TRANSPARENCY & ACCOUNTABILITY IN THE MALAYSIAN PUBLIC SECTOR by Syed Othman Alhabshi Deputy Director-General Institute of Islamic Understanding

Malaysia Kuala Lumpur Paper for the Fifth International Conference on" Public Sector Ethics - Between Past and Future", August 5-9, 1996 at Hilton Hotel, Brisbane, Queensland, AUSTRALIA

TRANSPARENCY & ACCOUNTABILITY IN THE MALAYSIAN PUBLIC SECTOR (Synopsis) Rising affluence is very evident in Malaysia due to nearly a decade of high economic growth. The Muslim sociologist, Ibn Khaldun observed that affluence weakens the moral fibre of society because material concerns overtake spiritual values. Malaysia is no exception. The public sector should set the example to the private sector and society at large. This paper focuses on the efforts by the Malaysian public sector which has transformed itself from being regulatory in nature in the 1960s to one that was involved in development administation in the 1970s and culminating in its present role as a facilitator and pacesetter in national development. We will ciritically analyze the effectiveness of various policies the government has initiated and the institutions it has established to improve its transparency and accountability over the last couple of decades. This analysis is very pertinent in the Malaysian context which undertakes numerous privatisation and social engineering projects to push for greater prosperity.

INTRODUCTION Four decades ago, Malaysia was an underdeveloped, low income country exporting only two primary products, namely rubber and tin, and importing mainly manufactured consumer goods. Agriculture was the country's mainstay which contributed more than 70 per cent of GDP and employment. The heavy dependence on rubber and tin made it vulnerable to the vagaries of international trade. Economic diversification became essential to reduce the over dependence on the two primary products. Apart from diversifying agriculture by introducing other cash crops, such as palm oil and cocoa, the country simultaneously ventured into industrialisation, although initially at very small scale. The five-year development plans were regularly formulated and religiously

implemented in order to determine the direction and targets of development. After four decades of development, industry and services have now emerged as the most important sectors of the economy, contributing not less than 80 per cent of the country's GDP and employment in 1995. Needless to say, it was the public sector which was very instrumental in the formulation and implementation of every development plan. It could not have made such significant achievements without transforming itself from a service that was primarily regulatory in nature in the 1960s to one that was involved in development administration in the 1970s and culminating in its present role as a facilitator and pacesetter in national development. The civil servants are also vested with tremendous authority and power under the law to perform their duties and responsibilities professionally in order to meet the public demands and expectations. It is also incumbent upon them to exercise the powers and authority vested in them with utmost transparency and accountability. This paper purports to provide some insight into the various aspects of the Malaysian civil servant's ethical conduct and the values they are expected to inculcate. It will first of all outline the various regulations that have been instituted to provide uniformity of actions and basic parameters for their discretionary decisions. Secondly, it will also focus on the values that have been continually reinforced for them to emulate in order to provide the best of service to the public.

THE CHANGING CIVIL SERVICE The Malaysian civil service is the heritage of the British which had colonised the country for almost two centuries. Its focus was mainly centered on providing various basic services to the public in order to maintain law and order. The nature of the service was a matter of routine in line with the kinds of economic and political activities of the time. When rapid development was undertaken by the newly independent nation in late 1950's and early 1960's, the civil service had to keep pace with the new activities. Its focus was on development administration and institution building. Priority was given to the creation of new organisational structures as instruments of development, mainly to meet the increasing need for improvements in the delivery of services to the public. To this end, in 1966, the Government established the Development Administration Unit (DAU) within the Prime Minister's Department to initiate reforms and identify and implement administrative improvement programmes. The establishment of this unit represented a bold step forward to add a new dimension to the colonial heritage of bureaucratic maintenance administration. The decade of the 1960's also witnessed the introduction of a major structural change, namely the information-based and implementation-conscious Red Book System. Under this system, the Operations Room and Morning Prayers were techniques introduced to coordinate development projects at the district, state and ministry levels. The Red Book System was very successful and became on of Malaysia's "administrative exports" to many developing countries. The modernisation trend of the 1960's continued into the 1970's. However, a new challenge which had never occurred before had suddenly appeared. There was a dramatic change in the

