Shocking! MACC officers posed as TNB meter readers were paid in bribes as string cripples Bitcoin syndicates

Sting operation on bitcoin-mining power theft racket nets 18 suspects

Eighteen people have been arrested in relation to the bitcoin mining syndicate busted by a joint sting operation involving Tenaga Nasional Bhd (TNB) and the Malaysian Anti-Corruption Commission (MACC).

MACC stings bitcoin miners

Open sesame A fireman breaking open a reinforced door at one of the Bitcoin mining centres. The raiding team had to break two more such doors before they could enter the premises.
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Electricity stealing spree comes to an end as Macc finally takes action

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In the three years that MACC officers posed as TNB meter readers, they were paid a whopping Rm2.4mil in bribes. The Bitcoin mining syndicates were raking in much more – about Rm50mil a month – but this is about to end soon. JAYA: It was a sting operation that began three years ago during which time MACC officers disguised as TNB meter readers were paid Rm2.4mil in bribes.
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Some were even offered Bitcoin – a first for graft busters – to turn a blind eye to the power theft by mining syndicates.
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The masterminds could afford this. They were raking in a whopping Rm50mil a month from their 1,000-odd premises nationwide.
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Yesterday, the anti-corruption officers crippled much of their activities by conducting simultaneous raids in Malacca, Negeri Sembilan, Kedah, Penang, Kuala Lumpur and Selangor. But it wasn’t easy.
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“It took us an hour to break open two doors at each premises,” a source close to the investigation revealed.
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“And then, there were three more vault-like doors to cut through before we could enter one of the premises,” the source said.
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“We had to seek the help of the Fire and Rescue Services.”
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Dozens of suspects were arrested, including the heads of the syndicates. More than 200 Bitcoin mining machines were also seized in yesterday’s raids that involved dozens of Tenaga Nasional officers.
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“Some 350 MACC officers were involved in the probe,” said the source.
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While it is not illegal to mine Bitcoin, power theft is.
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This is done because running such an operation requires dozens of computer servers that would be in operation around the clock.
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“This would require huge amounts of electricity,” said the source.
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“The amount of electricity stolen at each premises could amount to RM40,000 per month,” added the source, saying that the syndicates earned around RM50,000 from every premises.
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“If they had paid their electricity bills, they could still make a profit because most of them own dozens of premises each,” the source explained.
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“But, greed got the better of them.”
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Bitcoin mining uses sophisticated computer software to try to solve complex mathematical problems to unlock a “key” that will enable a new Bitcoin to be produced.
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The Bitcoin market is highly volatile. Its value fluctuated from RM160,000 to RM277,000 in a month.
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A MACC spokesman confirmed yesterday’s raids.
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Yesterday, The Star reported that Bitcoin mining operators were reaping in millions at the expense of the public.
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Local communities, including hospitals, that shared the same power source as the mining premises, were being deprived of supply.
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Some buildings located near the Bitcoin mining premises experienced power outages often, with some burning to the ground.
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It is understood that the graft busters began the sting operation following a sharp increase in losses incurred by the country due to electricity theft.
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“Each premises owns around 80 to 120 Bitcoin machines.
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“They bring in these machines from China via Port Klang. They declare it as computer equipment,” the source said.
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Investigations are being conducted under Sections 16 (b) and 17 (b) of the MACC Act 2009 and if convicted, the guilty face a maximum imprisonment of 20 years and can be fined not less than five times the value of the bribe or RM10,000, whichever is higher.
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On Jan 24, Energy and Natural Resources Minister Datuk Seri Takiyuddin Hassan said the country lost more than Rm2.3bil in bitcoin mining activities – an increase of 400% over the past four years.
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By ALIZA SHAH alizashah@thestar.com.my

 

Busting bitcoin bribers

 

On the watch: A TNB officer checking on a bitcoin mining premises.

 `MACC zeros in on miners who pay meter readers to look the other way

PETALING JAYA: Bitcoin mining operators running their operations on stolen electricity and bribing electricity meter readers to help them hide their actions will soon have to pay the piper.
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The Malaysian Anti-corruption Commission (MACC) is zooming in on them and their crime which is causing financial losses in the billions of ringgit.
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“Graft-busters have been looking at dozens of such operators and they are expected to make their move anytime now,” revealed sources with knowledge of the investigation.
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It is learnt that these operators, who have branched out to every state in Malaysia, are even willing to pay up to a quarter million ringgit as bribes to meter readers to look the other way and give them a miss.
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While it is not against the law to mine bitcoin, running such operations requires dozens of computer servers working on a 24-hour basis, which requires huge amounts of electricity.
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Many are not paying their dues and are instead stealing electricity by illegally tapping into power sources or tampering with the meter.
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In an interview with The Star, sources said that in addition to cash, these syndicates even offered bitcoin, or cryptocurrency, as bribes.
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The authorities, they added, kickstarted their on-ground investigation a few years ago following the sharp increase of losses incurred by the country due to electricity theft by bitcoin miners.
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It is understood that the investigations are currently being conducted under Sections 16 (b) and 17 (b) of the MACC Act 2009, which stipulates that giving or offering bribes is equal to the offence of accepting bribes.
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If convicted, the person faces maximum imprisonment of 20 years and can be fined not less than five times the value of the bribe or RM10,000, whichever is higher.
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However, enforcers face several challenges in thwarting these illegal activities, especially since these premises are usually as tightly sealed like as a war-time bunker.
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On Jan 24, Energy and Natural Resources Minister Datuk Seri Takiyuddin Hassan said the country had lost more than Rm2.3bil in bitcoin mining activities – an increase of 400% over the past four years.
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The number of cases has also drastically increased year-on-year.
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In 2018, there were 610 cases while there were 1,043 cases in 2019, 2,465 cases in 2020 and 3,091 cases in 2021, totalling 7,209 cases.
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By ALIZA SHAH alizashah@thestar.com.my

