Malaysia

Malaysia Corruption Report

Snapshot

Malaysia_249x123.pngCorruption in Malaysia is relatively low in comparison to the rest of East Asia. Anti-corruption laws are mainly contained within the Malaysian Anti-Corruption Commission Act, which covers a range of offences (including active and passive briberyextortion and abuse of office) and penalties for private and public sector corruption. However, a lack of capacity and technical skills in some areas mean the level of enforcement is sometimes lacking. Local laws do not make an exception for facilitation payments, which should therefore be considered unlawful. One of the main sectors subject to corruption is public procurement, with Malaysian companies sometimes being favoured over foreign companies and with political connections still playing an important role in the outcome of public tenders.

Last updated: May 2015
GAN Integrity

(Want to receive more corruption report updates? Subscribe here!)

Judicial System

Businesses identify Malaysia's judicial system as being subject to some government influence (GCR 2014-2015). Nevertheless, corruption cases within the sector are not very common, and government influence on the judiciary has significantly decreased in recent times (BTI 2014). Additionally, companies feel the legal framework is efficient in settling disputes and in challenging government actions and/or regulations, thus constituting a competitive advantage for Malaysia (GCR 2014-2015).

Police

Businesses indicate police services can be relied upon to enforce the law (GCR 2014-2015), but long-standing allegations of corruption within the police force have created a state of antagonism between the force and the Malaysian public over the years (TMI, Apr. 2015). Malaysians perceive the police as the most corrupt institution in the country (GCB 2013).

Public Services

Companies report irregular payments and bribes within Malaysia's public services sector are uncommon (GCR 2014-2015). Additionally, bureaucratic barriers are low; for instance, obtaining electricity takes less time and costs less than in most OECD countries (DB 2015).

Land Administration

Property rights in Malaysia are generally well-defined and are protected by Malaysian courts (ICS 2014). Registering property requires more procedures than in other countries in the region, but the time needed to complete an application is relatively low (DB 2015). However, corporate lawsuits with regard to private property still face lengthy delays (BTI 2014).

Tax Administration

Corruption is unlikely when dealing with Malaysia's tax authorities. The country has made significant improvements in relation to tax collection (BTI 2014), and the low number of procedures and time required, as well as the possibility of online filing, create few opportunities for corrupt behaviour (DB 2015).

Customs Administration

Businesspeople claim the use of irregular payments and bribes within the Malaysian customs administration is rare, although transparency issues remain (GCR 2014-2015, GETR 2014). In a recent crackdown by the Malaysian Anti-Corruption Commission, eight customs officers were charged with accepting bribes from a smuggling syndicate looking to evade excise duties (MalayMail Online, Sep. 2014).

Public Procurement

Businesses in Malaysia report it being uncommon for companies to make undocumented irregular payments or bribes in connection with the awarding of public contracts; the diversion of public funds is also rare (GCR 2014-2015). The Malaysian government has passed procurement reforms to stamp out corruption (ICS 2014), but the awarding of major infrastructure and public works contracts is often done without competitive bidding or open tenders (WSJ, Dec. 2013). Political connections continue to be one of the main criteria in the awarding of important infrastructure projects and state contracts (BTI 2014).

In 2012, a massive procurement corruption scandal emerged in connection with the government's purchase of two submarines. French shipbuilding giant DCNS allegedly bought classified Malaysian documents from the Defence Ministry to help its bid for the USD 1.25 billion contract and involved almost USD 45 million in kickbacks (Reuters, June 2012).

Natural Resources

Malaysia's logging industry has been the subject of a number of recent allegations of corruption, and the government has done little to tackle the problem (Reuters, Jan. 2015). In one case, Chief Minister of Sarawak Taib and his family allegedly received kickbacks from private companies in return for logging and plantation permits as well as purchasing land for a small fraction of its commercial value through directives from the Ministry of Resource Planning and Environment (which is headed by Taib) (GW, Mar. 2013).

Legislation

Malaysia's anti-corruption legislation is mainly contained within the Malaysian Anti-Corruption Commission Act of 2009, which created the Malaysian Anti-Corruption Commission (MACC) and which provides for offences and penalties for private and public sector corruption, including active and passive briberyextortion, attempted corruption, abuse of office, corruption through agents, corruption in public procurement and electoral corruption. There is no clear exemption for facilitation payments, so these should be considered akin to bribery payments. Gifts and hospitality are regulated under Malaysian law: Gifts of any value must be declared if the intention is deemed uncertain. However, these regulations are are often not effectively enforced. The Anti-Money Laundering Act 2001 criminalises money laundering and contains provisions for the freezing and seizing of assets obtained through corruption. In particular, the Act aims at strengthening the anti-corruption body to combat the system of political patronage in which well-connected Malay businesspeople are favoured for state contracts. A new Whistleblower Protection Act came into force in December 2010, but it does not protect informants who reveal information to a third party, such as the media. Malaysia is a State Party to the United Nations Convention against Corruption.

Civil Society

The Malaysian Constitution provides for freedoms of speech and press. However, freedom of expression is often restricted through intimidation into self-censorship or exertion of a series of tough censorship laws. Among others, the Printing Presses and Publications Act (PPPA) gives the Malaysian government the authority to suspend or revoke licences without judicial review, while the Official Secrets Act (OSA) reduces transparency in governance and curbs freedom of information by automatically classifying all government documents as 'secret' (FotP 2014). The Internet is subject to supervision, and political speech is restricted by several laws (HRR 2013). Malaysia's media environment is considered 'not free' (FotP 2014).

Although the Constitution provides for the rights of association and assembly, the government has limited these freedoms in practice (through the Public Order Ordinance and the Police Act) on grounds of maintaining security and public order (HRR 2013). Civil society activity has recently increased and strengthened in some areas, especially through groups that monitor human rights, the environment and government reform agendas. However, overall, civil society tradition remains weak, and citizens in urban areas play a marginal role (BTI 2014).

Sources

Topics: East Asia & The Pacific