political, social and economic environment due to the occurrence of the only major racial riot in the country in 1969. The government had no choice then but to be commited to a set of policies that would ensure a united, stable and secured Malaysian society based on socio-economic justice. After an intensive review of the nation's policies and priorities through close consultation and deliberation among all segments of Malaysian society, the New Economic Policy (NEP) was enunciated in 1971. With national unity as its overriding objective, the NEP comprised two principal strategies of eradicating poverty among all Malaysians irrespective of race and restructuring the Malaysian society so that the identification of race with economic function and geographical location is reduced and eventually eliminated. These objectives were to be realized through rapid economic expansion over two two decades (1971 -1990) so that equitable distribution is achieved by distributing only the increase in the economic cake. The Government continuously emphasized that these objectives were to be achieved without any section of society feeling deprived in the process. The basic objective is the creation of a socio-economic environment in which a united nation would evolve out of the daily interaction of Malaysians of all races in all sectors of the economy across the geographical regions of the country. The introduction of the NEP created a renewed sense of purpose and urgency of improvements in the civil service whose role subsequently expanded and changed from one of requlatory and system maintenance to that of providing leadership and social engineering. Indeed, the political, economic and social climate of the time required a much more sensitive, responsible and accountable administrative machinery to effectively implement the NEP. Any slight deviation from the NEP would create discontentment among certain sections of society which may lead to racial tensions. Unless socio-economic justice was seen to be done, no amount of justification would diffuse the anger of the people. Institution building became more fervent in order to induce, guide and at times manage specific economic activities in the private sector. However, the direction of administrative reform in the 1980's was very heavily influenced by the downswing in the Malaysian economy. In the economic catalycism even the civil service was not spared. During that period, amongst others, the following issues became matters of major concern: * growing sentiments against direct and active participation of the public sector in economic activities; * the burgeoning civil service and increasing operating public expenditure (which became the prime target for criticisms); and * growing expectations from an increasing discerning society. (There were greater needs and demands for public goods and services which led to calls for the debureaucratisation and downsizing of the civil service and greater efficiency of public expenditure). As a consequence, the government introduced and implemented several policies to address the problems at hand. In particular, the size of the civil service was reduced by hiving off some of its activities to the private sector through privatisation and encouraging the private sector to actively participate in the economy through the Malaysia Incorporated concept. In essence, the role of the

civil service changed from an active participant to that of facilitator and requlator of economic and commercial development. In the administrative modernisation, behavioural and systems improvements took the centre stage. The economic downturn of the decade taught us the importance of positive work ethics, efficiency, productivity and discipline in the civil service. Programmes focusing on attitudinal and value changes were introduced, including the following: * Punch Clock system; * Wearing of name tags; * Code of Ethics in the Public Service; * Look East Policy; * Clean, Efficient and Trustworthy Campaign; * Leadership by Example; and * Inculcation of Islamic Values in Public Administration. The 1980's also witnessed the introduction of specific concrete programmes in quality and productivity management which included the following: * Manual of Office Procedure and Desk File; * Quality counter services; * Quality telephone service; * Procedures on office correspondence and management of meetings; and * Open office concept. What is also of great significance is the emphasis given to behavioural changes and the cultivation of positive work ethics and values among the civil servants. These administative reforms were introduced to raise the productivity and quality of the public service so as to be at par with and supportive to the private sector which now assumed the role of leading the nation's economic growth and development.

THE ECONOMIC POLICIES AND RELATED ISSUES The economic downturn in mid-1980's was viewed with utmost concern because of the following: * it would have tremendous effect on the achievement of the NEP goals which depended on rapid growth to distribute the additional increase in the economic expansion; and