 

Syndicate’s greed ravaging local communities 

 

Fire hazard: The energy intensive mining activities of bitcoin machines that run 24/7, can lead to power outages, damage to electrical appliances and worse – potential fires. — Photo courtesy of TNB

PETALING JAYA: Bitcoin mining operators running on stolen electricity are reaping in millions at the expense of the public.
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Sources said the syndicates behind the operations were depriving the local communities – including critical sectors such as hospitals which shared the same power source – of their supply.
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The energy intensive mining activities of bitcoin machines that run 24/7, can lead to power outages, damage to electrical appliances and worse – potential fires.
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“Each premises is loaded with mining machines and the operators rely on air conditioning to help cool the equipment.
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“So, their electricity bills can go up to RM40,000 per month for each premises but their profit is just slightly above the amount.

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CLICK TO ENLARGECLICK TO ENLARGE

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“That is why they have no choice but to operate using illegal sources (of electricity),” the sources told The Star.
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The Star learnt that some buildings located near these bitcoin mining premises had experienced power outages, with some even burning to the ground.
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“These bitcoin mining premises often use fuses that do not adhere to safety standards and load, exceeding the capacity of the cables. So, unfortunately for their ‘neighbours’, when the fire breaks out, they are also affected.
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“There were instances where reports were lodged over power outages at dialysis centres and clinics and upon investigation, authorities found that these were due to bitcoin mining premises illegally tapping into the power,” said the sources.
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It is understood that some of these bitcoin mining operators own hundreds of premises.
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“Bitcoin mining” is a process of using sophisticated computer software to try to solve complex mathematical problems to unlock a “key” to produce a new bitcoin.
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The first bitcoin miner to solve the puzzle is rewarded with a bitcoin.
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Only one miner can add a new block to the blockchain every 10 minutes by solving the puzzle and to maintain a competitive advantage, many operators would scale up or upgrade their equipment to run round the clock.
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A study in the United States suggested that a single bitcoin transaction required 2209.41 kilowatt per hour (kWh), which was equivalent to 75.73 days’ worth of power consumed by an average household in the country.
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The bitcoin market is highly volatile, with its value having fluctuated from more than RM277,000 in October to over RM160,000 this month.

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MACC stings bitcoin miner

 

Tools of the trade: (From left) energy commission ceo abdul razib dawood, azam and Baharin looking at the seized computer hardware at the Macc headquarters in Putrajaya.

 

18 nabbed and rm4.5mil frozen after three-year Op Power

The masterminds behind a multimillion ringgit bitcoin mining syndicate are among 18 individuals arrested by the Malaysian Anti-corruption Commission (MACC), following a threeyear sting operation codenamed Op Power.

MACC chief commissioner Tan Sri Azam Baki said the 18 individuals arrested are all Malaysian males aged between 30 and 60.

“We confiscated 1,157 bitcoin (mining) machines worth Rm2.3mil in total.

“A total of Rm4.5mil was frozen from bank accounts linked to 94 individuals and 29 companies.

“The MACC also seized RM281,180 in cash, RM82,000 in ewallet balances and some US$25,893.46 worth of cryptocurrencies.

“Five vehicles, including a BMW, Toyota Vellfire and an Audi, have also been seized,” said Azam at a press conference at the MACC headquarters here.

Azam added that the MACC is looking to arrest another five individuals with links to the case, but this has been put on hold as the suspects have currently tested Covid-19 positive.

The Star on Sunday and Monday reported on a sting operation that began three years ago during which MACC officers posing as TNB meter readers were paid Rm2.4mil in bribes.

Azam said the syndicate operators offered between RM3,000 and RM300,000 to TNB officers to help cover up their operations.

The syndicate was found to have used special devices to manipulate power usage to ensure that their operations used as little electricity as possible.

Azam said that while cryptocurrency mining is not illegal, power theft is a crime.

TNB chief executive officer Datuk Baharin Din, who was also present at the press conference, said the syndicate used sophisticated methods for their illicit operations.

“The quantum of the power volume that this syndicate has stolen is very large, and it was done continuously for 24 hours and 365 days. This went on for over three years.

“The technique the syndicate used to tamper with the power usage is quite sophisticated.

“You come across small households that try to steal power, but these people go way beyond that.

“To do what they did, you have to be very competent.

“So we are very thankful to the MACC for their big help in this operation and because of them, we managed to stop this syndicate,” said Baharin.

 By JOSEPH KAOS Jr joekaosjr@thestar.com.my

 

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Bitcoin: Utter pipedream

New anti-graft plan after slew of scandals

PUTRAJAYA: Amid the slew of financial scandals seen since the change in regime last year, such as the ones involving 1Malaysia Development Bhd, Lembaga Tabung Haji and the Federal Land Development Authority, the Pakatan Harapan government yesterday launched a five-year action plan to stem similar misdeeds in the future.

