Fighting corruption must be serious !

We must separate the roles of the Attorney-General as legal advisor to the Government and Public Prosecutor who prosecutes cases in court.

IT has become fashionable for critics to express dissatisfaction every time the Auditor-General presents his report to Parliament. So when the second report this year was tabled on June 15, the reaction was generally expected.

But the reaction from Public Accounts Committee (PAC) Chairman Datuk Nur Jazlan Mohamed is particularly important. Nur Jazlan, who is also Ideas’ Council member this time, says that he is disappointed with the performance of many Government agencies because they have failed to improve.

He also said that not long ago he praised Government officials for showing improvements every time the Auditor-General’s report is published. But he felt compelled to retract that praise because this time it was particularly bad.

He went on to say that many of the problems originate from the attitude of civil servants. Apparently the quality of our civil servants has deteriorated, and they don’t even bother to read the rules.

When the PAC Chairman makes such a bold statement, you know that there is something really wrong in the way civil servants manage our money. It is ironic that the Prime Minister recently announced a bonus for our civil servants despite such abysmal indictment.

Under Nur Jazlan, the PAC has been doing a much better job in identifying weaknesses in Government machinery and in demanding accountability. In fact, thanks to the PAC, the public now knows about the risk posed by Pembinaan PFI Sdn Bhd, a Government-linked company that has one of the biggest liabilities among Malaysia’s GLCs. The company has been off the audit radar for almost 10 years, despite the large amount of debt that it has accumulated.

The work of bodies like the PAC is important in our push for better governance in the country. The issues the PAC looks into are not necessarily about corruption.

Their responsibility is wider, covering also problems such as leakages and failure to adhere to published policies and procedures.

Fighting corruption, on the other hand, is more commonly associated with the Malaysian Anti-Corruption Commission (MACC). I am still waiting to see if the MACC would act on a recent admission by Home Minister Datuk Seri Ahmad Zahid Hamidi that a Special Branch report found that around 80% of our border enforcement officers are involved in corruption.

Nevertheless, I am very aware that even if the MACC were to start an investigation, that is only half of the journey. The other half lies outside of the MACC’s jurisdiction, and that is the prosecution of corruption cases.

Our system is designed in such a way that the MACC, just like the police, can only investigate and not prosecute. Prosecution is the sole discretion of the Attorney-General, who doubles up as our Public Prosecutor.

I have no problem with the MACC not having the power to prosecute. In fact, I think it is right to keep prosecutorial powers away from the investigation agency. Back in 2012, we at Ideas looked into this issue and compared the experience of Indonesia and Hong Kong in fighting corruption.

We published the findings in July 2012 and concluded that it really does not matter whether or not the MACC has prosecution power. Instead, what is most important is the integrity of the judiciary and the Attorney-General’s office.

Any effort to improve the quality of MACC, therefore, will have to be accompanied by reform in both the judiciary and the Attorney-General’s Office. Focusing on the MACC alone is not sufficient.

If we want to see a more effective fight against corruption we must separate the roles of the Attorney-General as legal advisor to the Government and Public Prosecutor who prosecutes cases in court.

Let me justify that with a simple analogy using the case of the allegedly corrupt border enforcement officers.

Let’s say the MACC do investigate the allegation and find that the problem runs all the way up to Ministerial level.

The MACC then passes the files to the Attorney-General. How much confidence do we have that the Attorney-General will prosecute his friends in Cabinet?

It is obvious that as legal advisor to the Government, he is conflicted. How can he prosecute the very party he is supposed to advise?

There are actually many more proposals to improve the MACC that deserve public attention. If you are interested in this topic, I suggest you search for reports published by the Special Committee on Corruption now chaired by Tan Sri Abu Zahar Ujang. This bipartisan committee, whose membership consists of members of the Dewan Rakyat and Dewan Negara, regularly comes up with some very good ideas.

One of those ideas is for the MACC to be given independence in recruiting their own officers. This suggestion has been mooted since 2010 and it makes a lot of sense. To be truly independent, MACC cannot continue to be dependent on seconded staff from the Public Service Commission, because this creates a conflict of loyalty.

But unfortunately, this idea has not received the attention that it deserves from the Government. There are times when I ask myself if our Ministers are really serious in the fight against corruption. For if they are really serious, why are they ignoring sensible ideas coming from a committee whose membership is from among their own colleagues?

Don’t they realise that the longer they choose to do nothing, the more people will feel that they have things to hide?


By Wan Saiful Wan Jan, thinking liberally The Star

Wan Saiful Wan Jan is chief executive of the Institute for Democracy and Economic Affairs (www.ideas.org.my). The views expressed here are entirely the writer’s own.

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Dad's what all kids want?

Fathers have an impact – good or bad, intentional or otherwise – simply by what they do, and what they don’t.

TODAY is Father’s Day. There is no real significance to this date, other than the fact that it has become yet another day for commercial interests to make more money.

And so we are inundated with messages on what we should buy for our fathers – anything from a tie to a power drill is fine.

It is also interesting that many charity organisations have also got into the game, where you can give a donation on behalf of your father in support of various causes.

I won’t pour cold water on those who believe this day should be celebrated in such manner. Having been a father for nearly 30 years, I will say that a day’s celebrations can’t encapsulate the role of a father, which is both unique and challenging.

More so in our Asian culture where fathers tend to play second fiddle to mothers in a nurturing role, and may not have enough opportunities to exert their influence on the children.

But the reality is we, fathers, do have an impact – good or bad, intentional or otherwise – simply by what we do, and what we don’t.

I have written before in this column that the best times in my career were the six years, over two different stretches, that I spent at home as a full-time father.

I had a whale of a time, although my better half did find it tricky explaining to friends why she had to earn the bread and butter while I was gallivanting at home.