* the social and economic pressures on the government were mounting because it has only five more years to the end of the NEP period. A choice had to be made between the pursuit of rapid growth which meant opening up the economy to foreign investments or equitable distribution to achieve socio-economic justice. Opening up to foreign investments meant that the increase in the economic cake would have to be equitably shared with the foreign investors as well. On the other hand, it would not be possible to distribute the cake if there is no increase without any one feeling deprived or experiencing any loss in the process. The pragmatic stance was to pursue growth by inviting foreign investments so that there will at least be something to distribute. Slight departure from the NEP which initially was not generally acceptable, had to be implemented to move the economy forward. The vigorous pursuit for economic growth through various policies including privatisation and Malaysia Incorporated was indeed necessary to achieve the objectives of the NEP. There are a number of interesting consequences which are relevant to this paper arising from such policy changes. Firstly, the economy grew rapidly at unprecedented rates of between 8 and 9 per cent for the last eight successive years, beginning with 1988 making the period the most buoyant and the longest sustained growth achieved thus far. Even more significant, the high growth rate was achieved within an environment of relative price stability. With the strong fundamentals underlying the rapid expansion in the economy already in place, together with a sound social and political environment, the country stands poised to attain the objectives of balanced development as envisaged under the Nation Development Policy (NDP), with the overriding objective of creating a more united and just society. Secondly the privatisation and Malaysia Incorporated concept had clearly been successful in creating a more prominent private sector as the engine of growth since the middle of 1980's. In the past, particularly in the 1970's and early 1980's, it was the public sector which played the leading role in generating economic activities through investment in a large number of public enterprises. Privatisation involves the transfer of activities and functions that traditionally rested with the Government to the private sector. It is considered as a vital part of the overall strategy to strengthen the role of private sector in the country's economic development. It has significantly contributed to the accelerated growth of the economy as well as assisted in the restructuring objective aimed at further enhancing the participation of the indigenous people in the corporate sector. It has also greatly reduced the Government's financial and administrative burden, thus enabling the Government to allocate more resources to the critical sectors of the economy. It has also improved the efficiency and productivity as well as created competition in some sectors of the economy such as the ports, power and telecommunications. The Government plans to accelerate and expand the privatisation programme in the future, to cover projects in the infrastructure, utilities and transport sectors as well as in the services sector, particularly education and training, health services, and research and development. The introduction of the Malaysia Incorporated concept in 1983 was aimed at fostering greater collaboration berween the public and private sectors. In line with the concept, the Government

undertook greater deregulation, simplified administrative procedures and provided better incentives, which led to the strengthening of the private sector's contribution to economic growth. Thirdly, there is a general increase in affluence and quality of life. The rapid economic growth has significantly increased the per capita income from USD2,300 in 1990 to almost USD4,000 in 1995. Such a remarkable increase in income through rapid industrialization and the consequential rise in urbanization and rural-urban migration have resulted in an increasing occurence of negative social behaviour. Social problems such as drug addiction, child abuse, loafing, juvenile delinquencies, undealthy lifestyles and strains on the family unit are beginning to emerge. In 1994, there were 17,600 reported cases of drug addiction, 8,938 cases of AIDS, 871 cases of child abuse and 4,774 cases of runaways. Given that there are many unreported cases, the situation could be worse and this can impair the moral fabric of future generations if measures are not devised to curb them.

THE NEED FOR TRASPARENCY AND ACCOUNTABILITY IN THE PUBLIC SECTOR The multiracial, multicultural and multireligious society of Malaysia is the biggest challenge that its civil service has to deal with all the time. This is especially so after the outbreak of the 1969 racial riot which had heightened the racial tension for some time. The problem becomes more difficult when the plurality of the society had brought about inequalities that permeate almost all aspects of life, to the detriment of the Malays and other indegenous people. Although development planning was initiated even before the country gained independence in 1957, much of the efforts until 1970 were concentrated on achieving rapid economic growth with very little emphasis on distribution. Such a policy has actually widened the inequalities that had already emerged when the Malays and other indegenous groups had been bypassed by the British in meeting the labour demands in the higher value-added sectors such as commerce and industry in the past. Apart from glaring income inequalities among the major races, the Malays, the majority of whom resided in the rural areas have been involved in lower value added agriculture while the Chinese were residing in the urban, generally higher growth centres. Until 1970, the benefits of development were not being enjoyed by the Malays and other indegenous people in proportion to their population. As such, when the Chinese showed support to the Chinese dominated opposition parties in 1969, the Malays began to feel very threatened, for they were only hoping to cling on to their political power. The racial riot therefore became an eye opener to the leaders and hence the formulation of the NEP. The implementation of the NEP, especially during the initial years were quite smooth because of the precarious position of the country's political stability. However, after some time when success towards the NEP goals became more apparent, the opposition frequently brought up issues to Parliament. Poor civil servants had to come up with the justification for their actions. This was where, the trust in public service became very crucial. They could not deviate from the policies which to the Malays were not really to their advantage, neither could they over protect the Malay interest for they would be accused of betraying the other groups. They were really

