Ethics in Business – With whom does the heartbeat of a nation lie? – Part 2

Reading Time: 15 minutes
Firoz1
By Firoz Abdul Hamid

In this second part of the two-part series interview with the Chief Secretary to the Government of Malaysia (Head of Public Service/Cabinet Secretary), Tan Sri Dr. Ali Hamsa discusses the role of media in highlighting ethics. He also touches on public sector leadership in weeding out corruption and strengthening ethics both within the sector and in private sector. Tan Sri Dr. Hamsa closes this interview with his thoughts on Malaysia’s potentials and aspirations.

See part 1 here

In closing, the words of Mandela cannot ring any truer in what makes the face of a nation “It is said that no one truly knows a nation until one has been inside its jails. A nation should not be judged by how it treats its highest citizens, but its lowest ones.” ― Nelson Mandela

 

KSN Photo
His Excellency Tan Sri Dr. Ali Hamsa

Chief Secretary to the Government of Malaysia

We must strive to have “quality regulations” – regulations that have characteristics of good governance, and must fulfil “adequacy” and “gatekeeping or quality control” requirements.

1. Role of media – Has the media a role to play in highlighting unethical practices public and private sector?

The print and electronic media play an important part in the country and definitely have a role in highlighting unethical practices in the public and private sector. The media should be comprehensive, report the truth, be accountable to the people and not forget to practice ethics of journalism along the way.

Highlighting such practices will benefit the rakyat (citizens), in that they are informed that the government does not condone such practices, whether in the public or private sector, and a reminder to them that action will be taken against those who go against the rules and regulations of the country, be it in business or other sectors.

In the development of social media such as Twitter and Facebook in the country, the role of the media may have doubled, as the channels of reporting such bad and unethical practice are no longer done through the mainstream media but directly to the authorities through such access. People can also suggest and share views on how to improve, give feedback and even report unethical behaviours by the public or private sector.

The government is open to suggestions, feedback and even constructive criticism, but there should be a strong basis for it. We do not tolerate lies and allegations that have no basis towards the public sector.

There should be a win-win situation between the media and companies and smart partnerships should be developed. The Media can educate the business fraternity through the publishing of news on the best practice they should follow, and which agency they should refer to in order to evade any unethical practices.

 

2. Leadership of government – What is the role of public sector and government leadership, in your view, in strengthening Ethics in Business?

The public sector is the most important instrument in management and administration, as well as in delivery services and national development. The integration, internalisation and upholding of good moral values, and being free of corruption and abuse of power must continuously be strengthened. Leadership of Government is vital in shaping, guiding, maintaining and strengthening the ethical behaviour of the business community.

Since the 1980s, the government has introduced various programmes aimed at enhancing good moral values and integrity in the public service in particular. The Government has also put in place proper mechanisms to reduce corruption in its pursuit towards promoting the practice of higher ethical values. The establishment of the Malaysian Anti-Corruption Commission (MACC) also marked an important role of the Government leadership towards strengthening ethics in business.

Under the Government Transformation Programme (GTP), one of the National Key Result Areas (NKRA) initiatives is to reduce corruption in the country. Malaysia’s Corruption Perception Index in the Transparency International Survey 2012 rose from 60th to 54th position, which is a strong endorsement of the work that we have been doing. The Government has also implemented Compliance Units in selected enforcement agencies to monitor the performance and behaviour of civil servants and enforcement officers and to ensure compliance. This represents a major step towards creating a bribe-free society. These are but a few of the many Government initiatives undertaken to address the issue of petty corruption.

We are of the view that the UN system remains central to the global economic governance structure for achieving sustainable, equitable and inclusive growth. In this context, it is imperative for all global institutions to develop complementary ways to work with the UN system, to ensure that the UN’s work could be better articulated and coordinated. Real and lasting reform of global governance can only be achieved in close collaboration with the UN as the central role in the evolution of the framework. We believe there is a need to redesign regulatory structures to address the challenges of an increasingly complex financial system, increase transparency in the operation of specific markets and financial institutions, as well as to explore other options to ensure more effective global supervision in all segments of the financial system.

Hence, the nation supports the call for closer coordination and collaboration among national, regional and international regulatory authorities and institutions, specifically in sharing of information to ensure more effective global monitoring and transparency in all segments of the international financial system. At the same time, we believe that to further promote ethics in business, the policies of these global institutions must be formulated on the basis of promoting legitimate needs and expectations of peoples across the globe.

At the same time, the World Bank has played an important role in the evolution of the global integrity and good governance agenda since 1996, as the Bank believes that “Corruption diverts resources from the poor to the rich, increases the cost of running businesses, distorts public expenditures and deters foreign investors. It is a major barrier to sound and equitable development.” Many recommendations by the World Bank have been adopted by the Government in efforts to fight corruption, promote good governance among the business community.

The Securities Commission also undertook the World Bank’s Corporate Governance Report on Observance of Standards and Codes (ROSC) in 2012. The report is an assessment of corporate governance policy framework. Malaysia scored well from 76 to 86 per cent in the six main categories examined (enforcement and institutional framework, shareholder rights and ownership, equitable treatment of shareholders, equitable treatment of stakeholders, enclosure and transparency, board responsibilities).

 

Tan Sri23. Watchdog bodies – Watchdog bodies are often set up to monitor and oversee corruption and to be effective these bodies must be apolitical.

In Malaysia, for instance, you have the Malaysian Anti-Corruption Commission. MACC has come under alot of scrutiny and criticisms. Has MACC been effective in addressing corruption in the public and private sectors in Malaysia?

Watchdog bodies guarding against corruption in Malaysia are among civil society and they are not under the government payroll. Thus, they are independent and are not politically influenced.

