April 23, 2010

CAT in action – Pakatan Rakyat States

Posted in Malaysia, Selangor, The Cause, Tricia's Writings at 9:06 pm by egalitaria

First published in the Penang Economic Monthly, February 2010 Issue. 

CAT in Action: Competency, Accountability and Transparency in the Pakatan States

Tricia Yeoh

One of the electoral themes that took the now-governing Pakatan Rakyat states by storm was that of transparency and accountability. Indeed, harsh criticisms of corruption, financial mismanagement, wastage and abuse of power was levelled against their predecessor Barisan Nasional at both the state and national level. The stories worked: voters were angry and disgusted at their tax-paying money having gone down the drain to advantage a privileged few. Indeed, Malaysia dropped from 47th in 2008 to 56th place in 2009, in Transparency International’s Corruptions Perceptions Index, its worst ranking in 15 years.

Two years into their administration, what exactly has been done in order to fulfill their pledges of CAT – competency, accountability and transparency – that the Pakatan Rakyat states have waxed lyrical about? This article explores the attempts made by the state governments in improving administrative efficiency through transparency and accountability measures and the challenges encountered therein.

The reason for placing transparency as a priority is simple: the more information that is available to the public from the administration, the more likely it is for governments to behave responsibly in order to uphold standards and commitments. This also allows citizens to obtain, analyse, and evaluate for themselves details about projects carried out by the government. A mature democracy requires that people are in this manner empowered. However, transparency is often a principle that many leaders champion yet fail to translate into reality. It is easy to make motherhood statements and pronouncements of reform, as Malaysians recall former Prime Minister Abdullah Badawi doing, but the devil lies in the detail, where laborious standards and stringent guidelines are required.

 

There are several areas in which transparency is key in ensuring administrative efficiency. First, the amount of information provided by governments on its own practices. This includes publishing of budgetary documents. At the national level, Malaysia fared poorly in a 2008 international Open Budget Index, which measures accessibility of the national Budget and the quality of financial information provided, scoring 35% and placing it in the category of countries that provide “minimal” information to the public. At the state level, a quick search of all state government official online portals revealed that none provides full details on their respective budgets, with the exception of the Selangor website that has the Menteri Besar’s 2009 and 2010 budget speeches in full. Financial breakdowns of revenue and expenditure ought to be displayed. This holds true of local councils’ websites, very few of which provide their budgets online. One would imagine this to be a priority area of reform, where local councils have the authority to approve projects worth thousands of ringgit.

The Selangor state government in its celebration of the World Media Freedom Day 2009 announced its intention of tabling a Freedom of Information Enactment, which would require all state-owned agencies and companies to provide access of information to the public with only very few exceptions. This is expected to be tabled in the first legislative assembly sitting of 2010. Although this is limited to state agencies, and some difficulties may be encountered vis-à-vis clauses of the Official Secrets Act, this is an important move that should be adopted by all states promoting transparency. Although the enactment has not yet been tabled, Selangor made the decision to declassify information on large projects of the previous Barisan Nasional state government which caused great financial loss to the state. This included abandoned projects in the areas of Bukit Ceraka and Bukit Botak, and reafforestation projects by its state subsidiary where crony private companies profiteered at the expense of the state. Most recently, it announced its decision to support the declassification of the Syabas water concession agreement, a reversal of the previous state administration’s stand (in the ongoing case Malaysian Trade Union Congress v. the Selangor state government).

The second area of transparency reform is that of procurement policy. The Malaysian government has held to the position that limiting information about its procurement processes and the exclusion of foreign bidders is necessary to support the national agenda to protect local suppliers. In particular, Malaysia’s practice of affirmative action with procurement policies designed to upgrade Bumiputera equity has been shrouded in secrecy. It should be reminded instead that  greater transparency in government procurement, regulations and procedures in fact promotes competitiveness, and better social and economic development. Public procurement should aim to achieve competition, economy and efficiency, fairness and accountability by practising open tenders instead of negotiated tenders, and making information such as pricing and quality of the tender available for public viewing. It is estimated that procurement in Malaysia causes losses of up to RM10 billion a year.

In the meantime, Prime Minister Najib Razak is pushing his agenda of national key result areas (NKRA), one of which is on corruption, helmed by the Malaysian Anti-Corruption Commission (MACC). Apart from its targets of eliminating corruption amongst enforcement and public officers, the government is to ensure that government procurement processes and procedures are adhered to, although the details of these standards have not been made clear.

At the state level, the practice has always been that of negotiated tenders, a system that provides ample room for cronyism and nepotism. The Penang state government lived up to its self-proclamation as a CAT government by introducing a lottery system for class F Bumiputera-only contracts. It has since implemented open tenders, payments directly to recipients without going through middle-men, e-tenders online and a two week objection period. It is a success story, proving that open tenders promote financial efficiency, where its projected state deficit of RM40 million in 2009 was reversed to record a RM77 million surplus instead.

The argument against open tenders by the government over the years to protect the local industry especially that of the Bumiputera community, however, has also proven hollow. The claim was that if no preferences were given to the Bumiputera contractors and suppliers, their more business-savvy Chinese counterparts would win the tenders. The Penang state government has successfully proven that out of the 23 tender awards issued by the Penang Development Corporation, 30% was won by non-Malay contractors and 70% by Malay contractors. The same was experienced by Perbadanan Bekalan Air Pulau Pinang (PBAPP) (Penang Water Supply Incorporated), with 33% and 67% won by the same categories. Its Chief Minister Lim Guan Eng stated that this proves Malay contractors can compete with others and win tender awards on their own merit. This clearly disproves the false notion that Bumiputera companies cannot compete on an equal playing field. This sets into motion the deconstruction of the philosophical basis of the New Economic Policy and all it encompasses. It will be interesting to observe the details of the Prime Minister’s New Economic Model, to be announced soon.

Another area of transparency in action is a known practice in other countries but only recently recognised in Malaysia: public hearings. In Selangor, a Select Committee on Competency, Accountability and Transparency (SELCAT) was formed in 2009 to conduct hearings on selected issues in which there was suspicion of misconduct. Its main objective is to monitor the use of public funds, where its first investigation was on the dissolution of Balkis, the Wives of Elected Selangor Representatives Welfare Organisation and its expenditures. It revealed that Balkis received large funds from the former Selangor government’s state subsidiary companies, and paid for expenses unrelated to state government activities like overseas trips. Selcat’s second hearing involved investigations into the annual RM500,000 allocation of funds to state assemblymen. Such practices should be modelled in other Pakatan state governments. Although the Selcat does not have prosecution powers, as well as its experience of negative resistance from the state civil servants unused to such interrogations, it has been successful in unveiling past errors. 

In an Internet era where information is accessible with a click online, it is necessary to update laws and policies to match this culture of openness and transparency. It is refreshing to note that such reforms, although initiated in the Pakatan states, are also being considered at the Federal Government level. Perhaps it is this relationship that pressures the other into action that will ultimately benefit the rakyat. Equipped with more information, governments are then able to play the role they are elected as: responsible and accountable stewards of the public’s tax-paying money.

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