treading on a very delicate path. Unless they were seen to be doing what the policies demanded of them, they would never feel comfortable for at any time they could be asked to answer in Parliament. They had to be accountable in what they do because everyone has access to information through Parliament. In other words, they have to be completely trustworthy, truthful because they are made to be both accountable and transparent. After the NEP period ended in 1990, the government introduced the National Development Policy that promised to continue the two-pronged strategies of the NEP, i.e. the eradication of poverty for all Malaysians and the restructuring of society so that there is no identification of any race with economic functions. But emphasis had been on the newly introduced policies of privatisation and Malaysia Incorporated. Of course, the implementors of these policies are still the civil servants. Privatisation has been a success no doubt, particularly in reducing the Government's financial burden, the shift in the role as engine of growth from Government to the private sector and improving the efficiency of the delivery of goods and services. Privatisation is also a means of increasing the participation of the Malays and other indegenous people in the corporate sector, in line with the strategy of restructuring society. This raises a problem because the Malays and other indegenous people have the political connections to influence the civil servants to award privatisation projects to them. While such awards of projects would help attain the objective of restructuring society, the problem is not so straight forward because, often the Malays are short of capital and technology because their involvement in the corporate sector is only a recent phenomenon. Another issue of interest is the numerous information the civil servants themselves would have in assessing the privatisation projects. These information are also considered as opportuities for some. Unless they are truthful and trustworthy, they would easily succumb to temptations. Here is another area where the question of integrity of civil servants come in. Apart from the above special issues, the civil servant generally has to be a very versatile individual who acts as a provider of services, facilitator of the nation's economic growth, enforcer of law, protector of national peace and integration, and guardian of the future generation's well-being and prosperity. The civil servant also shoulders the responsibility of ensuring the implementation of national policies and the attainment of their objectives. In any democratic society, trust in the Government and civil service becomes an essential component of the socio-political system. Trust in the civil servant is even more critical as he plays the most prominent role in the delivery of public goods and services. This trust compels him to be of good character and reputation and to provide whatever service and asistance which he is assigned to with the greatest level of efficeincy and competence possible. In order for him to live up to this expectation, he must perform his work with honesty, fairness, responsibility, dedication and efficiency. The public service cannot afford to be lacking in work performance nor can it afford to be deficient in terms of character and integrity if it is to lead the nation towards progress and prosperity. Corruption, abuse of power, inefficiency and incompetence are some of the malignancies that could plaque the public service and taint its image as the "backbone" of national development. This collapse in public confidence, particularly among the local and

foreign business community, would undoubtedly affect the nation's social and economic wellbeing. The biggest challenge to the civil service is to uphold its integrity so that no suspicion among the public can arise with respect to their performance, decisions, actions, conduct and even their life styles. There is no doubt that there is expressed concern by the leadership in this regard, especially when many prosecutions have been made under the Prevention of Corruption Act 1957. Opportunities for such malpractices are numerous although they are directly subjected to the Official Secrets Act 1988 and the Public Officers (Conduct and Discipline) Regulations 1993.

THE CULTIVATION OF HUMANISTIC VALUES IN THE PUBLIC SERVICE In order to uphold the integrity of the civil servants as well as to improve their efficiency and productivity in facing the challenges of development ahead, they have been required to subscribe to certain core values. There are two sets of values that have been identified. The first set being trustworthiness, responsibility, sincerity, dedication, moderation, diligence, clean conduct, cooperativeness, honourable and gratitude. The second set is also called the "Twelve Pillars" which consists of the value of time; the success of perseverance; the pleasure of working; the dignity of simplicity; the worth of character; the power of kindness; the influence of examples; the obligation of duty; the wisdom of economy; the virtue of patience; the improvement of talent; and the joy of originating. These sets of values have become the subject of discussions, workshops and seminars among the civil servants as well as the compulsory curriculum in the training as well as retraining of the civil servants.

CONCLUSION Transparency and accountability in the public sector, particularly in a multiracial society such as Malaysia will continue to be its paramount characteristic features in the future. Both these features are necessary to build the trust of the public in the administration. Without the trust that is so highly valued by society, the integrity of the public service will surely open to question and suspicion. The Malaysian public has been very familiar with the commitment of the Government in leading the nation towards more progress and development. The desire to attain the status of a fully developed industrialised nation as envisaged in Vision 2020 is definitely relevant here. Our achievement in economic growth has contributed to rising affluence and the threat of moral decay looms high around us too. Unless the implementors are efficient and productive, there will be a lot of hiccups here and there, which will eventually show up in various forms. Character building through the cultivation of good work ethics and moral values will also become a permanent feature of the Malaysian civil service in the future as a means of protecting its dignity and integrity.

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