Friday, September 27, 2013

Malaysia The Most Corrupt Nation?

Actually, that’s not what EY said. I wonder if the person writing the following actually read the report (excerpt):

Malaysia one of the most corrupt nations, survey shows

Malaysia has been ranked as one of the most corrupt nations and listed as a country which is most likely to take shortcuts to meet targets when economic times are tough, according to a recent survey by Ernst & Young, signalling that the government's Performance Management and Delivery Unit (Pemandu) has failed in its role to transform the economy.

Malaysia, along with China, has the highest levels of bribery and corruption anywhere in the world, according to the latest report, Asia-Pacific Fraud Survey Report Series 2013.

This year's survey polled 681 executives in China, Singapore, Australia, New Zealand, Indonesia, Vietnam, Malaysia and South Korea.

About half of the 681 executives polled on their perception of fraud felt that China, Indonesia, Malaysia and Vietnam were the worst in bribery and corruption…

…About 39% of respondents said that bribery or corrupt practices happened widely in Malaysia, a figure which is nearly double the Asia-Pacific average of 21%.

In addition, 29% of respondents said that bribery or corrupt practices here have increased due to tough economic times and increased competition, which is the third highest among the countries surveyed…

A couple of things here:

  1. It’s a survey of eight countries – not the world. The headline (and content) is grossly misleading.
  2. The survey really focuses on the internal propensity and incentive to commit fraud and bribery, not the level of corruption in the environment. While the environment is certainly an enabler, they’re not quite the same thing.

For example, the line about “most likely to take shortcuts” actually refers to a survey question on company managements, not on the country per se. So its a bit of a stretch to go from the conclusions of the report to “…one of the most corrupt nations…”, and “…(Pemandu) has failed…”

There are survey questions on corruption in the environment, which are worth actually quoting in full, because the results are pretty interesting:

  1. “Bribery/corrupt practices happen widely in the country where you are based”; 39% agreed, Rank: 2 (highest: Indonesia 79%)
  2. “In your industry, it is common practice to use bribery to win contracts”; 15% agreed, Rank: 3 (highest: Indonesia 36%)
  3. “Bribery/corrupt practices have increased because of tough economic times and increased competition”; 29% agreed, Rank: 3 (highest: Vietnam 39%)
  4. “Government efforts against bribery have had a substantial impact on the level of bribery in the country you are based”; 56% agreed, Rank: 1

I found the dichotomy between the answers to Q1 and Q2 really interesting. What, who me? And then there’s Q4…

Nevertheless, the fact of corruption is undeniable, but then that’s not something we don’t know. On the other hand, the level of corruption here isn’t as bad as some have portrayed – Transparency International’s Corruption Perception Index 2012 report for instance ranks Malaysia 54th out of 176th countries, i.e. in the top third least corrupt. We’re nowhere near ANZAC or Singapore levels, but then, we’re not exactly Zimbabwe (163), Venezuela (165), or Somalia (174) either.

Finally, government efforts against corruption appear to have had an effect, based on response to that last survey question. EY had some survey questions on internal compliance policies, in which Malaysia scores quite well.

You can download a copy of the report from the EY website. And while we’re on the subject of corporate ethics, we might really need a survey on journalistic ethics (and that goes for mainstream media too).


  1. As long we are not the worst at the bottom, we can claim we are clean.

    1. @anon 5.24

      That's ridiculous, it would be as silly as claiming we're totally corrupt.

    2. Malaysian Insider Christian Chinese Communists!September 29, 2013 at 4:35 PM

      Where is KDN when you need them. Here we have the Malaysian Insider with the help of Yahoo spreading misinformation with delibrate intention. Yet nothing is done. The Malaysian Insider is run by Christian Chinese women and no one reading the report from E&Y can find any ranking.
      In fact the report placed Malaysia highest at 54% which says Government if effective in curbing bribes!
      In fact the report says almost 60% of Singaporean say that their anti bribery laws are ineffective. In other words 60 says there are bribery in Singapore! Making it the second most corrupt in the survey perception. Singaporean chinese are smarter they are not going to admit to bribery survey.Who in their right mind would admit to commiting bribery even in anonymous survey?
      The Malaysian Insider is an evil Chinese group that must be closed down. And pronto too!

  2. Good one hishamh. Help for those who cant see the forest for the trees and also for those extremist cinions whose minds are closed no matter what...keep on going man.

  3. Correction

    doomed not domed

    2. nothing can be further from the truth...........hocus pocus bung.............

  4. Warrior 231,

    Could not have said it any better, these idiots always see the glass as half empty and never half full.

    Nevertheless, Hishamh, thank you for the enlightenment.

    Zuo De

  5. Warrior 231,

    I do not think this is a lost cause. There will be those who seek knowledge (sitting on the fence) and these, keeping an open mind, will certainly change their thinking (perception) with the facts as presented here. So it is important, Hishamh to keep it going .....

    Your views are also important too, Warrior 231, as i or the others just cannot know everything (different perspectives).

    Zuo De

  6. The pessimism among Malaysians is damning, they even think the EPF that have been giving good returns is robbing their money to pay the civil servants salary....literally heard one malaysia telling such to an Australian during class, and this one studied in UK some more but chose to give misinformation.

    Hence I believe, the surveys deliberately ask the wrong people.

    No one really wants good news/progress from any country these days.