Due to the government’s financial system, which requires budget to be channeled through agencies, the MACC is put under the government payroll, but this administrative arrangement does not affect any part of MACC’s legal obligation. The MACC is neither under the purview of the ruling government nor opposition. The MACC is an apolitical entity that is only and directly answerable to the parliament.

The MACC has the total independence to execute its roles and responsibilities to combat corruption to the fullest extent as provisioned under the Malaysian Anti-Corruption Commission Act 2009. To ensure that the public’s expectations towards the Commission’s independence, efficiency, effectiveness, transparency and accountability in executing its obligations are met, the MACC is placed under 5 external oversight bodies. The 43 members of these 5 independent bodies represent the general public, working as the public’s eyes and voice. They are not paid and they work on a voluntary basis, thus do not have any conflict of interest.

Although the MACC has been put under a lot of scrutiny and criticism, the Commission has proven its effectiveness in addressing corruption in the public and private sectors. The Global Corruption Barometer survey conducted by Transparency International in 2011 found that 49 per cent of the Malaysian public felt that the Malaysian government’s fight against corruption is effective or extremely effective, as compared to 48 per cent in 2010 and only 29 per cent in 2009. A study by Universiti Kebangsaan Malaysia in 2012 found that 64 per cent of the Malaysian public felt that the anti-corruption measures carried out by MACC are effective, compared to only 42.5 per cent in 2011. Contrary to the negative perception of the MACC, the studies show significant improvements.

The war against corruption in Malaysia has taken a new direction. A widespread anti-corruption initiative is enabling a greater reach to society towards engaging greater participation, be it in the public or private sector. The Malaysian public sector is currently going through a strategic transformation process under the Government Transformation Plan which aims to create a performance based public service delivery. The engagement of both public and private sectors through a publicly signed and contractually binding Integrity Pact has also opened the door towards a corrupt-free practice by each party.

The MACC has also managed to curb corruption in the public sector by the decreasing trend of the number of government officials arrested and the increasing trend of the private sector individuals being arrested for offences of corruption. Offences of active bribery (offering of bribe) as compared to passive bribery (receiving of bribe) have increased, which can be attributed to the success of the MACC anti-corruption campaigns.

The Malaysian Government has enacted two laws, namely, the Witness Protection Act 2009 and the Whistleblower Protection Act 2010, which aims to make law enforcement more effective and enhance public support in efforts to fight corruption and other crimes. Malaysia’s anti-corruption efforts also meet international standards¸ as we were a signatory to the United Convention Against Corruption (UNCAC) in 2008.

 

4.  Transparency International – Malaysia’s score in Transparency International’s CPI improved from 60 in 2011 to 54 in 2012. The score for Malaysia in 2012 improved to 4.9 out of 10 compared to 4.3 in 2011. There have also been criticisms that the naming and shaming has been limited to small cases. Why haven’t institutions like PEMANDU, the government’s transformation unit,  been effective in its delivery of its promises in this regard?

Corruption is a major obstacle that could prevent Malaysia from becoming a high-income nation by 2020, because it means that the government has failed to maintain both a fair economy and government. In view of this, fighting corruption was made one of the government’s focus areas in the Government Transformation Programme.

There have been several achievements over the last 3 years in tackling corruption, including:

  • Enactment of the Whistleblower Protection Act, which protects whistleblowers and rewards them for reporting corruption. As at May 2013, a total of 141 whistleblowers have been offered protection.
  • Enhanced Integrity pact. The Mass Rapid Transit (MRT) project was to be the first large scale project to implement the full Integrity Pact including monitoring and oversight elements. An oversight body was established involving the Malaysian Anti-Corruption Commission (MACC) and an independent external monitoring system headed by the Auditor General with external party involvement, was formed to ensure adherence to the terms of the Integrity Pact. Full implementation of the Integrity Pact is only carried out on big projects with a high monetary value, so as to justify the cost of implementation.
  • Faster prosecution. To hasten prosecution, 14 new special corruption courts were established in February 2011, and have since cleared 76 per cent of corruption cases with a one-year time limit for each case in 2012.
  • “Name and Shame” website. The Malaysian Anti-Corruption Commission (MACC) has set up a website, which publishes the name, IC number and photos of those who have been successfully prosecuted for corruption offenses. As at June 2013, 1103 individuals have been listed on the database.
  • Open, competitive tenders. Wherever possible we have open competitive tenders with set procedures for Government procurement. For increased transparency, there is the MyProcurement Portal, which lists 6688 government open tender contracts online.
  • Signing of Corporate Integrity Pledge. More than 214 private sector companies have signed the pledge, where the company makes a unilateral declaration that it will not commit corrupt acts, will work towards creating a business environment that is free from corruption and will uphold the Anti-Corruption Principles for Corporations in Malaysia in the conduct of its business and in its interactions with its business partners and the Government.

 

5. Apolitical public sector – One of the greatest challenges of public sectors globally is to remain apolitical. Can this really be achieved when your leaders are the political masters of the country who decide your career in most instances?   What are the systems and processes instituted in Malaysian public sector at the federal and state levels to ensure an apolitical and professional public sector?

Malaysia practices a system of government based on constitutional monarchy and parliamentary democracy. The constitution distributes the power of governance in three main branches of the government:

  • The legislative branch or the parliament
  • The executive branch led by YAB Prime Minister, as the head of government, and supported by his cabinet ministers
  • The judicial branch headed by the federal court.

The system is both effectively practised at the federal and state level and each has its own role and indicates the clear separation of power and the element of check and balance.

