Interview: Ali Hamsa

In 2015 Malaysia will assume the role of ASEAN chair, just as the common market comes to fruition. What challenges does the country face?

ALI HAMSA: ASEAN member states are currently facing economic risks arising from continued weak economic conditions in Europe and the US. Malaysia also faces the challenge of lifting its economy out of the middle-income trap. These risks can be effectively countered through the ASEAN Economic Community (AEC).

While looking forward to the realisation of the AEC, Malaysia is also aware of the various challenges. Firstly, there will be a need to maintain a supportive business environment and undertake structural reforms to ensure that the country remains an attractive investment destination. Malaysia can also expect stiff competition from the opening of the domestic market to foreign firms. Additionally, there will be a need to encourage more Malaysian companies to diversify and take part in the vast production networks in the region, especially those that are offered by the Regional Comprehensive Economic Partnership and the Trans-Pacific Partnership. From a human capital standpoint, there will be a need to produce a more qualified local workforce – not only for domestic operations but also to supply professional workers to other ASEAN member states. Finally, efficient production networks require efficient logistics and transport infrastructure. For Malaysia, this will mean improving the availability of financing to fund construction projects in transport.

What is the correlation between Malaysia’s ranking in the World Bank’s Ease of Doing Business Index and efforts to curb perceived corruption?

HAMSA: This survey started in 2008 and has shown improvement since then. Most of the concerns relate to the duration of the process involved in starting a business through online systems, which requires less human intervention perceived. Corruption can occur when processes take too long, but actual corruption only takes places when people try to bribe related parties to expedite a process, thinking it is a solution to the matter. Our country has been finding ways to speed up processes so as to eliminate the perception of corruption. Some years ago, the business community was discouraged by how long it took to register a business. Steps have been taken since then to resolve these matters. In 2009 the Government Transformation Programme established the fight against corruption as a National Key Results Area. Curbing perceptions of corruption is about transparency. Today, Malaysia is ranked 6th out of 189 countries in ease of doing business, which is higher than many of the top 10 countries in Transparency International’s Corruption Perception Index.

What efforts are being made to reinvent and transform the civil service in Malaysia, especially given the government’s plans to curb spending?

HAMSA: At the federal level, salaries and wages account for about 29% of operating expenditure. The Public Services Department has implemented various measures to make civil service more lean and efficient, without affecting productivity and quality of service. The creation of new positions has been frozen since March 2011, and about 23,000 vacant entry-level positions have been repealed since September 2011.

While critical posts continue to be given priority, non-critical posts are generally not filled except through a trade-off of an existing post. Personnel have also been redeployed from central agencies to operational departments to take up administrative tasks, allowing for more concentration on core functions. Other measures include multitasking, intensive use of IT and greater inter-agency cooperation through initiatives such as the National Blue Ocean Strategy.

In line with the existing plans to cut subsidies and curb spending, the creation of any new government entities to fulfil functional requirements will be met through redeployment and trade-off of existing posts. However, special consideration will be given to three strategic sectors, namely security, education and health.