Home Aliran CSI Bloated bureaucracy, highly paid CEOs of state-owned firms weigh down on Malaysia

Bloated bureaucracy, highly paid CEOs of state-owned firms weigh down on Malaysia

We need to thoroughly re-examine the civil service and the role of government agencies

Photograph: mole.my

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By M Santhananaban

Malaysia is a fortunate, modern, multi-racial, multi-religious country with a diverse, multi-talented workforce.

But over the last four decades, successive governments have failed dismally to recognise the immense advantages of this diversity and the unique distinguishing features of the nation.

Reckless racial and religious experimentation has been carried out in Sabah. This could only have been enforced with the participation of federal peninsula-based institutions and some involvement by Sabah officials. But that is the past and cannot be undone.

Only six months in office, Prime Minister Anwar Ibrahim has taken some bold and brilliant steps. His innovative “Malaysia Madani” (Civil Malaysia) concept is symbolic of his seriousness in pursuing several noble goals.

But much serious work has to be done to concretise this concept.

Left to the hierarchy-conscious high and mighty bureaucrats, some of them mediocre, in the Public Service Department or, as indicated lately, to the Islamic development department Jakim, which attempts to run the administration through remote control commands and circulars – more with religious than reasoned fervour – it will flounder.

This is something that has to be avoided. Some people will recall the decent “Look East” policy administered by the Public Service Department.

But the way it was administered, the strong points apparent in Japanese and Korean work culture could not percolate into our administrative or education system.

Perhaps Anwar himself is not an effective propagator and promoter of the Madani concept if he thinks he can entrust its economic and ethical aspects to Jakim.

Alarmed folk from the women’s groups and minority communities should be reassured that the Madani concept under Jakim will meet the same fate as Abdullah Badawi’s Islam Hadhari (Civilisational Islam) drive and Dr Mahathir Mohamad’s Look East policy.

The Public Service Department has created a bloated, befuddled and burgeoning bureaucratic system. This has encouraged warlord-ism of a bureaucratic kind with undeclared turf wars and much duplication and overlapping of roles.

The major thrust of the department’s work seems to be the need to control and create more posts – rather than create a well-coordinated, lean, purpose-focused system with clear objectives to advance and protect the national interest.

Pressing problems put aside

Beyond being bloated, the civil service is somewhat bewildered because the Public Service Department has, by sheer shortsightedness, allowed by design or default over six million foreigners to settle in the country. This has contributed to strains to our healthcare system.

Meanwhile, the horrendous traffic situation results in a 30km commute on a tolled highway taking 70 minutes. Corruption and drug addiction are rampant, and the education system is ultra-conservative, with too much emphasis on the wrong priorities.

At one time, the Public Service Department had outstanding leadership of the most enlightened and impeccable kind. Leaders like Hashim Aman, Osman S Cassim, Abdullah Salleh, Rozhan Kuntom, Mazlan Ahmad, Alwi Jantan and Jamaluddin Ahmad Damanhuri all commanded respect and were trusted.

Under Anwar, the principal agency to combat corruption, the Malaysian Anti-Corruption Commission appears to be a lot more active, even proactive. It seems to have assumed greater prominence, with much press and media coverage.

Social media appears to cover other, including controversial, issues related to the MACC.

MACC officials who are competent, courageous and impartial in their work must be recognised and reasonably compensated. After all, they are performing their investigation duties, inquiries and evidence-gathering at some risk to their personal safety and that of their families. They must be sufficiently facilitated, protected and reassured that they are making important contributions to the country.

The public has to appreciate the work of the MACC and the other law enforcement and regulatory agencies. For this to happen, the media and the political and administrative establishment must be knowledgeable, understanding and supportive of the commission’s work.

The media have a peculiar and precious role. They have to do more investigative reporting and commentary.

Under Najib Razak and, to a certain extent, under Abdullah Badawi, the wages, allowances and other perks for civil servants were increased substantially. It was partly a populist move.

Pensioners who retired before or at the turn of the century did not benefit greatly from these increased gratuities, grants and other financial perks.

Corruption and compensation rose

The irony was that with increased salaries, corruption actually seems to have spiked. Breach of ethics and irresponsible, irregular practices appear to have even ensnared certain top officials in the government and within the Ministry of Finance (MoF). One of them allegedly drew an additional RM30,000 monthly for lending his name to a state-sponsored scam, while the other had remuneration that amounted to nearly a quarter of a million ringgit monthly.

When top civil servants succumb to such unhealthy conduct, it will naturally infect the whole stable of government-controlled and government-linked entities.

The conductors and conduits of this infectious practice have been mainly the MoF representatives who sat as the government watchdog on the boards of directors of these entities.

These government-linked companies included several big names and hundreds of other companies, including some mosquito ones. They operated as if they were stellar state-of-the-art private profit-making companies rather than state-owned publicly funded enterprises.

Appointments to these entities fall under the purview of the prime minister and finance minister.

But other ministers, including those responsible for rural development and trade and industry, also have their own playing grounds or parishes.

Edmund Terence Gomez’s book Minister of Finance Incorporated: Ownership and Control of Corporate Malaysia (2018) provides an insight into these state-owned enterprises. They account for about 45% of the equity owned by the government directly in listed companies.