The Malaysian public service is generally viewed as a professional, dynamic and vibrant entity. It is apolitical (free of political influences), non-partisan (neutral) and swears allegiance to the head of state, the Yang di Pertuan Agong. In order to allow the public service be effective, the constitution has provided various provisions that generally seek to uphold its neutrality. To ensure justice and impartiality, various service commissions have also been established, whose members are appointed by the Yang di Pertuan Agong. For example, the service commissions recruit public service employees based on the principle of selection on merit and on the basis of fair and open competition. It is also responsible for safeguarding public servants’ tenure.

Public servants carry out their duties and appointed tasks according to the established rules and regulations with dedication, efficiency and sincerity. They are highly professional and at the same time loyal to the government of the day. The government makes the policy and the civil servants execute it. The public service is responsive to the government in giving honest, transparent and comprehensive advice in policy formulations and carries out the implementation of programmes and is accountable for its action.

6. Power distance index – Malaysia is ranked top in the table of power distance, which reflects our deference to higher authorities. Westerners have often observed how our formal functions and ceremonies in Malaysia are steeped in protocol and formalities. This can often affect productivity and effectiveness of market. Is this changing in Malaysia and if so how so?

Malaysia may be viewed as to be steep in protocol and formalities, but this has not affected productivity and market efficiency. Organisations take into account intercultural and diversity factors to ensure amicable and productive work environments, factoring in both the hard and soft perspectives in their management practices and processes.

The increasing trend of productivity growth could be attributed to increased employee involvement and empowerment, increased motivation and morale among employees, application of problem-solving techniques, enhanced creativity and innovativeness and also enhanced communication, better teamwork and esprit de corps.

There is no prominent gap between employers and employees. The obvious existence of employer-employee collaborations is seen through many ‘bottom-up’ initiatives to enhance productivity. Among them are open communication channels for effective info sharing and feedback suggestions schemes, small group activities (ICC, LEAN, QE and KAIZEN, etc.), Employee Satisfaction Survey and various other avenues for the wellbeing of the employees.

The key of breakdown in ‘power distance’ is the concept of feedback in meeting the rakyat’s and business community needs, particularly through open dialogues and public consultation forums with relevant stakeholders.

 

Tan Sri17. Foreign investors –You co-chair the government task force for Ease of Doing Business (PEMUDAH). What measures have Malaysia taken to protect foreign investors and investment.

This in light of the recent news UK-based investors suing a company in Malaysia  could potentially scare investors and what should Malaysia do in highlighting soundness of ethics in its business environment?

PEMUDAH was established in 2007, and its main role is not to protect foreign investors and investment. Instead it aims at improving and enhancing the public delivery system, particularly, those that deal with the cost of doing business in Malaysia through public and private collaboration. This relation has enabled PEMUDAH to undertake improvements in many fronts, especially on enhancing transparency and streamlining processes and procedures.

Among the initiatives implemented were the reviews of policies, which include the Foreign Investment Committee Guidelines, Distributive Trade Guidelines and Competition Policy. These are fundamental changes, which impacts the private sector and Malaysia globally. Even though PEMUDAH does not focus directly in protecting investors, it improves the investment climate and maintains investor confidence in Malaysia by tackling issues such as labour, talent and safety and security, which are the key issues to the business and investment environment.

Acknowledging the importance of transparency in the public delivery system, a Circular on Online Public Consultation by Ministries and Agencies for All New Proposals or Amendments to Draft Laws was circulated to advocate online public consultation before any policy changes are adopted. This online public consultation forms part of the framework for good regulatory practices by ministries and agencies.

8. Religion and business – Does one have to be religious and spiritually guided to be ethical? What in your view drives one to be ethical in their transactions with fellow human beings at all levels? What ensure ethical sustainability in a leader’s character?

Ethics by application has a lot to do with the conduct and behaviours of people. Yet in essence, ethics is a virtue that one has within one’s inner being i.e. soul. One’s habits in life will be a testimony to one’s belief system and faith. Hence, to be good in life indeed has a lot to do with how one keeps to a certain code or way of life, which in simple terms, is how one applies and puts into practice his/her religion.

I go by the simple adage of, “do unto others what you want others do unto you.” If we put it in the context of our civil service, all of us as the rakyat (citizen),  would want the best service to be rendered and accessible to us, irrespective of our rank and position. This is where the concept of “Merakyatkan Perkhidmatan Awam” (Citizening Public Sector) comes to play. This idea and expectation of reciprocity of being civil in our service cuts both ways – whether we are the customers of Government services, or when we are the service providers on behalf of the Government.

Honesty is imperative to ensure ethical sustainability in a leader’s character. Being true to one’s words is another. In short, being a person of integrity is the basic character one should have or continue to nurture because nobody wants to be nor deal with one whose character is flawed.

 

9. Competitiveness and wellbeing – Recent Gallup polls showed that the happiest countries in the world are not necessarily the most competitive countries. Malaysia is investing alot to up its competitiveness. Is it worth pursuing competitiveness at the expense of wellbeing? Can the two ever converge?

Malaysia’s competitiveness has been closely monitored, as it is an important agenda in Malaysia’s transformation programme. In recent years, Malaysia has made significant strides in competitiveness at the international level:

  • Top 15 most competitive countries out of 60 countries in the Institute for Management Development’s (IMD) World Competitiveness Yearbook (WCY) 2013.
  • 25th out of 144 countries in the World Economic Forum’s (WEF) Global Competitiveness Report (GCR) 2012-2013, putting it in the top 20% in world ranking.
  • 12th position out of 185 countries in the World Bank Doing Business Report 2013.