During his opening speech, Prime Minister Tun Dr Mahathir Mohamad pointed to the previous National Integrity Plan introduced in 2004, aimed at inculcating a culture of integrity among the people, which he said did not really help in curbing corruption.

“In fact, the problem became worse between the time the plan was introduced and a few years ago when the country was perceived as a kleptocracy, a very shameful label, which means that the government was being led by the corrupt and thieves that exploited the country and its people’s resources for personal gain,” said Dr Mahathir.

“While the new government has taken action to bring the corrupt to justice, subsequent measures need to be taken to ensure the widespread culture of bribery and corruption does not continue. This is the context in which the National Anti-Corruption Plan (NACP) has been created,” he said.

In formulating the plan, the government assessed various data, including reviews by the United Nations Convention against Corruption, global anti-corruption models, corruption perception surveys, data from various government agencies, input from stakeholders and the public and recommendations from other entities such as Asean Development Bank and Transparency International Malaysia.

The NACP outlines 115 initiatives to be implemented by 2023, as the government looks to root out corruption over the next five years.

The plan is largely focused on the public sector, in line with the findings from surveys by Transparency International and the Governance, Integrity and Anti-Corruption Centre (GIACC), which found that about half of Malaysian respondents perceive lawmakers, government officials, local councillors, tax collectors and police officers as the most involved in corruption.

Meanwhile, 23% of respondents said they had bribed public officials in public schools, hospitals, utilities services, the police force and courts over the course of a year, while the Malaysian Anti-Corruption Commission highlighted that 63.3% of corruption complaints involve the public sector.

“It can be said that the civil service is a segment that is exposed to bribery, especially those that are involved in the delivery of public service and procurement. A study found that civil servants have a lack of understanding of bribery.

“We hope that the NACP can improve the image and quality of public service as well as the perception of the people towards the civil service,” said Chief Secretary to the Government Datuk Seri Dr Ismail Bakar.

Key initiatives to be implemented

Out of the 115 initiatives, the plan highlighted 22 priority initiatives aimed at addressing six key areas where corruption is rampant, namely in political governance, public-sector administration, public procurement, legal and judicial, law enforcement and corporate governance.

Under political governance, the government intends to introduce new legislation on governing political funding which will include an offence on lobbying as well as to implement a proper asset declaration system for members of the administration and members of parliament.

Other initiatives include a better policy on acceptance of gifts and the prohibition of the issuance of supporting letters by members of the administration or any highly influential persons for any projects or applications.

To address issues in public-sector administration, the government’s plans include the strengthening of the mechanism in enforcing mandatory job rotation for public servants holding sensitive posts and the management of the involvement of senior government officials as directors and chief executive officers of all state-owned enterprises and statutory bodies.

A transparent guideline on the appointment of special officers, political, private and media secretaries for ministers and deputy ministers will also be implemented.

In terms of procurement, the NACP seeks to ensure that all departments and regulators execute projects based on the advice and recommendation of technical departments such as the Public Works Department and to create accountability and transparency in defining the powers of a minister in legal provisions.

For the legal and judicial system, the government wants to promote a clear separation of powers and impartiality, such as the separation of the powers of the attorney-general and the public prosecutor, as well as to prioritise for corruption cases to be handled by judges and public prosecutors who are experienced in such cases.

In terms of law enforcement, the key initiatives include the integration of relevant agencies to improve border control and the transformation of the Enforcement Agency Integrity Commission into the Independent Police Complaints and Misconducts Commission to address integrity issues among the members of the Royal Malaysia Police.

All of these initiatives are expected to be implemented within one to five years’ time with the GIACC acting as the secretariat, evaluating the yearly performance and effectiveness of the initiatives.

The NACP’s 22 key initiatives

Political governance

1. New legislation on governing political funding

2. A proper asset declaration system for members of the administration and parliament

3. Policy improvement on acceptance of gifts, entertainment and payment by members of the administration

4. Prohibition of supporting letter issuances for projects or applications

5. Introduction of a prime minister’s directive in governing demarcation of power between ministers and secretaries-general

6. Policy on appointing politicians as chairpersons or members as directors of statutory bodies, state-owned enterprises (SOEs) and government established companies limited by guarantee (CLBGs) based strictly on academic and professional qualifications

Public sector administration

7. Strengthening the mechanism to enforce mandatory job rotation for public servants holding sensitive posts

8. Managing the involvement and appointment of senior government officials as directors and CEOs in all SOEs and statutory bodies

9. Strengthening the process of integrity vetting for public officials holding positions with high risk or responsibility

10. Introduction of a guideline on appointment of special officers and political, private and media secretaries for ministers and deputy ministers

11. Governing the power of any highly influential person on local authority performance and decision-making

Public procurement

12. Ensuring all client departments and regulators execute projects based on the recommendation of technical departments

13. Creating accountability and transparency in defining the power of ministers as stipulated in legal provisions, especially in procurement and the financial system

14. Introduction of standard clauses in undertakings of project procurement to protect the government’s interest in projects and contracts

Legal and judicial

15. Promoting clear separation of powers and impartiality

16. Prioritisation for corruption cases to be handled by judges and public prosecutors who are trained or experienced in such cases

Law enforcement

17. Integration of relevant agencies for better border control

18. Improving the existing foreign workers’ centralised management system

19. Transforming the Enforcement Agency Integrity Commission (EAIC) into the Independent Police Complaints and Misconduct Commission (IPCMC) to address misconducts among members of the Royal Malaysia Police

