How to determine corruption in Malaysia?

TRANSPARENCY International (TI) released its 23rd annual Corruption Perceptions Index (2020 CPI) on January 28. The index ranks 180 countries by their perceived levels of public sector corruption.

Malaysia ranked 57 among 180 countries and went down 6 places in the 2020 CPI with a score of 51 out of 100. In 2019, Malaysia was ranked 51 with a score of 53 which was also the country's best score over last seven years.

The dropped is due to the prevalence of corruption, political instability, crisis in democracy where weak institutions are less able to control corruption, a weak economy, lack of good governance and the uncertain future.

If those factors, including strong political will are not corrected, the next CPI will be getting worst.

A country's rank indicates its perceived corruption position relative to the other countries reviewed. The higher the ranking, the less corrupt a country is perceived to be. On the other hand, the score indicates the perceived level of public sector corruption on a scale of zero (highly corrupt) to 100 (very clean).

Thus, countries with a higher score will rank much higher in position (as being less corrupt) compared with lower scoring countries.

For comparison the scoring of the best ranked countries in the world was as follows:

The top countries are Denmark and New Zealand shared the same scores of 88 points. The bottom countries are Somalia, South Sudan and Syria with scores of 12, 12 and 14, respectively.

The CPI is a poll of polls, a composite index that combines data and range of surveys done by business people from around the world, including local experts and analysts working in the countries evaluated.

The data is not collected by TI, but rather by other organizations. TI’s headquarters in Berlin simply brings everything together to create one score for each jurisdiction. Independent and reputable institutions via credible sources using diverse sampling frameworks, different methodologies do come out with the indexing which is then audited by European Commission Joint Research Centre.

Malaysia is using 9 out of 13 secondary sources to calculate their CPI which are as follows:

1. Bertelsmann Foundation Transformation Index

The Bertelsmann Foundation Transformation Index is based on expert assessments on the state of transformation management performance and economic system in the surveyed countries. In relation to corruption, the experts are asked to assess to what extent public officeholders are prevented from abusing their position for private interests and does the government successfully prosecute, penalize and prevent corruption.

2. Economist Intelligence Unit Country Risk Ratings

This is a global research and advisory firm that produces business intelligence and financial exposure for policy-makers worldwide. On assessing corruption, it uses these following questions:

3. IMD World Competitiveness Yearbook

The International Institute for Management Development (IMD) is a top-ranked business school with headquarters in Geneva with bases around the world. Their survey measures the competitiveness of nations, rank and examines how a nation’s socio-political and economic climate affects corporate competitiveness. For corruption, survey respondents are asked, “Bribing and corruption: Exist or do not exist?”

4. Political and Economic Risk Consultancy Asian Intelligence

This is a consulting firm involved in strategic business information and analysis for companies doing business in East and Southeast Asia. Local and expatriate business respondents are asked whether they perceive corruption as being a problem in certain positions or institutions.

5. Political Risk Services International Country Risk Guide

This survey assesses the bank’s role on economic management, structural policies, social inclusion and public sector management of countries eligible for aid from the International Development Association. Their survey assesses transparency, accountability and corruption in the public sector.

6. World Justice Project Rule of Law Index

The World Justice Project is a non-profit organisation committed to promoting the rule of law, opportunity and equity around the world. As for corruption, the local experts are asked to assess whether government officials in the executive, judicial branch, the legislature, the police and the military misuse public office for private gain.

7. World Economic Forum Executive Opinion Survey

This survey is an independent non-profit organisation which engages businesses, leaders and academics to shape global agendas. It is an annual survey of business executives.

For corruption, respondents are asked to rate how common the diversion of public funds are to companies, individuals, or groups due to corruption connected to the following: Imports and exports, public utilities, annual tax payments, awarding of public contracts and licensing and obtaining favourable judicial decisions.

8. Global Insight Country Risk Ratings

The above rating is obtained from a global information company providing services covering macroeconomics, country risk and individual sector analysis in 30 countries. Their ratings assess a broad range of corruption - from petty bribe paying to higher-level political corruption - and the scores assigned to each country are based on a qualitative assessment of corruption in each country.

9. Varieties of Democracy (V-DEM) Project

This is a new approach to conceptualizing and measuring democracy. Their corruption index includes measures from the executive realm that distinguishes between corruption and bribery; and embezzlement from corruption. V-DEM differentiates bribery and corruption in the highest echelons of the executive committees and councils which includes rulers and at cabinet level. In the public sector there are several distinguishable types of corruption which are included: both petty and grand; both bribery and theft; and corruption aimed at influencing law making and that affects implementation. Corruption Question(s): How pervasive is political corruption?

The following nine sources are used to calculate the 2020 CPI for Malaysia. Each source carries 100 marks and the average is taken from the total of all sources to determine the CPI score:

The CPI has increasingly become a highly regarded and influential survey for good governance, influencing the rate of economic growth, investment and is a key marker in international efforts to fight corruption.

Indeed, the CPI is a helpful and re-known tool to measure corruption and tell us whether bribery and corruption continues to plague our country.

TI-CPI’s criteria are the best in the absence of an alternative system.

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* Datuk Seri Akhbar Satar is a President, Malaysia Association of Certified Fraud Examiners

** This is the personal opinion of the writer or publication and does not necessarily represent the views of Astro AWANI