Malaysia monitors these reports as they provide comprehensive indicators in gauging Malaysia’s competitiveness performance and identify areas needing improvement. However, we have to recognise that different reports utilise different methodologies and different sets of indicators/factors in assessing a country’s performance.

The basic driving force in enhancing Malaysia’s competitiveness is the fundamental aspiration to achieve a better quality of life for all citizens. The reports mentioned are comprehensive in their measurements, taking into consideration both our pursuit for economic wellbeing as well as social wellbeing. In line with Malaysia’s goal to become an innovation-driven economy and thus achieve a high income, developed nation status by 2020, Malaysia is on the right track in balancing our competitiveness aspirations, while at the same time providing the social safety net for its rakyat.

Various taskforces such as the special taskforce on facilitating business, PEMUDAH, task force on enhancing competitiveness as well as the Performance Management Delivery Unit (PEMANDU) had been set up to ensure Malaysia achieves the aspirations of an advanced nation with inclusiveness and sustainability. We therefore believe that economic development with social wellbeing can be achieved as they are not mutually exclusive. Underlying the success of the country is the 1Malaysia People First, Performance Now concept, which addresses Malaysia’s diversity and builds upon common values of national unity, peace, stability and prosperity.

The government is constantly raising the standard of living for the rakyat by providing financial aid, affordable homes in key urban and rural areas, as well as transforming rural areas by upgrading key infrastructure available and also promoting technological adoption.

Malaysia is geared to realise its full potential as a result of key reforms and initiatives crafted to drive economic growth and to modernise the economy. Malaysia has the right mix of experience and dynamic growth drivers that will push the nation forward. Malaysia offers an enticing lifestyle and culture. The country is made up a multicultural society that is harmonious friendly and welcoming. Together with affordable amenities such as transport, schools and healthcare, Malaysians have high quality lifestyle with excellent work life balance.

 

10. Role of CS – What is the role of a Chief Secretary’s Office in the whole debate of ethics in business given how topical this is now?

As the head of the civil service, the Chief Secretary to the Government has the responsibility of ensuring every measure possible is taken to ensure ethics are always maintained and that there is no easy way for unethical behaviour to exist within  Ministries/Agencies.

The office works hand in hand with the MACC to continuously ensure that there are no malpractices or unethical behaviour amongst public servants in the course of their work and responsibilities. It is important that ethics are upheld. At the same time, agencies such as IIM (Institute Integrity Malaysia) are continuously reminded to introduce new initiatives to enhance corporate governance and reduce corruption and abuse of power.

The office is very firm in dealing with unethical behaviour in the public service. Action is taken where necessary, and there are no two ways about it.

 

11. Aspirations- What are your aspirations for Malaysian public sector?

That the Malaysian public sector continues to be a world-class public service, envied by many, meeting the rakyat’s expectations and providing services efficiently and with integrity. We must put the rakyat’s needs at hand, and must transform and equip ourselves with the necessary skills, knowledge and expertise to keep up with the changing times. If not, we will become irrelevant and not be in tune with the ever-increasing and changing expectations and demands of society, and the world at large. The public sector is the backbone of the country’s development, and a strong and productive public service will be the main driving force in realising the national transformation agenda towards becoming a high-income, developed nation by 2020.

TAN SRI DR. ALI BIN HAMSA

Tan Sri Dr. Ali bin Hamsa was appointed as the 13th Chief Secretary to the Government of Malaysia by the Yang DiPertuan Agong, effective 24 June 2012. Born in Kluang, Johor on 29 August 1955, he obtained a Bachelor of Arts (Honours) degree from University of Malaya before furthering his studies to Oklahoma State University, United States where he obtained a Masters in Economics in 1986, followed by a Ph.D. in Environmental Sciences and Economics in 1997. On 22 April 2009, Tan Sri Dr. Ali was appointed as the Director-General of the Public Private Partnership Unit (UKAS), Prime Minister’s Department, a central agency created to spearhead Public Private Partnership (PPP)  initiatives, namely privatisation projects, Private Finance Initiatives (PFI), corridor development and facilitation funds. As the Chief Secretary to the Government, he is Chair of the Malaysian Integrity Institute (IIM), the co-Chair of the Special Taskforce to Facilitate Business (PEMUDAH) and Deputy Chairman of Johor Corporation (JCorp). Tan Sri Dr. Ali is also Member to the Board of Advisors of 1Malaysia Development Berhad (1MDB), Board Member of Bintulu Port Holding (BPHB), Penang Port Commission (PPC) and Bumiputera Agenda Coordinating Unit (TERAJU).

See other posts from on Ethics in Business:

Ethics in Business: Perception of sleepwalking

Ethics in Business: Facing medical ethics head on in Malaysia

Ethics in Business: A take on business ethics in the US

Ethics in Business: Moving Islamic finance from conference rooms to humanity

Ethics in Business: Walking the ethical track in Malaysia a perspective

Ethics in Business: Soul of ethics in the new Dubai

Ethics in Business: A conversation with Professor Tariq Ramadan

Ethics in Business: Where is the education for narcissistic leaders

Ethics in Business. With whom does the heartbeat of a nation lie, Part 1

Ethics in Business: Are we aware of the Iagos in our midst?

Ethics in Business: Fair trade or fair game, who benefits really

Ethics in business: What moves the conscience when mortality is at stake

Please: CSR is not Ethics in Business

Panel discussion: Medical ethics (plus video)

 

(Firoz Abdul Hamid is an Inside Investor contributor. The opinions expressed are her own.)