20. Introduction of a new provision in the MACC Act for offences against any commercial organisation or person selling off a government project or tender to another party for monetary gains without undertaking the project or tender

Corporate governance

21. Introduction of the integrity vetting requirement as a selection criterion of top management positions in statutory bodies, SOEs and CLBGs

22. Imposition of a conditional approach on the purpose and utilisation of funds provided by the government to all statutory bodies, SOEs and CLBGs

Source: National Anti-Corruption Plan 2019-2023


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Corruptions, Conflict of interests, politicians and Malaysian bloated civil service

Ministers may face conflict of interest, says Tunku Abdul Aziz: 

"If you have no power, you cannot abuse it. Civil servants have a lot more power than their political masters and ministers"

 

'With a population of 31 million, Malaysia has a ratio of one civil servant to almost 20 people.

'To compare, the news report cited corresponding figures for several other countries: Singapore (1 to 71 people), Indonesia (1:110), South Korea (1:50), China (1:108), Japan (1:28), Russia (1:84) and Britain (1:118).'

To keep graft in check, politicians should not be appointed to run government-linked companies, said Malaysian Anti-Corruption Commission advisory board chairman Tunku Abdul Aziz Tunku Ibrahim (pic).

He said politicians holding GLC positions may face conflict of interest leading to abuse of power and responsibility.

In an interview with Bernama, he said: "Many appointments are made for political reasons. If you are appointed to a position with unanimous power, there are decisions you have to make on a daily basis, weekly, monthly and whatever.

"And in making these decisions, there will be some demands made on you because of your connections, your relatives, your friends and also your cronies."

Tunku Abdul Aziz said this trend of abusing power because of conflict of interest has been happening since long ago, and may be stopped if the appointment for a top post in a GLC was conducted with "proper selection and screening".

Tunku Abdul Aziz said the selection process must include going through the candidate's background and track record.

He said there were always people out there who wanted special treatment, to have the advantage over their competitors.

"They don't care how it is done (as long as they get the job)... This is where corruption starts."

Tunku Abdul Aziz said that proper recruitment procedures and techniques could help achieve transparency and accountability, which are essential for top management.

"We can make corruption unprofitable business by making it more difficult to put your hand in the till."

He believes that corruption is now taking place at the operating level.

"Ministers cannot sign or award contracts. But directors in some departments can do it. This is where abuse of power takes place," he said.

"If you have no power, you cannot abuse it. Civil servants have a lot more power than their political masters and ministers (in awarding contracts)," he said.

He noted that the Malaysian Anti-Corruption Commission was now catching a lot more "big fish" than before the appointment of Datuk Dzulkifli Ahmad as the new head in July last year.

Tunku Abdul Aziz said MACC was a dedicated highly professional team focusing on the root causes of corruption while catching the crooks.

-- BERNAMA

 

Time to trim the civil service

 FINALLY, the Government has itself described the civil service as bloated.

To his credit, Second Finance Minister Datuk Johari Abdul Ghani openly and honestly stated that the civil service, although bloated, will not be reduced but will instead be made to multi-task to improve productivity. This statement is serious but also worrisome.

We now have one civil servant serving 19.37 people. The ratio is 1:110 for Indonesia, 1:108 for China, and 1:50 for South Korea. We won’t compare ourselves to the low ratio of 1:71.4 in Singapore because it’s a small island with hardly any rural population.

But why is our civil service so bloated? Firstly, we recruited rapidly to give jobs to the boys when the output from the education system expanded. We even had an “Isi Penuh” programme at one time. That is we rushed to create jobs and filled them fast!

Secondly, unlike the private sector, we rarely retrench staff even in bad times. We hardly sack anyone for inefficiency and even wastage of public funds.

Thirdly, the civil service has become a sacred cow that has to be handled gingerly for fear of reaction against the federal and state governments at the ballot box!

Life is relatively comfortable especially at the lower levels of the civil service. Salaries are better than before, pensions are secure, health provisions are generous, and the drive to be more productive is soft. In fact, there is now a strong manja-manja attitude towards civil servants.

The demand to join the civil service is high but the supply of jobs is slowing down considerably.

The Government should decide to reduce the size of the civil service to prevent the strain on the budget deficits, especially in the future.

Salary and pension bills are going up whereas productivity is not publicly perceived to be improving. Those who deal with civil servants often tell us more about the undue delays, corruption and “tidak apa” or lackadaisical attitude shown on the ground towards the public.

The Government should appoint a high-level task force, if not a royal commission, to examine ways and means of trimming the civil service to an efficient and reasonable size.

To start with, the Government should revise its stand on not reducing “the 1.6 million strong bloated civil service.” If it finds it difficult to reduce the civil service, then please freeze recruitment or make it more sparing and definitely more selective. Please go for more quality rather than quantity!

The civil service is huge because the public sector has been designed to be inordinately large. This has evolved because the private sector has been denied and deprived of greater opportunities to serve the public.

There are many government services, facilities and works and supplies that can be provided more efficiently by the business sector. In fact, this could be the way forward for more bumiputra contractors and other races to participate more actively and competitively to serve our society better.

The cost of maintaining the civil service, at RM74bil in 2016 for salaries and allowances, is not sustainable.

