Malaysia Country Profile

Environment, Natural Resources and Extractive Industry

Business Corruption

According to the NGOs Article 19 and CIJ Malaysia 2007, one of the most serious problems facing Malaysia is the impact of corruption on the environment, whether this be through skewing policies for private gain, allocation of grants to poor practice companies, failing to apply approved rules stringently or overlooking a failure to abide by the rules in project implementation.

Malaysia is one of the world's leading producers of tropical saw logs. In theory, forestry resources in Malaysia are managed on a sustainable basis, but in practice government controls on tree-felling continue to be flouted by loggers and illegal logging activities, such as unauthorised expansions of approved logging areas by altering documents and maps, bribing of forestry officers and smuggling, are widespread practices. According to New Traits Times in May 2007, investigations of six forestry officers from Pahang began for 16 cases of abuse of power related to altering of logging documents and maps. Furthermore, according to New Straits Times 2009, illegal logging activities have increased from 2006 to 2008. As of October 2009, 21 illegal logging activities had been detected. 

Political Corruption

According to the NGOs Article 19 and CIJ Malaysia 2007, the government's approach in the environmental sector has been characterised by undue secrecy and the withholding of information, especially surrounding the state oil and gas company, Petronas. This has seriously undermined the ability of citizens to participate in decision-making around issues which affect the environment and fuelled corruption and regulatory breaches.

While water supply is being privatised in Malaysia, the Transparency International Global Corruption Report 2008 reports that the government refuses to reveal studies of the water industry and information about the company, methods or proposed new rates. This has led to allegations of conflict of interest and kickbacks in water supply. The lack of transparency in the contracts and concessions given to water companies is of serious concern, in part because it creates an atmosphere conducive to corruption, as those approving the contracts do not have to justify their decisions on either public interest grounds or efficiency.

According to a 2009 article by The Star Online, the MACC arrested a director of a government department, together with 3 others, including 2 forest rangers, in relation to allegations of corruption over the acceptance of a bribe of more than MYR 100,000 in exchange for a logging compartment contract. The Transparency International Corruption & the Environment 2006 indicates that government officials and forestry rangers facilitate illegal logging activities such as extending contracts and receiving bribes from logging companies. In early 2009, the Malaysian Anti-Corruption Agency (in Malay) reported that it would crack down on loggers as well as on a number of officials from public agencies which had been profiting from illegal logging activities. These agencies include the Forestry Department, the Malaysian Timber Board, customs administration, the police and the Department of Environment. Currently, the MACC is investigating another illegal logging scandal worth several MYR million, which it is believed that several forestry officers are related to.

According to the NGOs Article 19 and CIJ Malaysia 2007, another case of corruption in relation to the environment involves toxic waste dumping in Johor in 2007. The New Straits Times ran a series of articles regarding the illegal dumping of toxic waste and the subsequent lack of action on the part of the Department of Environment (DoE). Information about the illegal dumping had come from whistleblowers within the DoE and there were allegations that the dumping had been permitted through bribery. The DoE said, however, that it did not have jurisdiction over the dumping grounds. The government's response centred on the need to prevent information leaking from the DoE. DoE officials were subsequently required to renew their oaths under the Official Secrets Act. The DoE said that this was a routine reaffirmation, but the timing of the reaffirmation led to a general public perception that this was linked with concerns about DoE corruption.

In a major corruption case, according to a 2007 by BBC News, former head of the state-controlled Perwaja Steel Group, Eric Chia Eng Hock, has been accused of embezzling USD millions by approving fraudulent payments to a fictitious company in the 1990s. In 2007, the case ended with the prominent businessman going free after a court dismissed the charges against him, the prosecution having failed to prove its case. Critics saw this verdict as a setback for former Prime Minister Badawi's anti-corruption campaign.