies and departments, formulated and launched the National Anti-Corruption Plan (NAPC) and is currently overseeing its implementation. The main enforcement agency continues to be the Malaysian Anti-Corruption Commission (MACC), the two together being the main anti-corruption bodies in the country. Combating corruption and promoting integrity has become a key aim within Malaysia due to how corruption has occurred and its evident impact on the social, political and economic landscape. It is estimated that corruption may cost up to RM10 billion a year within Malaysia, equivalent to $2.3 billion. It is estimated that this accounts for up to 2% of Malaysia’s Gross Domestic Product (GDP).

But as per a report by the World Bank, “Malaysia’s performance on international indicators and rankings on governance, accountability and transparency have improved as a result of some of these reforms and other on-going efforts.” Its ranking has improved from 61st in 2018 to 51st in 2019 on Transparency International’s (TI) Corruption Perception Index (CPI). On the Edelman Barometer on Trust in Government, Malaysia shot up by 20 points in 2018 to 60 points from 40 points in 2017. The Economic Intelligence Unit (EIU) gave Malaysia a marked improvement score for 2020 for improvements in electoral process and pluralism, where it received 9.17 out of 10 in the Democracy Index. It had scored only 7.75 in 2018. According to another report by Anti-Bribery Anti-Corruption Centre for Excellence, “Data suggests that efforts to combat corruption in Malaysia have been futile. This includes over 66% of the public believing that there has been no improvement to the transparency and integrity levels within the public and private sectors.” The highest levels of corruption were found within the police, followed by other enforcement agencies such as customs departments and roads and transport. Data by Transparency International (TI) further confirms that corruption has increased over the recent years, with Malaysia falling from 23rd position to 62nd position from 1995 to 2019. In 2020, according to Pricewaterhouse Coopers (PWC), the four most disruptive forms of fraud experienced in Malaysian organisations were asset misappropriation, bribery and corruption, customer fraud and cybercrime. These account for 70% of all economic crimes in Malaysia.

Although it is clear that there has been extensive effort to tackle corruption, it remains a significant issue with great economic and social repercussions. The level of corruption has remained high, questioning the effectiveness of strategies in combating corruption. This includes the effectiveness of MACC, which aims to investigate corruption at higher levels.

Besides Malaysia, other countries in Southeast Asia also have been affected by corruptive practices, like Indonesia. More than 8 in 10 Indonesians say that corruption is widespread throughout the nation's government and businesses. Indonesia’s once formidable Corruption Eradication Commission (KPK) is now metamorphosed into an impaired government agency. Indonesia’s results in Transparency International’s 2020 survey indicate that the KPK’s performance and credibility have fallen. Most investigations are neither new nor progressing quickly and effectively. “The KPK is entering its bleakest days. Two of the country's top corruption watchdogs have given the new leadership of the Corruption Eradication Commission (KPK) a red mark for performance in the first half of 2020, citing poor enforcement against special crimes and the many controversies embroiling the commission,”

the Indonesia Corruption Watch (ICW) and Transparency International Indonesia (TII) wrote in their joint report on KPK’s performance published in June 2020. Therefore, what can be seen is corruption is rooted in the political systems, top leadership and sometimes even in the anti-corruption bodies in some southeast Asian countries and this makes the process of remedial efforts difficult. In Malaysia, it has been sometimes said that the anti-corruption bodies have not been efficient under certain governments. If the top leadership can be seen as accountable for the not so satisfactory performance of these bodies, then the question that arises is what are the other ways that can be thought of to make these bodies accountable. Should the courts be brought in at the early stages while investigating a corruption charge or claim to ensure that the rule of law is being upheld or should these bodies be directly accountable to the courts instead of the top leadership? The ruling of the High Court and the apex court in former PM Najib’s case, did shed some positive light and is being seen by many as a pathbreaking decision. There are significant impacts of corruption in society, including impeding economic growth, increasing income inequality and leading to poor trust in government and political institutions. So, there is a need to tackle corruption as that would benefit the economic, social and political landscape of Southeast Asian countries.

The article has been authored by Premesha Saha, fellow with the Strategic Studies Programme, Observer Research Foundation, New Delhi.

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