Opposition supporters cheer and wave party flags in Seberang Jaya, Penang, on May 4, 2013.
On May 6, Malaysia re-elected its ruling coalition government, the National Front, to another five-year term after vociferous campaigning and debate on the issue of corruption. In the first of a three-part series looking at whether the election’s attention on corruption will produce results, we illustrate the economic impact of corruption. The second part will describe the discussion of corruption during the election. The final installment will analyze the election results and the likelihood of any major impact on the patterns of corruption in Malaysia.
A little country off in Southeast Asia, Malaysia is a developing country with great economic potential. Malaysia boasts a variety of natural resources, including rubber and timber. It is a leading exporter of electrical appliances, palm oil, and natural gas. There is high hope that the country can take advantage of its valuable resources and transform itself into one of the leading economies in Asia.
Unfortunately, for decades, political corruption has eaten away the country’s resources and halted the country’s steady economic progress. Corruption in Malaysia takes many forms, from graft to cronyism to bribery.
For instance, two years ago in what was dubbed as the Cowgate scandal, a cabinet minister redirected almost RM 250 million (US$82 million) in agriculture sector development funds to her own family. The funds were intended to “help transform Malaysia’s cattle and beef industry” and reduce Malaysia’s dependence on beef imports. Despite the well-documented graft and public outrage, the politician still holds a senior position within the dominant party of the ruling coalition, the United Malays National Organization (UMNO).
In April 2013, the Global Witness, an international nongovernmental organization that specializes in cracking down corruption related to natural resource exploitation, unlocked a scandal in Sarawak, one of Malaysia’s 13 states. The organization videotaped a top state official agreeing to and even encouraging a number of illegal transactions involving the purchase of local land by foreign investors. Sarawak, despite having “some of the world’s largest tracts of tropical forests,” remains one of the poorest states in Malaysia.
This bribery case again shows the lack of proper management of Malaysia’s resources. Transparency International, an independent organization that calculates a Corruption Perception Index (CPI) for most countries and ranks them, shows that Malaysia’s CPI has not declined much. CPI scores ranges from 0 to 10, with 0 being highly corrupt. Between 1995 and 2012, Malaysia’s lowest score was 4.3 (2011), the highest score was 5.3 (1995), and 2012 recorded a 4.9. So while statistically significantly lower scores have been visible in recent years, a true trend of improvement has yet to emerge consistently.
If government officials’ focus is personal enrichment rather than promoting public welfare, the failure of Malaysia to achieve its full economic potential comes as no surprise.
On the other hand, the Malaysian government has not been completely oblivious to the problem of corruption. Since 1967, the Malaysian Anti-Corruption Commission (MACC) was established to investigate and prosecute public officials who have engaged in corrupt activity. Other organizations, such as the Public Complaints Bureau, have also been founded (in 1971) to collect information on corruption from the public. However, these organizations have not been as effective as they need to be in combating corruption. Critics argue that they have been too occupied with small cases to tackle high-profile cases.
Evidently, even the focus on small cases has patently failed. Bribery can commonly be seen in the streets of Kuala Lumpur, the country’s capital, as when drivers pay off policemen when pulled over for allegedly speeding or running a red light. Incidents of corruption are frequently discussed in the media. For some, corruption is the norm in Malaysian politics, but for others, it continues to be a growing frustration.
Malaysia’s cost of corruption is high and unnecessary, and takes away valuable resources that could otherwise be allocated to useful projects that target the infrastructure of its developing economy.
Olivia Low is a Rice University rising senior who this spring completed the Baker Institute’s first-ever undergraduate course on public policy. Russell Green is the Will Clayton Fellow in International Economics at the Baker Institute.