Without being tied down to an office routine, I had all the time in the world. During my first stint, when my sons were still quite young, we had plenty of fun activities. Among other things, I built them a playhouse, flew kites with them, and taught them to swim and to ride a bicycle.

On my second stint, when they were already in their pre-teens and had become more aware of the world around them, our conversations often revolved around the values of life.

Fathers, as you receive gifts on Father’s Day, I wonder if you have thought about what gifts you might give to your children in their formative years – gifts that money cannot buy.

Do you teach them how to make the right choices, rather than lay down a list of dos and don’ts?

Do you respect that they have a voice that needs to be heard, or do you exert authority simply because you are the father?

Do you imbue in them the fortitude to overcome obstacles in life, resisting the urge to always jump in and rescue them?

Do you affirm their dreams, or simply tell them to be practical and march to the beat of the world?

I have learnt that these lessons cannot be taught in a textbook format, and certainly not in one sitting.

Lessons in life are passed on over many conversations and through much time spent together.

If we are the kind of fathers who leave home before our children wake up and come home after they are asleep, or even when we are present with them, are not really listening, perhaps it’s time to take stock.

The world tries to make busy dads feel less guilty by highlighting the effectiveness of so-called quality time. But I believe there can be no quality time without time in quantity.

Fathers, full-time or not, are you prepared to leave everything aside when your child comes up to you, because you are the only person he or she can call “dad”? And will you show, through your words and actions, that such moments mean all the world to you? Happy Father’s Day.

By Sunday starters SOO Ewe Jin

Deputy executive editor Soo Ewe Jin urges every dad to listen to Cat in the Cradle, made famous in 1974 by Harry Chapin. The song is about a father who was too busy to spend time with his son, who eventually grew up just like him, a busy man who did not have time for his father. The views expressed are entirely the writer’s own.





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What household debt means and how to manage it ?

The difference between ‘healthy’ and ‘unhealthy’ loans

I have received queries about what household debt means and the best ways to manage it.

Household debt is basically all forms of loans with interest rates taken from entities that provide financing. The loans can be secured with assets such as real estate loans (housing and commercial properties), or without any collateral such as personal and credit card loans.

Residential and commercial property loans have capital appreciation potential over the long term. According to statistics from National Property Information Centre, the annual appreciation rate for house prices has averaged 9% in the past five years.

Even if we assume the average house prices only appreciate 5% per annum, it is still an ideal asset which we can live in, and at the same time it grows in value.

If you refer to the chart above, the effective interest rate for housing loans is only 4.65%, which is lower than its annual appreciation rate.

On the other hand, the effective interest rates for car loans range from 5% to 7.5% depending on car model and loan term (effective interest rates are calculated from the advertised headline rates of 2.5% to 3% depending on the tenure of the car loan).

On top of higher effective interest rates, the value of private vehicles depreciate about 10% to 20% per year based on car insurance calculations and accounting practice.

In fact, everyone knows that the day you drive the car out of the showroom, its value drops by 15% to 25%!

The effective interest rate for personal loans is 9% to 10%, while credit card effective interest rates can go as high as 18% to 24% (again, like car loans, the effective interest rates per year are much higher than the advertised rates).

If these loans are spent on items that do not appreciate over time and on perishable items, then the depreciation rates are high and there are no returns to speak of.

The real estate loans (housing and commercial properties) that will appreciate in the longer term, can be deemed as “good debt”.

Car, personal and credit card loans, which have higher interest rates repayment and do not generate value in the future, and are considered as “unhealthy debt” or “bad debt”.

The chart above illustrates the effective interest rates on different household debt components. It also reminds me about the household debt I shared in my last article. What does our nation’s household debt really mean to us? How much of it impacts us if we include its interest rate, appreciation and depreciation values?

According to Bank Negara, our household debt was at RM940.4bil or 87.9% of gross domestic product (GDP) as of end-2014.

Large burden

Residential housing loans accounted for 45.7% (RM429.7bil) of total debts, hire purchase at 16.6%, personal financing stood at 15.7%, non-residential loan was 7.7%, securities at 6.5%, followed by credit cards and other items at 3.9%.

Our household burden is larger if we include the servicing of incurred interest rate for loans. Much of it comes from the higher interest rates to service hire purchase, personal financing and credit card loans.

It reinforces my belief that if we take a debt to invest or secure appreciating items such as housing and other valuable assets, they will eventually provide a higher return in the longer term which more than compensates for the interest rate paid on the loans.

My belief is substantiated by Bank Negara’s Financial Stability and Payment Systems Report 2014.

The report states that properties remain an important investment for many households to finance children’s education, provide a form of financial security for the next generation and preparation for retirement.

Our government can help us achieve higher investment on housing and other valuable assets by looking at ways to reduce our dependency on other types of loans.

Reducing dependency

Example, to provide a comprehensive public transportation system by aggressively expanding mass rapid transit, buses, mini buses, and taxi service to cover more areas.

This will reduce the dependency on private vehicles which in turn help us to divert our financial resources to more fruitful areas or secure a roof over our heads.

As shared in my previous article, housing loans in advanced countries comprise an average of 74% of total household debt compared with ours at 45.7%.

This tells me that we, as a nation, are spending too much of our already high household debt (87.9% to GDP) on high interest/high depreciation “bad debt” such as a car, credit card and personal loan.

Now is a good time to relook into our debt portfolio and the interest rates incurred, and check whether we are having a healthy or unhealthy debt burden.

FIABCI Asia-Pacific Regional secretariat chairman Datuk Alan Tong has over 50 years of experience in property development. He is also the group chairman of Bukit Kiara Properties. For feedback, please email feedback@fiabci-asiapacific.com.

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