Unlocking politics-business close ties before new economic model

By Thomas Soon, The Edge

Talking about insidious relationship between government officials and businessmen — it’s almost an exercise in futility, isn’t it?

Yet the matter is an important topic for discussion, although clearly an uncomfortable one for Malaysian politicians and businessmen, towards improving corporate and public governance, upholding integrity and credibility and towards making good use of taxpayers’ money in good and bad times.

It is all the more crucial given that within Asia, according to Morgan Stanley Research recently, Malaysia’s public sector economy at between 25% and 30% of gross domestic product is one of the biggest, ahead of countries such as India, Taiwan, Thailand, South Korea, Singapore and Hong Kong.

Some may say open tenders would do the trick, without the necessity of divulging the political funding. Yet even with that, the politically well-connected personalities can still be favoured.

Aplenty are rumours of “tricks” employed by corporate figures high up the social and political rank — including having the “opportunity” to have more than a glimpse of proposals submitted by rival bidders.

Many companies in the developed world even have “slush” funds to pay off their peers and public officials in emerging markets. Stories too abound of indirect funding via people purportedly bidding for public projects on behalf of the ruling political parties, with the latter getting a cut of the “unjust” rewards — as they say, a win-win situation.

Such allegations are not new, but they do highlight dishonesty and unethical practices in public procurement. Of course, costs to the public jump many fold. Taxpayers will suffer all the more if this public-private sector disease is allowed to continue and fester in any economy.

So it is not much of a surprise when Transparency International Malaysia (TI-M) president Datuk Paul Low recently spoke of the need for businesses to disclose any contributions made to political parties in order to curb political patronage.

Money saved could be deployed to improve public utilities and infrastructure, including the development or redevelopment of human capital, that would have brought even more benefits for the country as a whole over the longer term, even more so during a recession.

Given that it was highly unlikely that local companies would freely reveal if they were funding any political party, Low suggested that the Securities Commission or Bursa Malaysia Bhd introduce a requirement for them to make such a disclosure. He might add that many of our current batch of politicians will never concur with it.

Although highly independent from the ruling class, Low might also add that any such initiative is highly unlikely to come from the regulatory authorities given the highly sensitive nature of the matter that is in the realm of politics.

Calling for political will to tackle the funding issue is as good as predicting the sun never rising in the east again.

It can only be hoped that businessmen’s seemingly innocuous capitalistic dream of making it good through “kang tau” (Hokkien for ways to gain financially) but unsavoury means of “kau tim” politicians (taking care of) has not taken too much of a root here to be irreversible.

Malaysians were not at all surprised when a certain corporate personality-cum-politician alleged that he had given a RM10 million donation to a political party, though the latter had denied it.

People ask privately what are the other allegations out there of what other businesses and corporate captains have donated how much more to what political parties and politicians?

People wonder privately about the unimaginable sums sloshing around for politicians, for businessmen, and for politicians-cum-businessmen, with their big bungalows and fancy cars.

TI-M’s Low said political patronage and money politics were a big issue in the country. Agreed, now what more can be done about it? How can the perception that only the “small fry” are being targeted by enforcement agencies be eradicated?

Given that self-regulation for public-private sector interaction is about the only regime for now insofar as political funding is concerned, Malaysians perhaps can only pin their hope on whistle-blowers, people in or familiar with public expenditure to tell of any malpractices. For that, those in the civil service must be trained to tell the difference between ethical and unethical.

Human Rights Commission of Malaysia (Suhakam) too should look into the matter as it involves the citizens’ rights in having their tax money being well spent and not misused.
 
Perhaps, amnesty for all previous public-private sector transgressions and let the country start anew, with full disclosure of political funding?

The government’s budgeted expenditure totals a record of over RM207.9 billion for 2009, excluding any supplementary spending and the stimulus packages. The amount comprises RM154.2 billion for operating expenditure and RM53.7 billion for development expenditure.

Budget 2010, which will be unveiled towards the end of next month, may be much more given the need to stimulate the economy, unless the government finds the means to make the necessary cuts and stem the tide of fiscal deficits. As usual, much of the government spending is up for grabs by the private sector.

In Budget 2010, Prime Minister Datuk Seri Najib Razak will have an uphill task to create a strong foundation for the country to achieve his vision of escaping the “middle-income” trap and achieving a high-income from a middle-income status.

In transition, those in poverty and low-income groups risk being left further behind. Productivity and getting the most out of taxpayers’ money in public spending must surely be part of the necessary change in the rules of the game in relation to the opaque ties between political parties and the private sector.

Greater efficiency can be achieved by curbing wastage in public spending. Savings can be deployed for beneficial projects as well as to help the affected groups uplift capacity, including education, and means to ensure that they too escape their “trap”. That must be an exercise in all earnestness, futility banished.