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Reading Time: 15 minutes

By Firoz Abdul Hamid

In this second part of the two-part series interview with the Chief Secretary to the Government of Malaysia (Head of Public Service/Cabinet Secretary), Tan Sri Dr. Ali Hamsa discusses the role of media in highlighting ethics. He also touches on public sector leadership in weeding out corruption and strengthening ethics both within the sector and in private sector. Tan Sri Dr. Hamsa closes this interview with his thoughts on Malaysia’s potentials and aspirations.

Reading Time: 15 minutes

Firoz1
By Firoz Abdul Hamid

In this second part of the two-part series interview with the Chief Secretary to the Government of Malaysia (Head of Public Service/Cabinet Secretary), Tan Sri Dr. Ali Hamsa discusses the role of media in highlighting ethics. He also touches on public sector leadership in weeding out corruption and strengthening ethics both within the sector and in private sector. Tan Sri Dr. Hamsa closes this interview with his thoughts on Malaysia’s potentials and aspirations.

See part 1 here

In closing, the words of Mandela cannot ring any truer in what makes the face of a nation “It is said that no one truly knows a nation until one has been inside its jails. A nation should not be judged by how it treats its highest citizens, but its lowest ones.” ― Nelson Mandela

 

KSN Photo
His Excellency Tan Sri Dr. Ali Hamsa

Chief Secretary to the Government of Malaysia

We must strive to have “quality regulations” – regulations that have characteristics of good governance, and must fulfil “adequacy” and “gatekeeping or quality control” requirements.

1. Role of media – Has the media a role to play in highlighting unethical practices public and private sector?

The print and electronic media play an important part in the country and definitely have a role in highlighting unethical practices in the public and private sector. The media should be comprehensive, report the truth, be accountable to the people and not forget to practice ethics of journalism along the way.

Highlighting such practices will benefit the rakyat (citizens), in that they are informed that the government does not condone such practices, whether in the public or private sector, and a reminder to them that action will be taken against those who go against the rules and regulations of the country, be it in business or other sectors.

In the development of social media such as Twitter and Facebook in the country, the role of the media may have doubled, as the channels of reporting such bad and unethical practice are no longer done through the mainstream media but directly to the authorities through such access. People can also suggest and share views on how to improve, give feedback and even report unethical behaviours by the public or private sector.

The government is open to suggestions, feedback and even constructive criticism, but there should be a strong basis for it. We do not tolerate lies and allegations that have no basis towards the public sector.

There should be a win-win situation between the media and companies and smart partnerships should be developed. The Media can educate the business fraternity through the publishing of news on the best practice they should follow, and which agency they should refer to in order to evade any unethical practices.

 

2. Leadership of government – What is the role of public sector and government leadership, in your view, in strengthening Ethics in Business?

The public sector is the most important instrument in management and administration, as well as in delivery services and national development. The integration, internalisation and upholding of good moral values, and being free of corruption and abuse of power must continuously be strengthened. Leadership of Government is vital in shaping, guiding, maintaining and strengthening the ethical behaviour of the business community.

Since the 1980s, the government has introduced various programmes aimed at enhancing good moral values and integrity in the public service in particular. The Government has also put in place proper mechanisms to reduce corruption in its pursuit towards promoting the practice of higher ethical values. The establishment of the Malaysian Anti-Corruption Commission (MACC) also marked an important role of the Government leadership towards strengthening ethics in business.

Under the Government Transformation Programme (GTP), one of the National Key Result Areas (NKRA) initiatives is to reduce corruption in the country. Malaysia’s Corruption Perception Index in the Transparency International Survey 2012 rose from 60th to 54th position, which is a strong endorsement of the work that we have been doing. The Government has also implemented Compliance Units in selected enforcement agencies to monitor the performance and behaviour of civil servants and enforcement officers and to ensure compliance. This represents a major step towards creating a bribe-free society. These are but a few of the many Government initiatives undertaken to address the issue of petty corruption.

We are of the view that the UN system remains central to the global economic governance structure for achieving sustainable, equitable and inclusive growth. In this context, it is imperative for all global institutions to develop complementary ways to work with the UN system, to ensure that the UN’s work could be better articulated and coordinated. Real and lasting reform of global governance can only be achieved in close collaboration with the UN as the central role in the evolution of the framework. We believe there is a need to redesign regulatory structures to address the challenges of an increasingly complex financial system, increase transparency in the operation of specific markets and financial institutions, as well as to explore other options to ensure more effective global supervision in all segments of the financial system.

Hence, the nation supports the call for closer coordination and collaboration among national, regional and international regulatory authorities and institutions, specifically in sharing of information to ensure more effective global monitoring and transparency in all segments of the international financial system. At the same time, we believe that to further promote ethics in business, the policies of these global institutions must be formulated on the basis of promoting legitimate needs and expectations of peoples across the globe.

At the same time, the World Bank has played an important role in the evolution of the global integrity and good governance agenda since 1996, as the Bank believes that “Corruption diverts resources from the poor to the rich, increases the cost of running businesses, distorts public expenditures and deters foreign investors. It is a major barrier to sound and equitable development.” Many recommendations by the World Bank have been adopted by the Government in efforts to fight corruption, promote good governance among the business community.

The Securities Commission also undertook the World Bank’s Corporate Governance Report on Observance of Standards and Codes (ROSC) in 2012. The report is an assessment of corporate governance policy framework. Malaysia scored well from 76 to 86 per cent in the six main categories examined (enforcement and institutional framework, shareholder rights and ownership, equitable treatment of shareholders, equitable treatment of stakeholders, enclosure and transparency, board responsibilities).

 

Tan Sri23. Watchdog bodies – Watchdog bodies are often set up to monitor and oversee corruption and to be effective these bodies must be apolitical.