The pension bill of RM19bil per annum, without any contribution to the GDP by retirees, is also unbearable in the longer term. At the same time, according to Johari, revenue from palm oil and other commodities have been falling drastically. So where do we go from here?

It is basic economic and financial logic that we cannot afford to cope with rising salary expenditure and lower revenue. It is much more difficult to raise revenue than to cut expenditure.

The Government has said that our fundamentals are strong. Indeed, they are reasonably healthy at this time. But at this rate of a growing civil service that is now acknowledged as bloated, we cannot afford to assume that the economic and financial fundamentals can continue to be strong for much longer.

My appeal then is for Government to more actively seek to reduce the size of the civil service and to act without undue delay. Our good economic fundamentals are being seriously threatened and we must preserve and protect them from further risks.

TAN SRI RAMON NAVARATNAM , Chairman Asli Center of Public Policy Studies

An effective civil service does not burden Govt

 

Civil Servants

IN a recent interview with a vernacular newspaper, Second Finance Minister Datuk Johari Abdul Ghani brought up a matter that is seldom highlighted publicly – the size of the Malaysian public sector.

He said the country’s 1.6 million government employees formed “the world’s largest proportion of civil service”.

With a population of 31 million, Malaysia has a ratio of one civil servant to almost 20 people.

To compare, the news report cited corresponding figures for several other countries: Singapore (1 to 71 people), Indonesia (1:110), South Korea (1:50), China (1:108), Japan (1:28), Russia (1:84) and Britain (1:118).

Johari was making the point that a major challenge for the Government was the rising costs of running the public service system.

This is particularly tough when there is a decline in the taxes and other receipts collected from the oil and gas and palm oil industries.

However, he added that there were no plans to reduce the civil service head count.

The minister has won praise for bringing attention to an issue that many have long felt deserves public awareness and discussion.

Emoluments are by far the biggest component of the Government’s operating expenditure, and that cost has kept expanding.

Back in 2006, emoluments totalling RM28.5bil made up 26.5% of the operating expenditure. A decade later, the percentage is estimated to be 35.7%. To pay its employees this year, the Government has allocated RM77.4bil, which is 36% of the budgeted operating expenditure.

And let us not forget the retired civil servants. According to the Public Services Department, there were 739,000 public service pensioners in 2015, and every year, 23,000 people join this group.

In 2010, the Government spent RM11.5bil on pensions and gratuities, accounting for 7.6% of the operating expenditure. In the Budget 2017, retirement charges will come to RM21.8bil, about 10% of operating expenditure.

Although Johari did not appear to use the phrase in the interview, others were quick to talk about the “bloated civil service”.

It should be pointed out that measuring and comparing the sizes of the public sector can be tricky and misleading. There are different ways of defining a civil servant. And the width and depth of a public service system is very much determined by the country’s prosperity and policies.

The Organisation for Economic Cooperation and Development looks at public sector employment as a percentage of total employment. In 2013, the average among its members was slightly above 19%.

In Malaysia, civil servants represent 10.8% of our labour force. Perhaps, the public sector is not bloated after all.

On the other hand, we must bear in mind that the number of government employees is growing faster than the country’s labour force.

But we cannot discuss quantity and ignore quality. The issue here is not about how large our public service system is; it is whether the system is larger than necessary.

No matter how big, the numbers make sense if they yield excellent results and lead to robust revenue growth.

At a time when the Government is pushing hard in areas such as innovation, productivity and good governance, the civil service ought to lead by example.

There are already ongoing efforts to transform public service in Malaysia and surely the hope is that these initiatives will result in greater transparency and accountability, enhanced competitiveness, and a high-performance culture,

What is also absolutely clear to us is that the Government’s financial obligations are increasingly heavy, and much of this has to do with the emoluments and pensions it pays.

It is realistic to expect the Government to be more prudent in its hiring of new employees. It cannot afford to be the country’s default employer and young people are wrong to blame the Government if there are no civil service vacancies for them to fill.

The public sector’s primary role is to serve the country’s needs effectively and efficiently. It cannot do that if it is a burden to the Government and ultimately the people. -The Star Says

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Minister's aide among three nabbed by MACC

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Bloated civil sevice in Malaysia must cut down the size and salaries

 

The Malaysian government can make further spending cuts if it reduces the size of its “bloated” civil service, an economist said. File picture shows Deputy Prime Minister Datuk Seri Dr Ahmad Zahid Hamidi meeting civil servants during a Workers’ Day gathering in Penang. May 5, 2015. — Picture by KE Ooi: http://www.themalaymailonline.com/malaysia/article/economist-putrajaya-can-tighten-spending-further-by-trimming-bloated-civil

Economist says there is need to cut down further on emoluments

<< Rosario: ‘The size of the Malaysian civil service is that there are five civil servants for every 100 people.’

KUALA LUMPUR: The government has to eventually deal with the issue of the bloated civil service to avoid repercussions later on, said Deutsche Bank’s economist Diana Rose del Rosario.

“Operating expenditure accounts for at least 80% of total expenditure (in the budget) and a big part of it comes from emoluments which account for 26% of total operating expenditure,” Rosario said at the Budgetary Priorities in a Challenging Economic Environment forum hereyesterday.

“The government has actually already tightened spending in this area: it used to grow around 10% year on year between 2010 and 2014. Growth here has since fallen to 5% year on year in 2016 to 2017.

“Success has been there in terms of tightening this area but there remains a great need to (further) cut down on emoluments,” she added.

