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. Despite your valiant efforts, your attempts at giving clarity and putting everything in its proper perspective is domed to be ridiculed. Why?

    Most Malaysian who are quick to gloat over such a "damning" verdict are prejudiced vacuum brained idiots anyway. So no amount evidence based arguments are going to shake their convictions that Malaysia is indeed corrupt.

    2. You succumbed to the false belief that perception surveys like these and TI etc impart substantively accurate info on corruption in the nations surveyed. Nothing can be further than the truth. With dubious methodology allied to simplistic deductions based on scanty data, these surveys amount to nothing more hocus po us bung masquerading as informed analysis.

    That is why countries like China, Vietnam etc don't give a damn about such worthless findings and carry on as business as usual. And they are doing mighty well thank you, corruption or no corruption while the supposedly clean ones like NZ eke out meager gains at the bottom of the world.

    As an international banker pal of mine would say ' pay close attention to the pattern not the numbers and therein lies the secrets as to the whys and the wherefores?

    And pray what pattern? Well let's say that countries that are known tax havens, are lax at enforcing financial regulations, that geographically straddle the key exit points of illegal money, invariably end up with solid whiter than white corruption ratings. Don't believe him or me? Just take out the globe,id those strategically located I.e the Caribbean, Luxembourg, Singapore, HK, Switzerland and trace their ranks on TI as well as on UNDP data 'bout amount of stock investment flows and you get my drift........

    TI, EW or whatever, are nothing more than the poorer stepbrothers of credit ratings. And CR has taken a big hit, thanks to the Global Financial Crisis via the subprime fiasco. Just a matter of time these poorer attempts at financial probity follow suit.

    P/S : I like calling out the idiots for being stupid and prejudiced for it is precisely what they are. And of course people don't like being called stupid since time immemorial, that is why you have the emperor without clothes saga. It took a lil boy to holler how stupid all the adults were. Some deserved comeuppance that one, mind you.

    And so when pathetically stupid people yell like silly chicken little about the national debt, for instance, ,its time to call out the fools.

    Wonder if these are the descendants of the same broilers who were chirping madly that Malaysia was doomed back then.

    Warrior 231

    1. Correction

      doomed not domed

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

    2. 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

    3. 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

    4. 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.

    5. You are an idealist, Zuo De. A knowledge thirsty hound you are but an idealist all the same. The value systems of this world no longer operate on the crucible of truth. Rather they are mere offerings at the altar of money, to be burnt to ash in a jiffy. Money talks and wins all the time, period. Ask the victims of Great Financial Crisis of 2008. The conmen from Goldman Sachs et al are still awash in greed, rewarded for their scams, feted for their dishonesty, celebrated for wrecking lives and destroying livelihoods.

      So what makes you optimistically hope that truth will set everyone free. For every you, Zuo De, there are a million money scavengers, hypocritical humans for whom nothing matters more than money. I was right all along, people are primarily concerned with a full tummy and an over full pocket, ideals like justice, equality, freedom, be damned. That is why any political system that can deliver that assuredly will definitely survive. Ask the CCP that.

      And those who tout democracy as the way to uphold truth, lie big time. Democracy actually is the mother of all con games that hide all other con games. That is why those who worship the god of democracy are worshipping a false deity. Democracy is only valuable in direct proportion to how successfully, it enriches its devotees, not how much it empowers them as enlightened, free citizens upholding truth and justice. Only the fool would care for the higher ideals of democracy for they are nothing but illusions anyway, fit to assuage delusions.

      Having given you a somewhat admittedly inchoate riddle to mull over, let me show you why TI, or any other corruption perception index is as screwed as a biased Credit Rating.

      Link 1 brings us to Singapore

      And what do we know? A moneylaundering, tax haven ranks as an incorruptible paragon of incorruptibility. Moneylaundering? Tax Haven? Well, this is attested by formal evidence compiled by government agencies.

      For ML go here:

      Where it's recorded that only 32 of over 30000 cases ever reached prosecution and Spork is listed as a jurisdiction of primary concern, a code red indictment.