In Malaysia, for instance, you have the Malaysian Anti-Corruption Commission. MACC has come under alot of scrutiny and criticisms. Has MACC been effective in addressing corruption in the public and private sectors in Malaysia?

Watchdog bodies guarding against corruption in Malaysia are among civil society and they are not under the government payroll. Thus, they are independent and are not politically influenced.

Due to the government’s financial system, which requires budget to be channeled through agencies, the MACC is put under the government payroll, but this administrative arrangement does not affect any part of MACC’s legal obligation. The MACC is neither under the purview of the ruling government nor opposition. The MACC is an apolitical entity that is only and directly answerable to the parliament.

The MACC has the total independence to execute its roles and responsibilities to combat corruption to the fullest extent as provisioned under the Malaysian Anti-Corruption Commission Act 2009. To ensure that the public’s expectations towards the Commission’s independence, efficiency, effectiveness, transparency and accountability in executing its obligations are met, the MACC is placed under 5 external oversight bodies. The 43 members of these 5 independent bodies represent the general public, working as the public’s eyes and voice. They are not paid and they work on a voluntary basis, thus do not have any conflict of interest.

Although the MACC has been put under a lot of scrutiny and criticism, the Commission has proven its effectiveness in addressing corruption in the public and private sectors. The Global Corruption Barometer survey conducted by Transparency International in 2011 found that 49 per cent of the Malaysian public felt that the Malaysian government’s fight against corruption is effective or extremely effective, as compared to 48 per cent in 2010 and only 29 per cent in 2009. A study by Universiti Kebangsaan Malaysia in 2012 found that 64 per cent of the Malaysian public felt that the anti-corruption measures carried out by MACC are effective, compared to only 42.5 per cent in 2011. Contrary to the negative perception of the MACC, the studies show significant improvements.

The war against corruption in Malaysia has taken a new direction. A widespread anti-corruption initiative is enabling a greater reach to society towards engaging greater participation, be it in the public or private sector. The Malaysian public sector is currently going through a strategic transformation process under the Government Transformation Plan which aims to create a performance based public service delivery. The engagement of both public and private sectors through a publicly signed and contractually binding Integrity Pact has also opened the door towards a corrupt-free practice by each party.

The MACC has also managed to curb corruption in the public sector by the decreasing trend of the number of government officials arrested and the increasing trend of the private sector individuals being arrested for offences of corruption. Offences of active bribery (offering of bribe) as compared to passive bribery (receiving of bribe) have increased, which can be attributed to the success of the MACC anti-corruption campaigns.

The Malaysian Government has enacted two laws, namely, the Witness Protection Act 2009 and the Whistleblower Protection Act 2010, which aims to make law enforcement more effective and enhance public support in efforts to fight corruption and other crimes. Malaysia’s anti-corruption efforts also meet international standards¸ as we were a signatory to the United Convention Against Corruption (UNCAC) in 2008.

 

4.  Transparency International – Malaysia’s score in Transparency International’s CPI improved from 60 in 2011 to 54 in 2012. The score for Malaysia in 2012 improved to 4.9 out of 10 compared to 4.3 in 2011. There have also been criticisms that the naming and shaming has been limited to small cases. Why haven’t institutions like PEMANDU, the government’s transformation unit,  been effective in its delivery of its promises in this regard?

Corruption is a major obstacle that could prevent Malaysia from becoming a high-income nation by 2020, because it means that the government has failed to maintain both a fair economy and government. In view of this, fighting corruption was made one of the government’s focus areas in the Government Transformation Programme.

There have been several achievements over the last 3 years in tackling corruption, including:

  • Enactment of the Whistleblower Protection Act, which protects whistleblowers and rewards them for reporting corruption. As at May 2013, a total of 141 whistleblowers have been offered protection.
  • Enhanced Integrity pact. The Mass Rapid Transit (MRT) project was to be the first large scale project to implement the full Integrity Pact including monitoring and oversight elements. An oversight body was established involving the Malaysian Anti-Corruption Commission (MACC) and an independent external monitoring system headed by the Auditor General with external party involvement, was formed to ensure adherence to the terms of the Integrity Pact. Full implementation of the Integrity Pact is only carried out on big projects with a high monetary value, so as to justify the cost of implementation.
  • Faster prosecution. To hasten prosecution, 14 new special corruption courts were established in February 2011, and have since cleared 76 per cent of corruption cases with a one-year time limit for each case in 2012.
  • “Name and Shame” website. The Malaysian Anti-Corruption Commission (MACC) has set up a website, which publishes the name, IC number and photos of those who have been successfully prosecuted for corruption offenses. As at June 2013, 1103 individuals have been listed on the database.
  • Open, competitive tenders. Wherever possible we have open competitive tenders with set procedures for Government procurement. For increased transparency, there is the MyProcurement Portal, which lists 6688 government open tender contracts online.
  • Signing of Corporate Integrity Pledge. More than 214 private sector companies have signed the pledge, where the company makes a unilateral declaration that it will not commit corrupt acts, will work towards creating a business environment that is free from corruption and will uphold the Anti-Corruption Principles for Corporations in Malaysia in the conduct of its business and in its interactions with its business partners and the Government.

 

5. Apolitical public sector – One of the greatest challenges of public sectors globally is to remain apolitical. Can this really be achieved when your leaders are the political masters of the country who decide your career in most instances?   What are the systems and processes instituted in Malaysian public sector at the federal and state levels to ensure an apolitical and professional public sector?

Malaysia practices a system of government based on constitutional monarchy and parliamentary democracy. The constitution distributes the power of governance in three main branches of the government:

  • The legislative branch or the parliament
  • The executive branch led by YAB Prime Minister, as the head of government, and supported by his cabinet ministers
  • The judicial branch headed by the federal court.

