In the Institute for Democracy and Economic Affairs (IDEAS) new policy idea entitled “Corruption in the Supply Chain: forms and impacts on consumers” the paper which was co-authored with the Coalition for Business Integrity (CBI), looks into how corruption impacts the cost of living for the average Malaysian consumer, which evidently leads to increased price of good and services.
With a focus on the construction, education, and healthcare sectors, the research found that while bribery is obviously the most common form of corruption in the private and public sectors, there are other forms of corruption including extortion, embezzlement, fraud, abuse of discretion, and favouritism.
It also identified three major causes of corruption in Malaysia. As observed by IDEAS CEO, Tricia Yeoh, “This includes the abuse of so-called ‘information asymmetry’ for personal gains. To put it simply, this involves public officials abusing their positions and discretion over the public due to the lack of knowledge and information over said official’s roles and responsibilities. As well, corruption often emerges as a response to excessive and poorly managed bureaucracy. The ‘grease the wheel’ hypothesis views corruption as the ‘grease’ which can ‘lubricate and smoothen’ over various bureaucratic processes.”
“Finally, there are cultural reasons why corruption can flourish, especially when individuals view acts of corruption as the ‘standard operating procedure’ in doing business in Malaysia.”
IDEAS also found that the presence of corruption within Malaysia’s supply chains can have a significant economic impact on the average Malaysian consumers. Research has found that when suppliers of goods and services are required to engage in corrupt practices, this increases the costs of doing business, which is then passed on to the end-consumers.
CBI’s CEO Mark Chay commented that the multiple problems that are confronting Malaysia is attributed to the rampant lack of integrity in managing our resources by some of those in positions of power and business operators and the rakyat have to bear the brunt of it.
Corruption has also been found to distort competition, to curtail private sector development, to raise entry barriers, to undermine the delivery of public services, and to produce inefficient government spending. Finally, acts of corruption can contribute to higher levels of price inflation as well as suppress incomes, thereby encouraging more corruption and leading to a vicious cycle.
The report concluded that addressing corruption in Malaysia on a systemic scale will require sustainable policy efforts across all segments of society. Full copy of the report can be found here