Rosario said that the bloated size of the civil service in the country is much higher than the average in the Asean region.

“The size of the Malaysian civil service is that there are five civil servants for every 100 people. This is a lot higher than the average in the civil service of the rest of the region with an (average) of around two for every 100 people,” she said.

“There is an urgent need for this government if it continues in the path of fiscal consolidation to strive for a lean and efficient public service,” she added.

Rosario also said that there may be some “upward pressure” from debt service payments under the emoluments section of the expenditure as interest rates are poised to rise due to the stance taken by the US Federal Reserve.

Meanwhile, she also said that the retirement pension charges that are poised to rise by 15% next year should be looked at from a wider perspective.

“Although we are not worried that it is driven by a surge in retirees, but if you look at the pace of growth in the younger population the labour force as projected by the United Nations – the younger ones are expected to decelerate at a sustained deceleration in the next five years,” she said.

“This does not bode well for tax collection or domestic demand. There is a need then to boost wages through a boost in productivity to facilitate domestic demand and tax collections,” Rosario said.

At the same event, secretary-general of the Treasury Tan Sri Mohd Irwan Serigar said contingent liabilities by the government are backed by sound assets and companies.

“There may be some pressure by contingent liabilities by the government but those entities that the government provides guarantees for are all strong and credible ones which can pay off their dues.

For example, Khazanah Nasional Bhd, Prasarana and MRTcorp (have borrowed) for their big capital items,” he said.

“Although there is pressure but there is no worry in terms of default,” Irwan said.

Commenting also on the issue on jobless graduates and productivity, Irwan said that universities in Malaysia should supply manpower for what is needed for the industries in Malaysia.

“Some of the industries are too reliant on foreign workers.

“We can’t change this overnight and we need more technology here. We should not have universities which do not provide for certain industries that are in demand,” he said.

Source: The Star/Asia News Network

Bloated Malaysia Civil Service Presents Headache for Najib

 

Malaysia's Prime Minister Najib Razak. Photographer: Mohd Rasfan/AFP via Getty Images 

Public workforce large relative to other Asian peers

Civil servants indispensable support base for Najib’s party

Malaysian Nor Mohamad loved her job with a major Western tech company. But she gave it up after two years, tired of bickering with her parents who felt she’d be better off in the public service.

“It’s boring but stable,” said the master’s degree holder, who is in her thirties and asked not to be fully identified, citing government policy. “Even though I’m not so in love with the job, I’m thankful that in this economic situation there’s no bad impact to my career.”

Malaysia’s civil service employs 1.6 million people, or about 11 percent of the labor force. The jobs provide stability and security, including for ethnic Malays who are the majority of the population. Now the bloated bureaucracy presents a challenge to Prime Minister Najib Razak.

Najib, whose ruling coalition Barisan Nasional has been in power for nearly 60 years with the help of the Malay vote, has pledged to gradually narrow a budget deficit the country has been running since the Asian financial crisis. The commodity-driven $296-billion economy is expected to grow at the slowest pace in seven years in 2016, with lower oil prices eating into revenue.

But trimming the public workforce to improve the government’s coffers is difficult. While Najib has survived a year of political turmoil over funding scandals, he needs the support of Malays to win the next election due by 2018. His party, the United Malays National Organisation, has for decades propagated policies that provide favorable access to education, jobs and housing for Malays and indigenous people, known collectively as Bumiputeras.

“The civil service in Malaysia is intricately jived in with the ethnic policies” of the government, said Jayant Menon, an economist at the Asian Development Bank. “This is a form of ensuring not just employment, but relatively attractive employment.”

About 79 percent of the civil service was made up of Malays as of the end of 2014, with over 11 percent from indigenous Bumiputera groups, the official Bernama news agency reported in March 2015, citing a government minister. About 5.2 percent of public servants were Chinese and 4.1 percent were Indian.

Malaysia’s civil service relative to population is large, at more than double the average in the Asia-Pacific region by some measures, according to Menon. The cost of maintaining it is draining resources at a time government revenues are falling.

Salaries, pensions and gratuities account for about a third of the budget every year, the biggest expenditure item. The government doesn’t regularly publish data on the size of the public service.

Najib has weathered a year of graft allegations over hundreds of millions of dollars that appeared in his personal bank accounts before the last election in 2013, with the claims putting some pressure on his leadership. He denies wrongdoing and was cleared by the country’s attorney-general earlier this year.

Najib’s office didn’t respond to an e-mail seeking comment on the civil service. The office of the chief secretary to the government also did not reply to an e-mailed request for comment.

Malaysian officials have previously defended the size of the civil service, which includes teachers, doctors, soldiers and police. Idris Jala, then-minister in the Prime Minister’s office, said in 2014 that it wasn’t bloated even though it could be made more efficient to save the government money.

Najib’s government spent 1.1 billion ringgit ($275 million) to raise salaries for civil servants last month -- the biggest rise since 2013 -- and increased their minimum starting pay to 1,200 ringgit a month. Like in previous years, public employees received a 500 ringgit special allowance just before the Eid al-Fitr holidays in July, a celebration marking the end of the Muslim fasting month.

‘Support Base’

“The civil service forms an important support base for the government and can usually be counted upon to show up and vote for the ruling party during elections,” said Chia Shuhui, an Asia analyst at BMI Research in Singapore. “The government is not going to cut benefits to their support base, and therefore it is unlikely to make significant changes in terms of its expenditure on the civil service.”

