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Reform in Political Financing – Penang

Reforming Political Financing

Opening and Welcome Address by Datuk Paul Low, President of Transparency International Malaysia at the Seminar on Reform in Political Financing on 9th October, 2010 in Penang.

On behalf of Transparency International Malaysia I would like to welcome all participants to this important seminar on reform on political financing in Malaysia. This seminar held today is part of our campaign to bring awareness to the civil society on the need for political reform so as to eradicate one of the key roots of corruption. Our researchers have carried out numerous interviews with politicians on the subject and the findings are published in our book entitled “Reforming Political Financing in Malaysia”.

Our nation aspires to become a high-income economy in 10 years time. Towards this goal, the development plan for the NEM (New Economic Model) and the ETP (Economic Transformation Programme) have been launched recently. Although few can find fault with the intention and even the content of these plans, there are key concerns especially on our ability to executive the proposed transformation agenda. Unfortunately our track record for the proper execution of previous plans or programmes has not been good. The issue as expressed by many in the private sector is whether these projects will be negotiated directly with the favoured and well connected few, or would an open and transparent system of procurement be followed to allow all who are qualified to have the opportunity to participate so that the best can be chosen. Although it is encouraging to note that under the federal government’s Government Transformation Programme (GTP) some level of openness and transparency in government procurement have been initiated recently, there is still great concern that there are be some key mega projects that will be kept out of the public domain and privately negotiated without an open tender. Although not openly said, the public perceive such deals as being done to fulfil private arrangements to finance political parties or private interests. Therefore, if the country wants to improve its standing in the international community and give confidence to domestic investors the government must show good governance and integrity and such practices must be stopped. Otherwise, the credibility of the government administration will be tarnished and we will not be seen as serious in our efforts to curb corruption and not walking the talk.

Transparency International’s annual Corruption Perception Index has consistently showed that there is direct correlation between the level of corruption and the economic development of a nation. Those nations with a good CPI score (less corrupt) are developed nations with a high standard of living such as New Zealand, Denmark, Singapore, Sweden and Switzerland (top five in the 2009 CPI ranking). Likewise, the countries that have a low score (that is more corrupt) are the low income nations. This tells us that Malaysia’s quest for a high income economy will be hampered and retarded if corruption persists. A high income economy can only be achieved where there are efficient delivery systems, where the institutions are capable of managing its resources professionally with integrity and minimum waste. A strong political will is necessary to make reforms and changes to curb abuses.

As long as there is rampant monetization of politics, resistance against the necessary changes will triumph over good intentions and sound policies that will benefit the people. The importance of reform in political financing can be seen today in the ongoing party elections of PKR. Various online media have reported on the vast sums spent by some candidates during campaigning. While it is understandable that substantial funds are needed for by-elections and general elections, it is disturbing that party elections incur financing of such magnitude. It raises a few questions, namely – are shadowy financial backers involved, and is money politicking prevalent in the election process. If so, the public needs to know where the money comes from and how is the money used. Who are these backers and how much are they paying to support the candidates? If PKR wants to improve its credibility then it must be transparent and this must start from the way it conducts its internal party elections.

The discussion of political reform in financing must start with the recognition that the status quo is unsatisfactory and there is not only a strong but necessary need to have a more regulated regime for political activities. All high income economies have a highly regulated environment to enforce disclosure of funding to political parties and how these funds are expended. The monetization of politics needs to be checked as it is the root of political corruption and the driver of excessive political control and rent-seeking behaviour resulting in political parties and politicians getting involved in corporate business activities. This creates an environment where political corruption flourishes and cronyism is pervasive. The divide between public funds and interests on one hand and that of the party and personal funds on the other has become blurred. Can we blame the public for not respecting politicians and political parties and perceiving the political institution as the most corrupt, as reported in TI’s Global Corruption Report (GCR) 2009?

It is essential for reforms in political financing to be made. Continuing the status quo will undermine the economic reforms and transformations that we hope will result from the GTP and NEM plans. A decade down the road we could be even poorer, and the aspiration to become a developed nation will be an unrealised dream.

TI Malaysia has made 22 recommendations for reform in our political culture. Through this seminar we hope to get public feedback for us to prepare our submission to the relevant authorities. Therefore, all are encouraged to take part actively in today’s event. Please be frank and open in the deliberations.

Finally, I would like to thank YAB Tuan Lim Guan Eng, the Chief Minister of Penang and Datuk Wira Haji Wan Ahmad bin Wan Omar, the Vice Chairman of the Election Commission for their support and contribution as panellists, and to each and every one of you for your participation in today’s seminar.

Issued by :
Datuk Paul Low Seng Kuan
Transparency International – Malaysia