Malaysia – The land of 1.15 million civil servants

Posted by SM Maulana
Thursday, 12 June 2008

Malaysia Today

In his blog, YB Datuk Nur Jazlan recently used the word “bloated” to describe the Malaysian civil service. The Datuk also pointed out recently that there were more civil servants (1.15 million) than taxpayers (1.14 million) in Malaysia.

There have also been accusations of inefficiency and corruption against the civil service.

I would like to offer some comments on why the Malaysian civil service has become “overlarge.”

If we assume that 1.15 million figure represents all civil servants in Malaysia (other than police and the armed forces), the civil service grew from 775,000 in 1999 to 1.15 million in 2006, an increase of 375,000. Eighty percent of civil servants serve the federal government, where the employment growth rate averaged more than 5% a year in the late 1990s. This rate of growth is double the 2.5% annual growth rate in the country’s population between 1990-2000.

The increase in the civil service occurred despite periodic reforms, privatization initiatives and other administrative changes.

So what accounts for this growth?

While there are several factors, let me highlight what I think are the two main reasons:

1) Empire building: Researchers often talk of empire building within organizations. Bureaucracies like the federal civil service are organizations where individuals make key decisions. Prestige and position of bureaucrats are based on the number of staff they control and the size of the budget. Ministers find ways to expand their “empire” by coming up with new legislation to fund programs that “expand” services to the Rakyat or laws to regulate economic activities. Bureaucrats run programs and establish rules and regulations, which means more paperwork. Budgets are increased and staff hired to process the paperwork.

The empire building within the civil service occurred in the context of inter-racial economic inequalities in Malaysia. Preferential hiring policies in the civil service were adopted after Merdeka as a way to bring about greater economic balance in a multiracial country. It is widely known that Malays were underrepresented in the private sector as compared to the Chinese and Indians at the time of Merdeka. With the NEP, there was pressure on UMNO politicians to absorb unemployed Malays, especially university graduates, into the civil service. Since there has always been a close relationship between UMNO and the civil service, there were no checks and balances on the recruitment of staff. Bureaucrats often emerge as politicians – several of our prime ministers were at one time working for the civil service! So, now, due to these preferential hiring policies, Malays comprise over 80% of the Malaysian bureaucracy.

2) Government knows best: For every problem that emerges, the government has an appropriate response – spend taxpayer money. An example is the National Service (NS) scheme. There was concern that Malaysians were living separate existences with little interaction across racial lines. This lack of interaction is partly due to the failure of our “national” schools to attract and retain a multiracial student body. So, the NS was hastily introduced – camps established, staff hired (except for medical personnel!), and arrangements made – for transportation, supplies, and food – all involving contracts. The government spends over $500 million ringgit per year ($2.4 billion since 2004) to support this programme and there is a proposal to increase intake of trainees by 33% next year. And it is not even clear at this point that the NS has been effective in reaching its stated goals – racial unity, national integration and patriotism? Has the government presented solid evidence that the programme works?

The NS is one example – the Auditor-General’s report outlines other projects where public funds have been misused because of the government knows best mentality.

Over the last few decades, the Malaysian government has become a Jack of all Trades: it is an employer of civil servants who function as regulators of businesses, entrepreneurs making investments in companies, trustees of bumiputra assets and additionally, provides other services associated a traditional civil service – passports, licenses, courts, defense, and law and order.

And as RPK knows well, the government also monitors the Internet!

Meanwhile, according to a recent report, one-third of Malaysian schools have no water or electricity! And now, the country faces challenges providing inexpensive food to its needy citizens.

It should be acknowledged that the government under the BN has had many successes in the last four decades, in the health, social and economic arenas. Malaysia has done much better than several of its neighbors. Unfortunately, due to the dominance of UMNO and the BN over Malaysian politics, there has been very little parliamentary debate or public control over expenditures of the federal government over the last few decades, leading to a bloated civil service that has been accused of corruption, inefficiency and mismanagement. That lack of attention has changed since March 2008 as both BN and opposition politicians have asked hard questions.

The economic crisis the country faces now provides an opportunity to make significant changes. I think there needs to be a fundamental re-assessment of the role of the government in Malaysia. It’s time to shrink its responsibilities. Parliament should exert more control over public expenditures. Facts and figures should be more readily available to the Rakyat.

Malaysia has a robust private sector, which will fill any gaps as the government restricts itself to regulation rather than investment activities. The country should double its efforts to privatize some of the government-linked companies. As the private sector expands, many of the Malays who now work in the civil service, as well as fresh graduates, will seek their fortunes there. Since salaries and benefits are better in the private sector, the entry of more Malays into this sector will reduce the persistent income-gaps amongst the races at a faster rate.

To its credit, the government has announced some cost-cutting measures recently, including a freeze on new government posts and a 10% cut in expenses. The freeze on positions should be made permanent. These steps should be followed by a critical review of all governmental functions with the goal of eliminating some of these and reallocating resources to key sectors such as public safety, education and health. Current civil servants can be retrained to do new functions in these sectors, and issues related how best the civil service can serve a multiracial society addressed gradually. Malaysia is not the only pluralistic society around – we can learn a lot from other societies as they have struggled to address inter-racial and inter-ethnic economic inequalities.

To sum up, the PM has suggested that the Rakyat change their lifestyles to cope with the rise in food and petrol prices. The government should consider a lifestyle change of its own: it should do something governments hate – go on a diet permanently and get trim!

By Ramumenon

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