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Instilling good governance in Malaysia

Interview - February 19, 2014
YB Senator Datuk Paul Low Seng Kuan currently serves as the Minister in the Prime Minister's Department in charge of Governance and Integrity. He discusses with Worldfolio the issues of tackling corruption and instilling good governance in Malaysia; issues on which the first dialogue was opened on December last with Malaysia’ ASEAN neighbours, as countries aim to work together to solve these issues for the good of the region. He also discusses the prospect of freedom of information in Malaysia and his objectives over the coming months in his new role
The backbone of the Malaysian economy is comprised of small and medium enterprises along with exports. Do you think more could be done with the private sector in terms of transparency, accountability, and corporate governance when a company is perhaps of a small or more medium size? Do you think perhaps this is something that should be addressed more here in Malaysia?
Yes, but we have to address the public sector first, because the small and medium scale industries and multinationals need to operate in an environment that is efficient, which is transparent and clean.

So for many years the government has started a transformation – there is a group called PEMUDAH, which is a government delivery system that tries to improve efficiency, reduce the number of licenses and permits, and improve the delivery of services and ease doing business. And this has worked. I think we are one of the most business-friendly centres in the world. 
Looking at the private sector, there are two companies that everyone is talking about in the UK: SP Setia and Sime Darby. They are obviously very transparent and in order to invest in the UK they have to have great system of governance in place. Do you think that the private sector here could play a part in improving the efficiency and transparency of the public sector?
Of course, not all the companies are on the same league as SP Setia though; companies like SP Setia or bigger companies that are investing overseas have to comply with overseas anti-bribery laws whether in the UK, US or Europe. I think companies such as those are able to comply with those laws because they already have a system of good governance.

They came out of 1997 financial crisis, when we put in place a number of regulations, laws, and listing requirements. I don’t think it’s a problem for them – for big enterprises investing in the UK. I think the biggest problem is domestic companies, because the pressure for them in order to have good governance didn’t really exist. 
We are now building the institution itself, the anti-corruption agency, to make sure that the enforcement is there. You see when you deal with corporate corruption getting the information is not so easy, so you need to have capability of forensic accounting. All these things are being done simultaneously.
Now the public sector is transforming and changing, laws are becoming tougher, the institutions are becoming stronger and the judges are becoming less tolerant and also foreign companies whom you deal with are governed by very tough laws – in the US and UK they even have extraterritorial jurisdiction.

If companies want to deal with TESCO, for example, they have to make sure they are clean. And multinationals like TESCO or others will start to look for companies that have good records in governance, because they don’t want to take the risk of dealing with some companies that can get them into trouble with the UK laws in their own country. So, the environment has changed completely.
Is there any dialogue with the other ASEAN countries vis-a-vis corruption? Could you work together? Is it something that is going to happen?
Not yet, but we’re going to have a dialogue. The first one will be on December 9th in Bangkok during the International anti-corruption academies meeting. Malaysia is the major shareholder and one of the significant donors. I did not have a dialogue with the other ASEAN countries yet because I think we need to get our own house in order first before I can have that dialogue, but at the same time I see no reason why we can’t have a dialogue, since the ASEAN Economic Community will come in 2015.

We have our own community, and when you have your own community you’ve got to remove all mine fields. That is a process that I hope I can begin to discuss this year so that issues of governance, integrity, and corruption in trade will become at the forefront. And as you can imagine, if we are a free trade community and we have clean governments in ASEAN with a population of about 600 million, then there is tremendous potential, the only thing that we have to make sure is that we need to integrate much more; we have to make sure that we have good policies and good governments with clear laws.

Uphold the rule of law is important. British investors who come in can be sure that they are protected. That’s a challenge, but that’s a good vision to have.
Transparency is obviously very commendable, any form of corporate governance is very commendable, but what initially attracted you to this field?
Ok, put it this way… I’m in the private sector, very active in advocacy, as I was president of the Federation of Malaysian Manufacturers (FMM) and I see the potential of this country. But I realised that the only issue now is to deal with corruption.

Five years ago, a group of people who were concerned about transparency started looking for key persons who could play a role, so I was one of them. They approached me saying: “We have this organization, which is good but it is not operating the way it should be. We want a group of people who we can trust to bring this organisation up to the level it should be
Do you foresee more freedom of information in the future?
First, when you have freedom of information it means that the civil service must be able to respond to that request of information; and second, the model that we have is not so open and must now be transparent. That’s a whole sort of restructuring that we’ve got start. In order for the law to pass you have to change the internal processes, and for as much as I say of politics there are good signs. 
You’ve been office for less than four months. What would you like to achieve in the next two or three years? You mentioned it’s a very slow process; more of a marathon rather than a sprint. What kind of objectives have you set yourself?
Several: to begin with I want to strengthen the institution, particularly the anti-corruption agency. And the second thing is that the head of this commission, the Chief Commissioner, is appointed by and reports to the Prime Minister in a way that his position may not be completely independent.

The perception is such that if someone appoints you and can fire you, no matter how good you are, there is always this thing on your head. So the other instruction is to make the Chief Commissioner similar to the Attorney General or similar to a judge. So this is what I want to achieve by March next year, but to do that constitutionally we need to reach the two/thirds majority, therefore this should involve me talking to the other side as well.