RM60 billion may have been lost to graft in 2018

MALAYSIA could have haemorrhaged RM60 billion of last year’s gross domestic product (GDP) value due to corruption.

(NST) – Criminologist Datuk Seri Akhbar Satar drew this observation based on World Bank projections that graft hacks away two to four per cent of a country’s GDP on an annual basis.

“We are losing up to RM57.88 billion based on this calculation, but I estimate that we could be losing RM60 billion or even more due to unseen social costs and indirect graft that is difficult to quantify.”

The former Transparency International Malaysia president said he took the highest rate in the range given by the World Bank due to the magnitude of graft in Malaysia.

“And these estimates are conservative. We have so many unsolved high-profile cases of corruption and fraud in Malaysia.

“This year, the GDP is expected to grow between 4.3 per cent and 4.8 per cent. What then?” he said, adding that such estimates in graft stood in the nation’s way in its Shared Prosperity Vision.

Checks with relevant ministries found that RM1 billion could build 800 to 1,000 100-bed hospitals, 40 schools or four-lane roads stretching several kilometres.

Last year, Deputy Prime Minister Datuk Seri Dr Wan Azizah Wan Ismail revealed that the nation lost RM47 billion of its GDP value to corruption in 2017.

That amount was more than what the government spent on education and double the sum allocated for healthcare in the same year.

Transparency International Malaysia also said about four per cent of the GDP had been lost to corruption annually since 2013.

Economist Dr Hoo Ke Ping, meanwhile, offered another perspective on how funds have been lost due to graft.

He said corruption in Malaysia had been institutionally endemic since the 1970s, when the number of government agencies and government-linked companies expanded from about 30 entities back then to the thousands seen today.

He said this led to people being burdened as they endured negotiation and appointment practices that were open to abuse.

“The system of direct negotiations, concession agreements labelled under the Official Secrets Act 1972, as well as political patronage, cronyism, nepotism and unregulated political financing means that in the end consumer pays more.”

He said while this did not necessarily mean that the country’s coffers bled all the time, it was about consumers being directly affected due to corrupt practices.

Hoo cited the negotiations of highway deals, where rates and the durations of concessions were open to increases at the expense of the people.

“This is a form of graft. Toll fares can be increased by a few sen or ringgit that way.”

He said previously, independent power producers were also given higher subsidies and the burden was passed to consumers via increased tariffs.

Hoo, however, credited the government for reviewing some deals.

“Solar-powered electricity is now sold to Tenaga Nasional Bhd through an open tender system, which cost as low as 28 sen or 29 sen per unit following the Energy, Science, Technology, Environment and Climate Change Ministry’s intervention. Previously it was 30 sen or 40 sen.

“The government has to relook its previous and current policies and practices, and carry out changes.”

Sunway University Business School economics professor Dr Yeah Kim Leng said there was no way for Malaysia to achieve its Shared Prosperity Vision goals without corruption being kept at a minimum.

He said rampant graft would lead to resources being diverted or transferred out of the country, depleting the nation’s coffers.

“Graft causes leakages, wastage and diversion of resources, as well as higher costs, and this will be passed on to consumers.

“The worst is when practices, such as the awarding of contracts and public investment, affect businesses that are clean and efficient.

“The end result will be the erosion of investor confidence, outflow of capital and reduced investments because companies are forced to offer bribes to get clearance or favours.”

Yeah said when the costs were passed on to the consumer, the products would be less competitive and it would affect their bottom-line.

He said in the past, there were instances when Malaysia’s attractiveness to investors, ranking in corruption and ease of doing business took a hit because of graft.

He said this changed when Pakatan Harapan took over the government.

“PH has demonstrated its commitment to end corruption and it is manifested in the country’s improved ranking in the anti-corruption index.”

He said the government’s stand in taking former prime minister Datuk Seri Najib Razak to court over abuses related to the 1Malaysia Development Bhd scandal was crucial in improving the country’s reputation.

Malaysia’s attractiveness to investors was climbing as a result of this, he added.

He commended the government for coming up with the soon-to-be enforced Section 17(A) of the Malaysian Anti-Corruption Commission Act 2009.

The clause on corporate liability will see companies being fined no less than 10 times the value of the gratification, or RM1 million, whichever is higher, or be subjected to a prison term not exceeding 20 years, or both, when the law comes into effect in June 2020.

Section 17A(3) also provides that if the offence is committed by a commercial organisation, the director, controller, officer, partner and persons managing its affairs at the time of the offence is deemed to have committed the offence of failing to prevent corruption.

These individuals will then need to prove that the offence was committed without his consent or connivance and that he exercised due diligence to prevent the commission of the offence.