Amid its remarkable rise from the pre-crisis era that allowed economic industrialization, Malaysia has incessantly face public backlash due to its embroilment in several political, financial and business ethics scandals.
Amid its remarkable rise from the pre-crisis era that allowed economic industrialization, Malaysia has incessantly faced public backlash due to its embroilment in several political, financial, and business ethics scandals. Analysts argue that increasing corporate misdeeds in Malaysia could be attributed to weak government policies.
The 1MDB Scandal
Topping the list is the 1Malaysia Development Berhad (1MDB) scandal in 2015, where former Malaysian Prime Minister Najib Razak was accused of channeling RM2.67 billion (US$700 million) from the government-run strategic development company to his personal accounts. His cohort, Malaysian financier Low Taek Jho, played a huge role in the massive graft scandal and remains at large.
Corporate Irregularities
Meanwhile, major corporate companies also made headlines due to irregularities in internal controls and intentional deceptions that allowed the masterminds to pocket millions of cash while putting thousands of people at risk.Four years ago, two top executives of Malaysia’s KNM Group Berhad were declared guilty of troubling debtors by illegally claiming assets from an insolvent firm through malicious and dubious procedures. The Supreme Court of Indonesia ruled against the accused KNM Director and CEO Lee Swee Eng and his in-law, Director Chew Fook Sin, after they were found to have violated bankruptcy law. Chew Fook Sin served as the former director of two subsidiaries, PT. Heat Exchangers Indonesia (HEI) and PT. KPE Industries.
Lack of Enforcement
Despite the Indonesian government’s order to return the laundered money to the deprived creditors, it remains unclear whether this has been done. Malaysian authorities, for their part, should have taken necessary measures to ensure that the accused officials would not commit further wrongdoings. However, it was found that the top executives have managed to maintain their posts in the investment holding and process equipment manufacturing firm. This has saddened observers because it seemed that the country’s public officials did nothing to restrict the individuals who were once chased by the judiciary.
Decline in Public Trust
Given these scenarios, it is not shocking that there is now a record-breaking decline in public trust in both public and private institutions in the country. The scandals, which have victimized local and foreign firms, have tarnished Malaysia’s image as a safe place for doing business.
Analysts’ Perspective
Analysts say that these financial and corporate misdeeds are likely to recur because the Malaysian government lacks the iron fist and strategic policies needed to halt unethical practices in the marketplace. In 2018, a study showed that the majority of Malaysian businesses were “still uncertain about government laws and regulations” concerning trade and investment, taxation, and corporate security.Despite the implementation of commerce-related guidelines, experts say there are still deficiencies in clear and comprehensive direction from public officials. This, unfortunately, dents foreign investors’ confidence in investing money in the country. The little to no enforcement by Malaysian authorities likewise allows more greedy corporations to embezzle funds from other foreign firms.
Recommendations
Researchers suggest that ensuring consistent policies and providing adequate transition time for any policy changes is another area that businesses would like the government to address. If the uncertainty continues and the government still fails to communicate a clear, consistent, and comprehensive economic policy, more people and entities may quickly lose their optimism in Malaysia.
Conclusion
The government should not waste time and must act promptly to protect small businesses from fraudsters and swindlers. Strengthening enforcement and ensuring transparency in corporate governance are crucial steps to restoring public trust and investor confidence in Malaysia.