Gomez points out with poignancy the kind of chill and swill that affects these state-run enterprises.

Beyond these so-called business and corporate entities, regulatory and asset management bodies also have government appointees in policy and operational roles.

Admittedly, the quality of the professional elite management of these government-affiliated entities has improved in recent decades. But there seems to be little convincing correlation between the performance of these entities and the excessive emoluments and allowances paid to their management.

Government-affiliated entities and companies do not operate on a level playing field. They enjoy advantaged positioning or monopolies. They have relatively greater manipulative and muscle power compared to privately owned and operated business concerns. Their management and directors do not face the risks and personal liabilities that private entrepreneurs and their employees face.

To provide them emoluments and entitlements that are over 20 times the monetary value of what the prime minister earns monthly seems odd and out of place. The annual payments made to some of these CEOs seemingly exceeds the combined emoluments of the Yang diPertuan Agong, the prime minister, the chief justice, the central bank governor and all the state chief ministers.

The prime minister, especially the current one, seems to be at the greatest risk with his reform agenda.

Is any government-linked company, government-linked investment company or state-run entity CEO subject to the same risk?

In 2019 a report titled “‘GLCs CEO’s pay hard to justify’” noted that the incomes enjoyed by a select group of CEOs of government-linked companies in 2017 ranged from a million to RM10m.

This was considered excessive then, but has since probably soared. The then Prime Minister Najib Razak, with a penchant for irresponsible populism and facing a difficult general election in 2018, would have seen to that.

The report noted that the CEOs of government-linked companies received 22,816% or 229 times the median salary of Malaysian citizens.

In a similar vein, another report in 2018 was titled “The many blunders at Bank Pembangunan“.

These reports sum up the excesses and poor management that afflicted government-owned entities.

These disclosures received hardly any response, suggesting that towering personalities who were in charge were able to deflect all attention from the issue.

These excessive salaries, allowances and other perks are just one aspect of a bizarre situation.

The qualities of these CEOs, their qualifications and the quality of their leadership are what matter.

Not so long ago, when Tan Siew Sin, Ismail Ali, Raja Tun Mohar Raja Badiozaman, Abdullah Salleh, Taib Andak, Saw Huat Lye and Chet Singh were appointed to head some of these large, essentially state-owned corporations, many felt reassured that persons of the highest integrity had been selected.

Others like Rastam Hadi, Azizan Zainal Abidin and Nik Saghir Mohd Noor were also noted for probity and no-nonsense performance.

None of these appointees drew the excessive emoluments that are being paid today.

With present day appointments, however, the tendency is to move selected individuals rapidly and inexorably up the hierarchical chain.

The public are only informed about the length of a particular individual’s incumbency in a promoted position. But they are often given no indication of what these individuals achieved that was extraordinary. Yet, the incomes of these individuals often seem to soar from their previous positions.

Good political appointees

The media do not seem to be too concerned about these excessive emoluments.

Instead, we have overwhelming misplaced hype about politicians being appointed to top positions in government-linked companies and other government entities. But not all politicians lack character, integrity and capability.

The recent appointments of Nazri Aziz as ambassador to the US, Wong Chen to the chairmanship of Malaysia Debt Ventures, and Charles Santiago as chairman of the National Water Service Commission seem to have attracted some adverse publicity.

But these are capable and trustworthy people who can be entrusted to perform their duties with dedication, diligence and proper deportment.

Sure, Nazri Aziz has a larger-than-life personality. But he can hold his own in an important diplomatic centre. He would know how to pat his counterparts on the back in a brotherly, bonhomie way.

Mahathir laments in his A Doctor In The House book (2011) on page 17: “I see Malaysians – even diplomats – holding forks in their fists as if wanting to stab someone.”

The reality is that our civil service is a bloated, protocol-driven, hierarchy-conscious, turf-guarding behemoth. Its size has grown out of proportion to the size of the country’s gross development product.

The off-budget agencies with their big ticket pay packets are not being openly acknowledged as a drain on the state’s resources.

Government-linked companies are relatively powerful players in the business arena. They carry the authority and weight of government backing but their officials have no ‘skin in the game’: these officials run no personal risk, their incomes are assured, and they often have no exceptional entrepreneurial know-how. Placing them in the highest wage bracket ensures their well protected, secure and arbitrary status.

In a typical private enterprise, the risk to the investor-owner and operator is enormous. The private entrepreneur has to provide reliable, qualitative and consistent service to enjoy secure profitability.

There is a need for an overall review – a re-examination of the function and the role of government agencies and government-linked entities.

Lest it be forgotten, the CEOs of these state-owned enterprises should not be earning 20 times the allowances paid to the rulers.

Can we, for a change, be more down-to-earth, be realistic and reasonable and relate remuneration to our station in life?

M Santhananaban is a former Malaysian ambassador with 45 years of public sector experience

The views expressed in Aliran's media statements and the NGO statements we have endorsed reflect Aliran's official stand. Views and opinions expressed in other pieces published here do not necessarily reflect Aliran's official position.

AGENDA RAKYAT - Lima perkara utama
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