      Tax haven?

      And a honorable mention in an Indian white paper: see 2.8.2 but read at your leisure nonetheless.

      Now tell me, a money laundering, tax evasion haven topping TI and other corruption perception charts, and I will show you a live dinosaur!

      Now look at what these three countries have in common together with Spork.

      Yes! excellent, they all are in top percentile of TI. Additionally, they also are in the top echelon of the Financial Secrecy Indice. Now tell me wouldn't it be a huge loss if they were at the bottom of perception indices like TI. You think thieves and launderers will dare leave their money to be looked after by the corrupt....dream on.

      Finally, who do these perception indices survey? The run of the mill crowd or the executive fat cats of global financial houses, MNCs and the like? The answer is obvious isn't it? Do you think a financial consultant managing hoards of stolen money is going to look beyond his belly button and diss the safe haven where the stolen money of his handlers are banked in?You reckon any E&W fat cat gonna come clean at the expense of his paycheck+ bonuses+ his Feraris etc....dream on. That is what certain thieves at Goldmans etc did not do during the GFC and were amply rewarded for afterwards.

      Warrior 231


    6. 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

    7. 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

    8. 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.

    9. You sounded angry and exasperated at me reducing TI and its like to plain garbage. Chill out mate, my take was not aimed at you in any way whatsoever but to merely address the general perception (ah..that troublesome word again!!) that TI and its kin are “gospels of truth” that they “speak the tongues of Emmanuel and the enlightenment”...hahahahahaha
      Reality yodels otherwise, dude:
      1. There is growing concern among anti-corruption agencies that perception-based indexes are not accurate measures. The best perception-based surveys do not always account for indirect effects of subjective factors, and their margins of error are large when compared with actual corruption (Bertrand and Mullainathan, 2001)

      2. As one prominent academic states, the CPI “can legitimize the case for reform, but it cannot genuinely point reformers in any meaningful direction” (Galtung 2006, p. 123). Although the World Bank Institute (which publishes Worldwide Governance Indicators) and Transparency International both acknowledge in their annual reports that their indicators are not suited for comparing countries with similar scores and for making comparisons over time, many organizations continue to use these indicators to make exactly such comparisons (Arndt and Oman 2006)

      So to goad your billy goat further :- P let me just surmise that TI and its ilk in whatever permutation, whether absolute or relative, is a worthless barometer to assay or compare corruption levels and any claims it purports to make to the contrary is purely fatuous.

      And to rub additional salt, TI wholly incongruent with other measures to as indicated by the simple discrepancy observed on page 21 in the linked report. Plus looking at the respective definitions of TI and the World Bank is sufficient to indicate that TI’s inability to even get basic definitions right hobbles TI’s grand design of compiling a reliable corruption indice right from the word go. So dude, lets cool it okay.

      To Zuo De

      Nope I am not a knowledge hound as you may perceive. Far from it as I am equally at home clad in my dungarees gawking at the sights in ‘Playboy” as I am at flippadding (‘flipping the Ipad”) through an IMF report or research paper.

      You see, I subscribe to the interconnected nature of things concept, a loose fitting version of ‘Gaia’ if you like. Browsing through stuff like the ones I linked merely reaffirms my belief that everything in economics is just part of an interconnected game… interesting game indeed. And from an organic viewpoint, given that capitalism is an ecosystem wired with unique features that give its form and meaning, understanding those features is the key to unlocking its mystery. Besides, tinkering with stuff like TI, CR, NDFs, subprimes, derivatives etc merely confirms my view that at the heart of the puzzle, absurd contradictions exist to short-circuit the system without the system being conscious of it. And economists themselves are no closer to making it conscious cos the nature of their inexact science prevents them from doing so plus they cripple intuition while at it.

      That is why economists neuter the world not nurture it like engineers do ;D


      Warrior 231

    10. @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).

  4. 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

  5. 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.

  6. 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.

  7. 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.

  8. 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