The system is both effectively practised at the federal and state level and each has its own role and indicates the clear separation of power and the element of check and balance.

The Malaysian public service is generally viewed as a professional, dynamic and vibrant entity. It is apolitical (free of political influences), non-partisan (neutral) and swears allegiance to the head of state, the Yang di Pertuan Agong. In order to allow the public service be effective, the constitution has provided various provisions that generally seek to uphold its neutrality. To ensure justice and impartiality, various service commissions have also been established, whose members are appointed by the Yang di Pertuan Agong. For example, the service commissions recruit public service employees based on the principle of selection on merit and on the basis of fair and open competition. It is also responsible for safeguarding public servants’ tenure.

Public servants carry out their duties and appointed tasks according to the established rules and regulations with dedication, efficiency and sincerity. They are highly professional and at the same time loyal to the government of the day. The government makes the policy and the civil servants execute it. The public service is responsive to the government in giving honest, transparent and comprehensive advice in policy formulations and carries out the implementation of programmes and is accountable for its action.

6. Power distance index – Malaysia is ranked top in the table of power distance, which reflects our deference to higher authorities. Westerners have often observed how our formal functions and ceremonies in Malaysia are steeped in protocol and formalities. This can often affect productivity and effectiveness of market. Is this changing in Malaysia and if so how so?

Malaysia may be viewed as to be steep in protocol and formalities, but this has not affected productivity and market efficiency. Organisations take into account intercultural and diversity factors to ensure amicable and productive work environments, factoring in both the hard and soft perspectives in their management practices and processes.

The increasing trend of productivity growth could be attributed to increased employee involvement and empowerment, increased motivation and morale among employees, application of problem-solving techniques, enhanced creativity and innovativeness and also enhanced communication, better teamwork and esprit de corps.

There is no prominent gap between employers and employees. The obvious existence of employer-employee collaborations is seen through many ‘bottom-up’ initiatives to enhance productivity. Among them are open communication channels for effective info sharing and feedback suggestions schemes, small group activities (ICC, LEAN, QE and KAIZEN, etc.), Employee Satisfaction Survey and various other avenues for the wellbeing of the employees.

The key of breakdown in ‘power distance’ is the concept of feedback in meeting the rakyat’s and business community needs, particularly through open dialogues and public consultation forums with relevant stakeholders.

 

Tan Sri17. Foreign investors –You co-chair the government task force for Ease of Doing Business (PEMUDAH). What measures have Malaysia taken to protect foreign investors and investment.

This in light of the recent news UK-based investors suing a company in Malaysia  could potentially scare investors and what should Malaysia do in highlighting soundness of ethics in its business environment?

PEMUDAH was established in 2007, and its main role is not to protect foreign investors and investment. Instead it aims at improving and enhancing the public delivery system, particularly, those that deal with the cost of doing business in Malaysia through public and private collaboration. This relation has enabled PEMUDAH to undertake improvements in many fronts, especially on enhancing transparency and streamlining processes and procedures.

Among the initiatives implemented were the reviews of policies, which include the Foreign Investment Committee Guidelines, Distributive Trade Guidelines and Competition Policy. These are fundamental changes, which impacts the private sector and Malaysia globally. Even though PEMUDAH does not focus directly in protecting investors, it improves the investment climate and maintains investor confidence in Malaysia by tackling issues such as labour, talent and safety and security, which are the key issues to the business and investment environment.

Acknowledging the importance of transparency in the public delivery system, a Circular on Online Public Consultation by Ministries and Agencies for All New Proposals or Amendments to Draft Laws was circulated to advocate online public consultation before any policy changes are adopted. This online public consultation forms part of the framework for good regulatory practices by ministries and agencies.

8. Religion and business – Does one have to be religious and spiritually guided to be ethical? What in your view drives one to be ethical in their transactions with fellow human beings at all levels? What ensure ethical sustainability in a leader’s character?

Ethics by application has a lot to do with the conduct and behaviours of people. Yet in essence, ethics is a virtue that one has within one’s inner being i.e. soul. One’s habits in life will be a testimony to one’s belief system and faith. Hence, to be good in life indeed has a lot to do with how one keeps to a certain code or way of life, which in simple terms, is how one applies and puts into practice his/her religion.

I go by the simple adage of, “do unto others what you want others do unto you.” If we put it in the context of our civil service, all of us as the rakyat (citizen),  would want the best service to be rendered and accessible to us, irrespective of our rank and position. This is where the concept of “Merakyatkan Perkhidmatan Awam” (Citizening Public Sector) comes to play. This idea and expectation of reciprocity of being civil in our service cuts both ways – whether we are the customers of Government services, or when we are the service providers on behalf of the Government.

Honesty is imperative to ensure ethical sustainability in a leader’s character. Being true to one’s words is another. In short, being a person of integrity is the basic character one should have or continue to nurture because nobody wants to be nor deal with one whose character is flawed.

 

9. Competitiveness and wellbeing – Recent Gallup polls showed that the happiest countries in the world are not necessarily the most competitive countries. Malaysia is investing alot to up its competitiveness. Is it worth pursuing competitiveness at the expense of wellbeing? Can the two ever converge?

Malaysia’s competitiveness has been closely monitored, as it is an important agenda in Malaysia’s transformation programme. In recent years, Malaysia has made significant strides in competitiveness at the international level:

  • Top 15 most competitive countries out of 60 countries in the Institute for Management Development’s (IMD) World Competitiveness Yearbook (WCY) 2013.
  • 25th out of 144 countries in the World Economic Forum’s (WEF) Global Competitiveness Report (GCR) 2012-2013, putting it in the top 20% in world ranking.
  • 12th position out of 185 countries in the World Bank Doing Business Report 2013.