The government has been taking steps to streamline the civil service and improve the efficiency of the public sector as part of its long-term efforts, Chia said.

Given that nothing much could be done to the civil service because of political and ethnic sensitivities, the government should focus on cutting its business exposure through the government-linked corporation divestment program to increase revenue, the ADB’s Menon said.

While UMNO has worked to retain Malay voters, the opposition has also sought to support the bureaucracy. The opposition-controlled Selangor state government pledged a 1.5 month bonus to its civil servants to mark Eid.

In neighboring Thailand, the ruling junta gave the nation’s two million civil servants and soldiers a four percent salary increase in December 2014 at an expected cost of 22.9 billion baht ($659 million). Many civil servants took part in anti-government protests that led to the May 2014 military coup and the junta has since emphasized the need to give bureaucrats greater power over elected officials.

“Civil servants are indeed an indispensable support base for Barisan Nasional in general and UMNO specifically,” said Oh Ei Sun, a senior fellow at the S. Rajaratnam School of International Studies in Singapore. “Hence the need to constantly improve their welfare.”

By Pooi Koon Chong Bloomberg

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Call on the Government to downsize the country’s bloated civil service

Sheriff: ‘Government bureaucracy has grown so big that it’s not only taking up too much resources but creating many failures in our finance economy

KUALA LUMPUR: One of Malaysia’s former top civil servants has called on the Government to consider downsizing the country’s bloated civil service, while it still can.

Malaysia has the highest civil servants to population ratio in the Asia-Pacific, employing 1.6 million people or 11% of the country’s labour force.

And that could be a problem Malaysia may not be able to sustain if it runs into a financial crisis, said Tan Sri Mohd Sheriff Mohd Kassim, the former Finance Ministry secretary-general and Economic Planning Unit director-general.

He said if the Government was really set on keeping the national deficit at 3%, it needed to look at retrenching employees, particularly in the lower levels of the civil service, to cut spending.

“Government bureaucracy has grown so big that it’s not only taking up too much resources but creating many failures in our finance economy. There are just too many rules and regulations that the public and private sector have to live with,” he told a delegation of economists, politicians and government officials at the Malaysian Economic Association’s forum on public sector governance.

He advised Malaysia to begin downsizing the civil service, “better sooner than later” if it wanted to avoid running the risk of falling into a Greece-like crisis, where the European country had to cut salaries and was unable to pay pensions for its civil service.

Drawing examples from the recent Malaysia Airlines restructuring, where 6,000 people were retrenched, Mohd Sheriff said it was better to let staff go now and compensate them with retrenchment packages while the Government can still afford it.

“It may cost the Government a heavy expenditure now but it is worthwhile to do it now while we can still afford it and not until we are forced into a financial crisis like Greece.

“We don’t want to be in that situation. I think we should do it gradually. It is kinder to do it now with incentives than to suddenly cut their salaries and pensions at a time when they can least afford it,” he said.

Malaysia is expected to spend RM76bil in salaries and allowances for the civil service this year, on top of another RM21bil for pensions. Efficiency and corruption dominated talks on the civil service at the forum, held at Bank Negara’s Sasana Kijang.

Mohd Sheriff, who is also former president of the Malaysian Economic Association, said these issues have been around since his time in the civil service decades ago though not much has changed due to a lack of political will.

In jest, he suggested Malaysia emulate United States President Donald Trump’s idea on downsizing the US civil service by closing down two departments of the Government if it wanted to open another one.

He also suggested that Parliament create a committee to monitor the performance of top civil servants and give them the ability to retrench these officers if they fail to meet their marks.

“In many countries, even Indonesia, they have committees to hold Government leaders to any shortcomings on policy implementations and projects.

“These are the kinds of checks and balance we need to make our civil servants aware that they are being monitored for their work and they can be pulled out at any time,” he said.

Finance Minister II Datuk Johari Abdul Ghani had said Malaysia’s ratio of civil servants is one to 19.37 civilians and that the high number of Government staff had caused expenditures to balloon yearly.

As a comparison, the ratio in Indonesia is 1:110, in China it is 1:108, in Singapore it’s 1:71.4 and in South Korea the ratio is 1:50.

Despite this, Johari said there were no plans to reduce the number of civil servants.

By Nicholas Ccheng The Star

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Sunday, August 5, 2018

New Malaysia's civil servants must keep it civil of multi-racialism !

Brave new world: The civil service needs to get used to the New Malaysia approach while our ministers need to snap out of the Opposition mode and get down to work.

Wake Up Malaysian Civil Servants: Duty Beckons by dinobeano

August 16, 2018 Wake Up Malaysian Civil Servants: Duty Beckons by Dr Amar-Singh HSS http://www.freemalaysiatoday.com These Civil Servants pledge to feather their own nest We need to get rid of the culture of censuring those in the civil service who speak up when they see wrong being done. I found the courage to write this […]

Read more of this post

Wake Up Malaysian Civil Servants: Duty Beckons

by dinobeano

Wake Up Malaysian Civil Servants: Duty Beckons

by dinobeano

Keeping it civil: The civil service makes up the backbone of any nation, yet the concept of its implementation continues to elude some of the powers that be.

IT’S often said that ministers come and go, but civil servants stay forever. And the good old government machinery runs as before, a fact some of our new ministers will probably be clued into by now.