  7. I like your last sentence Hisham: "And while we’re on the subject of corporate ethics, we might really need a survey on journalistic ethics". I'm sure we are going to fail big time! Nowadays when I read something I have more and more "betul ke ni?" moments. Can't trust the so called journalists anymore coz most of them are truly biased.

    Sad to say that our world currently is full of fitnah. So to be safe it is better for us to go back to Quranic principle of "show me your proof if you are truthful", baru selamat kita hidup dunia dan akhirat.

    1. Problem is , show proof, then they call you racist or some dog of a political party.

      You, in my last job in manufacturing, we did quite well that our quarterly bonuses was in the 70% range, but the executives, who draw the most bonus compared to us humble engineers and operators still complain about corruption and that the economy is forever stagnating and affirmative action.

    2. Read my blog on sewerage mismanagement in full. Then ask me for proof of anything in my blog and it is will be given to you.
      Luqman Michel


  8. Part 2

    So why bother about such meaningless rankings etc. They are screwed anyway. Even the Times Higher Education survey at least collates other solid data like citations, international enrollment apart from perceptions. Seen TI or EW compiling data from enforcement agencies, white papers etc? Or is laundering money and lax financial regulations enforcement very uncorrupt practices?

    And to give you a picture of all the dirt they deliberately miss, read the comments about NZ

    An eye opener isn't it? Still want to waste time quibbling about garbage?

    And talking about the Financial Secrecy Indice, tax haven,ML, etc, here is something to chew over. Go to Cayman Islands

    On the FSI, it's no 2, below Switzerland. Next go to this link

    Amazing, isn't it for a nobody like the Caymans? Now do the same for all the "strategic" tax havens and FSI chart toppers like Switzerland, Spork, HK, etc by clicking on the respective regions here

    Amazing too, isn't it? Pure coincidence? Nope......there can be no other explanation than the only logical one. Go figure it out.

    Warrior 231

  9. Regarding the debt issue I raised previously, I think this paper provides some food for thought. The findings themselves are unsurprising and may provide fodder for deficit hawks concerned about the primary balance ( see scatter plot on page 20 , tables 1 and 2 are also interesting stories of their own)

    But I find the authors contention that the data bespeaks suggestions of creative accounting by governments to understate their debt rather intriguing.

    As a non-economist, I am rather curious as to whether this is pervasive in balanced budget or even structural surplus economies. I mean if this was to go undetected that makes all designations of sovereign credit ratings rather hollow, wouldn't it? Maybe the blogger can shed some light on this.. Also is this in any way related to the IMF periodically revising national account data as in the case here:

    To be fair, here is the official clarification:

    Hmm... a technical glitch on IMF' part sounds like an excuse that's a tad too simplistic and amateurish. But then again, the last para sounds a bit odd, given there have been such problems before :

    Or is the above just an adaptation to a new format and nothing more...........

    Mr Blogger, any chance of links to papers affirming or disputing Ricardian Equivalence. Just piqued my interest, that's all. Thanks, beforehand.

    Warrior 231

    1. Warrior,

      I'm terribly busy these next couple of days, but I'll follow up if and when I can. In the meantime, try this.

  10. Ok, you are like me, a hound for knowledge. An idealist, maybe when i am younger, i like to think myself pragmatic now.

    Nevertheless, interesting perspective you are putting up, i can "buy" (punt intended, as i have to bow to money) it.

    Zuo De

  11. Warrior,

    I know very well how dodgy the TI CPI is, no need to tell me that, especially for rankings before the recent change in methodology. The standard errors alone means that Malaysia's 2012 "true" ranking could be anywhere 10 places up or down. Nevertheless, in the absence of anything else, I'll use what's available, especially since it's still a useful guide to relative corruption levels (though not absolute ones).

    Ref: credit ratings. I don't think I'll be publishing my results due to an ethical conflict, but if you provide me an email, I can pass you the data and you can have fun with it.

  12. I second the need for a survey on journalistic ethics. Have seen and been the receiving end of too much bungling from that crowd, who are loudest in condemning and asking wrong questions in wrong forums, who get all self-righteous when told so, and they are also frequently the last to do proper research on issues. Although a very small number do apparently do their homework, kudos to those.

  13. @Warrior,

    Angry? Who me? I was mostly amused :)

    But seriously, drop me a line, and I'll send along the CR data (I've got both Moody's and Fitch now).

  14. Hisham,

    Just wondering: from a different perspective.

    Do you know of any other countries that put in so much political capital in fighting corruption.

    I think Malaysia is remarkable in that sense, where corruption is highlighted by successive administrations as a key deliverable.

    Do you think its a good strategy for the government to invest so much political capital in corruption?

    1. Greg,

      I think most countries transitioning from low to higher incomes will tend to go through this phase. If we look at the experience of developed economies, even here in East Asia, they've all had periods where corruption becomes a major public issue.

      I think for Malaysia though, neither side of the political divide has a choice - they have to take in on, because the public demand it.

    2. A better strategy maybe not to raise the public's expectations, and address the issues administratively.

  15. I don't know corruption statistics but I know first hand about corruption practice in JKR Sabah. I have written a blog on sewerage scam in Kota Kinabalu where JKR issued Certificate of Practical Completion (CPC) when work was not yet completed by the sewerage contractor.
    CPC was issued in January 2013 despite the CCTV contractor writing in November 2012 to JKR and informing them that 242 defects had not be rectified. To-date these defects have not be rectified.
    If corruption had not played a part can someone please explain how the CPC was issued.
    Luqman Michel