Malaysia monitors these reports as they provide comprehensive indicators in gauging Malaysia’s competitiveness performance and identify areas needing improvement. However, we have to recognise that different reports utilise different methodologies and different sets of indicators/factors in assessing a country’s performance.

The basic driving force in enhancing Malaysia’s competitiveness is the fundamental aspiration to achieve a better quality of life for all citizens. The reports mentioned are comprehensive in their measurements, taking into consideration both our pursuit for economic wellbeing as well as social wellbeing. In line with Malaysia’s goal to become an innovation-driven economy and thus achieve a high income, developed nation status by 2020, Malaysia is on the right track in balancing our competitiveness aspirations, while at the same time providing the social safety net for its rakyat.

Various taskforces such as the special taskforce on facilitating business, PEMUDAH, task force on enhancing competitiveness as well as the Performance Management Delivery Unit (PEMANDU) had been set up to ensure Malaysia achieves the aspirations of an advanced nation with inclusiveness and sustainability. We therefore believe that economic development with social wellbeing can be achieved as they are not mutually exclusive. Underlying the success of the country is the 1Malaysia People First, Performance Now concept, which addresses Malaysia’s diversity and builds upon common values of national unity, peace, stability and prosperity.

The government is constantly raising the standard of living for the rakyat by providing financial aid, affordable homes in key urban and rural areas, as well as transforming rural areas by upgrading key infrastructure available and also promoting technological adoption.

Malaysia is geared to realise its full potential as a result of key reforms and initiatives crafted to drive economic growth and to modernise the economy. Malaysia has the right mix of experience and dynamic growth drivers that will push the nation forward. Malaysia offers an enticing lifestyle and culture. The country is made up a multicultural society that is harmonious friendly and welcoming. Together with affordable amenities such as transport, schools and healthcare, Malaysians have high quality lifestyle with excellent work life balance.

 

10. Role of CS – What is the role of a Chief Secretary’s Office in the whole debate of ethics in business given how topical this is now?

As the head of the civil service, the Chief Secretary to the Government has the responsibility of ensuring every measure possible is taken to ensure ethics are always maintained and that there is no easy way for unethical behaviour to exist within  Ministries/Agencies.

The office works hand in hand with the MACC to continuously ensure that there are no malpractices or unethical behaviour amongst public servants in the course of their work and responsibilities. It is important that ethics are upheld. At the same time, agencies such as IIM (Institute Integrity Malaysia) are continuously reminded to introduce new initiatives to enhance corporate governance and reduce corruption and abuse of power.

The office is very firm in dealing with unethical behaviour in the public service. Action is taken where necessary, and there are no two ways about it.

 

11. Aspirations- What are your aspirations for Malaysian public sector?

That the Malaysian public sector continues to be a world-class public service, envied by many, meeting the rakyat’s expectations and providing services efficiently and with integrity. We must put the rakyat’s needs at hand, and must transform and equip ourselves with the necessary skills, knowledge and expertise to keep up with the changing times. If not, we will become irrelevant and not be in tune with the ever-increasing and changing expectations and demands of society, and the world at large. The public sector is the backbone of the country’s development, and a strong and productive public service will be the main driving force in realising the national transformation agenda towards becoming a high-income, developed nation by 2020.

TAN SRI DR. ALI BIN HAMSA

Tan Sri Dr. Ali bin Hamsa was appointed as the 13th Chief Secretary to the Government of Malaysia by the Yang DiPertuan Agong, effective 24 June 2012. Born in Kluang, Johor on 29 August 1955, he obtained a Bachelor of Arts (Honours) degree from University of Malaya before furthering his studies to Oklahoma State University, United States where he obtained a Masters in Economics in 1986, followed by a Ph.D. in Environmental Sciences and Economics in 1997. On 22 April 2009, Tan Sri Dr. Ali was appointed as the Director-General of the Public Private Partnership Unit (UKAS), Prime Minister’s Department, a central agency created to spearhead Public Private Partnership (PPP)  initiatives, namely privatisation projects, Private Finance Initiatives (PFI), corridor development and facilitation funds. As the Chief Secretary to the Government, he is Chair of the Malaysian Integrity Institute (IIM), the co-Chair of the Special Taskforce to Facilitate Business (PEMUDAH) and Deputy Chairman of Johor Corporation (JCorp). Tan Sri Dr. Ali is also Member to the Board of Advisors of 1Malaysia Development Berhad (1MDB), Board Member of Bintulu Port Holding (BPHB), Penang Port Commission (PPC) and Bumiputera Agenda Coordinating Unit (TERAJU).

See other posts from on Ethics in Business:

Ethics in Business: Perception of sleepwalking

Ethics in Business: Facing medical ethics head on in Malaysia

Ethics in Business: A take on business ethics in the US

Ethics in Business: Moving Islamic finance from conference rooms to humanity

Ethics in Business: Walking the ethical track in Malaysia a perspective

Ethics in Business: Soul of ethics in the new Dubai

Ethics in Business: A conversation with Professor Tariq Ramadan

Ethics in Business: Where is the education for narcissistic leaders

Ethics in Business. With whom does the heartbeat of a nation lie, Part 1

Ethics in Business: Are we aware of the Iagos in our midst?

Ethics in Business: Fair trade or fair game, who benefits really

Ethics in business: What moves the conscience when mortality is at stake

Please: CSR is not Ethics in Business

Panel discussion: Medical ethics (plus video)

 

(Firoz Abdul Hamid is an Inside Investor contributor. The opinions expressed are her own.)

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