Curruption

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Abdullah, N. R. W. (2008). Eradicating corruption: The Malaysian experience, JOAAG, Vol. 3. No. 1

Eradicating Corruption: The Malaysian Experience

Nik Rosnah Wan Abdullah1

Abstract Corruption has long been a focus of concern. Studies have shown that there can be a huge array of anti-corruption institutions, regulations and laws available in a given society and there have been some success stories in fighting corruption. This paper examines the governance of corruption in developing countries. It reviews the relevant country experience, before it evaluates critically the Malaysian experience on governing corruption. It concludes with the question ‘Can Malaysia eradicate corruption? It is hoped that the paper could provide an analysis of corruption from the developing Asian countries. Keywords: Corruption, governance, transparency, International (TI), regulations accountability, Transparency

1

Associate Professor and Head, Department of Administrative Studies and Politics, University of Malaya, Malaysia.

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Abdullah, N. R. W. (2008). Eradicating corruption: The Malaysian experience, JOAAG, Vol. 3. No. 1

Introduction In recent years there is widespread condemnation of corruption. Studies have shown that corruption has ‘toxic’ effects on societies (Carino, 1986). Corruption affects economic growth, investment and government expenditure (Campos, Lien & Pradhan, 1999; Mauro, 1997; Mehrez & Kaufmann, 1999), hurts the poor and worsens income inequality and poverty (Gray & Kaufmann, 1997; Gupta, Davoodi & Alonso-Terme, 1998; Kaufmann & Shang, 1999; Tanzi & Davoodi, 1998), reduces the efficiency of firms, and increases the transaction costs of doing business (Kaufmann & Shang, 1999). The report on Human Development in South Asia 1999 concluded: “Corruption is one of the most damaging consequences of poor governance. It undermines investment and economic growth, decreases the resources available for human development goals, deepens the extent of poverty, subverts the judicial system, and undermines the legitimacy of the state. In fact, when corruption becomes entrenched, it can devastate the entire economic, political, and social fabric of a country…corruption breeds corruption – and a failure to combat it effectively can lead to an era of entrenched corruption” (1999: 96). In countries where corruption is successfully controlled, there is greater inflow of foreign investments, higher per capita income growth, higher literacy rate and increased business growth (Kaufman, Kraay, & Zaido-Lobaton, 2000). Hence, eradicating corruption inevitably helps further poverty eradication and economic development. In Malaysia several events, notably the Asian financial crisis, have helped to catalyse the shift in public perception of corrupt practices so that it has now become a critical component of public policy. This paper examines the governance of corruption in Malaysia. The paper starts with a short review of the literature on corruption. The next section reviews the relevant country experience. The paper then evaluates the Malaysian experience on governing corruption. It concludes with the question, ‘Can Malaysia eradicate corruption? Literature Review Conceptualizing Corruption ‘Corruption’ is often used interchangeably with ‘rent seeking’ and there is a large area of overlap. Rent seeking is the effort to acquire access to or control over opportunities for earning rents.2 These efforts are not necessarily illegal, or even immoral. However, of concern is what Bhagwati termed ‘directly unproductive’ rent seeking activities, because they waste resources and can contribute to economic inefficiency (Bhagwati, 1974, Krueger, 1974). Rents are unproductive when they are spent in resource reallocation rather than resource creation (Buchanan, 1980). The theory of rent-seeking argues that Rents are defined as “…that part of the payment to an owner of resources over and above that which those resources could command in any...
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