POLITICIANS (and presidents) come and go and governments can change around the world but investors and people stay in countries where they have trust in the strength of institutions that make up the backbone of a country. That is why it is important for Malaysia to make several structural reforms to strengthen the foundations of the country’s institutions so that poor governance does not sap the nation’s growth potential.
“Several basic reforms are needed so that institutions can provide effective checks and balances on the executive. Governments can change but if institutions are strong, there is no worry of changes. For example, in Japan and Korea, governments can fall but businesses are confident that they can continue operating in a responsible manner,” says Tan Sri Mohd Sheriff Mohd Kassim, former managing director of Khazanah Nasional Bhd and a member of the group of 25 (G25) former high-ranking civil servants and prominent Malay figures.
Speaking at the launch of G25’s 92-page report, titled ‘Invigorating Economic Confidence in Malaysia’ in Kuala Lumpur on Dec 9, Mohd Sheriff related how he was heartened to read how Indonesia’s parliamentary committee had approved the appointment of a key public defence appointee after they were satisfied the candidate nominated by the president passed a “fit and proper” test.
“The prime minister has the right to nominate [a person to key positions] but there needs to be strong parliamentary oversight,” says Mohd Sheriff, who was also former secretary-general of the Ministry of Finance.
In 2015, it was reported that Indonesian President Joko Widodo’s anti-graft credentials were questioned and he had to withdraw a previous nominee for national police chief, Budi Gunawan, who was implicated in a bribery scandal. In April 2015, members of parliament endorsed three-star police general Badrodin Haiti as police chief after grilling him on a range of topics, including tackling corruption, radicalism and crime.
More recently, the global community would have witnessed how US President Donald Trump’s Federal Reserve chairman nominee Jerome Powell had to face the US Senate Banking Committee for a confirmation hearing. The US president can be impeached by Congress.
“The weakening of governance is a threat to upside potential. [People and investors] need absolute confidence ... other countries are doing this ahead of us. Everyone wants a place with good governance and clean government,” says another G25 member, Datuk Latifah Merican Cheong. She related how some businesses here insist on contracts being drawn up using Singapore law “even when Malaysian law is the same word for word, because they trust the Singapore courts”.
“There must be better governance and transparency in public sector institutions, there must be confidence that the judiciary is independent,” adds Latifah, who is former assistant governor of Bank Negara Malaysia.
The 2017 Edelman Trust Barometer Malaysia, released in February, found that 52% of Malaysians have lost faith in the institutions and systems, citing a sense of injustice, lack of hope and confidence as well as desire for change. These findings were consistent with the findings of The Edge’s survey, ‘How to Fix Malaysia?’, in December 2016, with corruption and poor governance cited the two most urgent problems that Malaysia needed to fix.
In its newly released report, the G25 repeated its call for a distinct separation of power in the government’s three branches — parliament (makes the law), judiciary (interprets and enforces the law) and executive (carries out the law) — to strengthen the nation’s foundation for economic growth.
“Poor governance has opened the flood gates for endemic corruption at high levels of government and government-linked business entities, which erodes the efficiency and efficacy of the public sector and businesses, promotes the improper allocation of resources and raises the cost of doing business… Malaysia must restore public confidence in good governance practices so that citizens and investors are confident that laws, regulations, procedures and processes will be implemented with appropriate checks and balances,” the G25 said.
“The key areas most essential to rebuild the strong foundations for supporting sustainable inclusive economic growth are (a) strengthening the independent judiciary; (b) making the legislative system dynamic; (c) improving public sector performance; and (d) restoring a clean government,” the G25 report read. It advocated stronger parliamentary oversight with the establishment of parliamentary select committees and special select committees with oversight functions and which are adequately funded, independently staffed and empowered to undertake special investigations when there are wrongdoings.
“To ensure proper and effective checks and balances to safeguard public interests against the abuse of power, it is imperative that parliament has a greater and more dynamic role in overseeing the functions of the government, particularly the operations and performance of ministries and other public sector agencies,” the G25 said.
It is not enough that Malaysia has a Parliamentary Public Accounts Committee (PAC), which largely goes through financial-related matters. The PAC, in 2016, issued a report on 1Malaysia Development Bhd (1MDB) and made several recommendations that are deemed to have yet been fully carried out. Some PAC members had publicly complained that the final report on 1MDB was amended without the agreement of all its members. The Auditor General’s final audit report on 1MDB, for instance, today remains classified under the Official Secrets Act. 1MDB — which in July 2016, said its 2013 and 2014 financial statements should not be relied upon following civil forfeiture suits filed by the US Department of Justice alleging misappropriation of funds from 1MDB — has yet to issue its 2013, 2014, 2015, 2016 and 2017 audited accounts.
“The government should release a full comprehensive transparent report on the official status of 1MDB. This should contain explanations from management towards meeting financial commitments and achieving corporate objectives. Where appropriate, the report should be consistent with and reflect the findings and court documents already in the public domain in the US, Switzerland, Singapore, and others countries as well as the actions taken by authorities in these countries impacting 1MDB. Going forward, the government would ensure that current regulations are strengthened to prevent a recurrence of such an incident,” the G25 said.
According to the G25, greater prominence for Parliamentary committees will trigger a restoration of powers to members of parliament (MPs) when approving legislation and diminish attempts by the Executive to undermine the role and powers of Parliament.
Among other things, the G25 says the PAC should be enhanced by appointing a chairman from the Opposition party, in line with international practices.
The G25 also called for the setting up of Parliamentary committees for Legislation to consider bills and oversee Executive activities as well as the enacting of a Freedom of Information Act to foster greater access to information.
It also proposed that the prime minister “plays no role at all in the appointment of judges” and that the Constitution be amended so that the Judicial Appointment Commission (JAC) be the party that recommends names to the Conference of Rulers (for their views) and thereafter the Yang di-Pertuan Agong.
The group also wants the dual role of the Attorney General as public prosecutor and the government’s legal adviser be separated to avoid conflict of interest and eliminate any suspicion of political interference in the prosecution of wrongdoing involving government officials.
The group also suggested that the A-G and the Director of Public Prosecution (DPP) be appointed, with security of tenure, through a transparent, accountable and merit-based process. He or she can only be terminated by the Yang di-Pertuan Agong on the advice of an independent commission. As it is, the AG is appointed and removed by the Yang di-Pertuan Agong on the advice of the prime minister.
At the briefing, Mohd Sheriff also named at least five key public service appointments that should be independent from the executive: the attorney general, auditor general, chief secretary of government, director of public prosecution and the head of the Public Service Department.
The G25 also asks that the Parliament and Executive continue to respect the independence of Bank Negara Malaysia, as provided in the Central Bank Law. It also said the Malaysia Anti-Corruption Commission (MACC) must be allowed to function independently and impartially with structural protection.
“This can be achieved by setting up the Independent Anti-Corruption Commission (IACC) as mandated through a Constitutional amendment. The MACC will then be established as the investigative arm under the oversight of, and within, the IACC. A constitutional commission is beyond the scope and control of the executive with independent Commissioners holding security of tenure serving the commission. IACC commissioners will be selected or terminated by the Parliamentary Select Committee on Corruption and appointed by the PSC,” it said.
It remains to be seen if any politician or political party would publicly support these suggestions, which these former prominent civil servants reckon are imperative to win back the confidence of the people.
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