Ministers who have no experience at state government level may have pre-conceived notions of the privileges they enjoy, like unlimited authority and knowing what they decree would suffice to overrule the bureaucrats.

And that is the biggest mistake they could make as newcomers to Putrajaya, because nothing exemplifies shooting oneself in the foot more than putting down civil servants – they run the ministries, after all.

Making its rounds on the grapevine these days is how some ministers put down their secretaries-general at meetings, believing they know better, or quite possibly, that they can do a better job at improving the performance of their charges.

Some of our ministers were probably not born when British sitcom Yes, Minister (which later became Yes, Prime Minister) aired on BBC Two, and on RTM, from 1980 to 1984.

Set principally in the private office of a British Cabinet Minister in the fictional Department of Administrative Affairs in Whitehall, it follows the ministerial career of the Right Honourable Jim Hacker.

In it, he attempts, or rather, struggles to formulate and enact laws or effect departmental changes and meets with resistance from the civil service, in particularly his Permanent Secretary Sir Humphrey Appleby.

The obstructions (sabotages, some would say) were often carried out so deftly that the minister would often rarely know what hit him or possess a trail of evidence to prove insubordination.

In fact, the delays (such as total rejection of policy) were cited to impress upon the minster that the shenanigans were for the benefit of his political mileage.

But of course, the sitcom was totally fictional and in real life, not all civil servants could get away like that.

Respected banker and commentator Tan Sri Dr Munir Majid wrote that Prime Minister Tun Dr Mahathir Mohamad had put together a Cabinet with a mix of races and genders, and a range of ages, which is unprecedented in the political governance of our country. However, except for a handful of ministers, the Cabinet falls short on experience.

Dr Munir urged Pakatan ministers to get out of “Opposition mode” so they can function and deliver with all the advice and support available.

“They would need to get the government machinery – the civil service – to implement their decisions effectively.

“Here, there is another problem. The largely Malay civil service is not used to having political masters committed to a multi-racial Malaysia and a no-nonsense regime,” he wrote.

That simply means our ministers, who have been used to merely delivering fiery speeches, now need to roll up their sleeves and get down to work and show the fruits of their labour. They can only blame the ills and corruption of the previous government to an extent.

A few ministers, and even the Attorney-General Tommy Thomas, must now grapple with all the documents being in Bahasa Malaysia, unlike in the private sector where the medium of communication is English.

Their staff would most likely be entirely Malay, except for their aides, who are political appointees. Directives would be issued in an entirely different way, obviously reflected by the work culture and style of communication.

That is just how the civil service works, so, they simply need get used to it. Of course, stories of all this being a culture shock for some have surfaced recently.

Dr Munir reminded that “there is still some way to go to arrive at a New Malaysia in terms of multi-racialism. After two generations of ‘Malay First’ and subsequently ‘Malay and Muslim First’ political ethic, there is a mountain to climb to make it New Malaysia.”

The reality is that about 75% of the Malay electorate in GE14 voted for Umno or PAS, in comparison to 95% of the Chinese voters who voted for Pakatan Harapan (an increase from the 85% who supported the now-defunct Pakatan Rakyat coalition in 2013). About 70% - 75% of Indians voted for PH, the figures show.

It has been reported that only 25% - 30% of Malays voted for PH, according to figures from Merdeka Centre. Apparently, 35% - 40% of Malays voted for Barisan Nasional while 30% - 33% supported PAS.

The findings displayed that although a higher percentage of Malays voted for Pakatan Harapan in Johor and in west coast states such as Melaka and Negri Sembilan, the coalition’s overall Malay support was diminished by its weak performance in Kelantan and Terengganu.

It’s no secret that as the new government reaches its 100-day mark, some ministers are still struggling to assemble their offices.

It’s just as well that some have yet to meet the press or make statements, because they are still learning to juggle the workload as others continue their scramble to find the ideal personnel.

The job has been so overwhelming that they have been unable to meet their key officers to solidify plans and directions.

With no appointments in sight, some staff are wondering if they are being snubbed, or simply that the ministers are too busy with other engagements. It doesn’t help that they don’t even reply messages.

But the civil service needs to accept that this is New Malaysia. There is no turning back. The culture of openness, accountability, engagement and success must take centre stage, with any form of prejudice left by the wayside.

The strategy of using race and religion to stir emotions seems hollow now.

Millions of ringgit were stolen from the people by those in power, and as the facts have revealed, they weren’t Chinese, Indians or Christians, contrary to what these politicians still want the Malays to believe.

And certainly, the civil servants who sniffed out the moral decay under their very noses knew exactly what was happening.

Clean, trustworthy and competent ministers, and a loyal, non-corrupt and efficient civil service will make Malaysia great.

After all, as the saying goes, it doesn’t matter what colour the cat is, as long it catches the mice.

In this context, what’s important is surely them being good Malaysians.

Wong Chun Wai

Wong Chun Wai began his career as a journalist in Penang, and has served The Star for over 27 years in various capacities and roles. He is now the group's managing director/chief executive officer and formerly the group chief editor.

On The Beat made its debut on Feb 23 1997 and Chun Wai has penned the column weekly without a break, except for the occasional press holiday when the paper was not published. In May 2011, a compilation of selected articles of On The Beat was published as a book and launched in conjunction with his 50th birthday. Chun Wai also comments on current issues in The Star

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