PubIic Administration Reform in

MaIaysia
(By Van Ngoc - Adapted and translated from
the book entitled,
"The Malaysian Bureaucracy - Four Decades
of Development")
Administrative improvements and reforms in
Malaysia have been taking place in the public
service since the early sixties, a few years
after Merdeka (ndependence). From the most
mundane reforms such as name-tags to
quality systems and advanced information
technology, administrative reform has
continued to develop and strengthen over the
years. Credit should be given to the
indigenous post-ndependent government for
its approach to implementing administrative
changes led by such figures as Tun Abdul
Razak and Dr. Mahathir.

This paper gives an overview of administrative
reforms in Malaysia in the past four decades:
between 1960 and the present time.

THE SXTES

The decade began promisingly. With more
funds now available, the Government began a
systematic programme of socio-economic
development. t first turned its attention to rural
development, aiming to upgrade the standard
of living and economic status of the people to
be on par with that of the urban population.
Programmes focused mainly on the provision
of basic infrastructure such as roads, bridges,
schools, health clinics, water supplies,
electricity, irrigation canals, agriculture
marketing facilities as well as other small
projects at the grassroots level.

t was a massive programme, which required a
new management approach. The Government
introduced the Red Book system to enable the
administrative system to respond quickly and
efficiently to the increasing demands of rural
development. The system attempted to
effectively mobilise human and other
organisational resources in order to produce
and translate ideas into project proposals for
higher-level approval and subsequent
implementation. This bottom-up approach
aimed to create a solid partnership between
the Government and the rural people. t was a
radical departure from the standard public
administration procedure that civil servants
had been used to.

The Government reforms promised
development and stability for the people of
Malaysia. The launch of the First Malaysia
Plan (1966-1970) placed a new emphasis on
various aspects of development for a stronger,
growing Malaysia. The Government saw the
need to improve the administrative machinery
as a means to carry out the expanded
programme and increase responsibilities.

The Montgomery-Esman Report was accepted
by the Government and led to the
establishment of the Development
Administration Unit (DAU) in the Prime
Minister's Department with specific terms of
reference stipulated. The terms were to bring
about reforms through the introduction of
modernisation programmes in four priority
areas: planning, budgeting and financial
management system of the Federal
Government; personnel management and civil
services at the federal level; organisational
structures and management methods
pertaining to government ministries and
operating agencies; and land and local
government administration at the state level. n
the next few years DAU undertook several
studies and introduced a number of reforms
under the concept of the development
administration within its terms of reference.

The next major proposal of the Report was the
improvement of the government's education
and training programmes for all levels of the
civil service. One such programme was a
graduate study programme in development
administration in the University of Malaysia for
the post-entry of MCS officers. Mid-career
university-level education would also be
provided to professional cadres. Expanded in-
service training facilities for technical and
clerical staff were also envisaged as well as
periodic staff seminars for high-ranking
officials.

For the proposal's implementation, the
Government set up the Training and Career
Development Division in the Public Service
Department and expanded the training budget.
The Government accepted the importance of
large-scale formal training in public
administration and management for the
majority of civil servants as opposed to relying
on "on-the-job training as in the colonial
tradition. This was a fundamental shift towards
strengthening key areas within the public
service.

Another major shift taken by the Government
at this time, related to the Report was the
curtailment of powers of the Public Service
Commission (PSC) on promotion. Citing the
interest of efficiency and the public service, the
Constitution was amended to the effect that
the authority for promotion from then on came
under the supervision of the Government. The
PSC however, became the appellant body in
the case of Division One officers. Since it
appeared that impartiality would be affected by
the amendment, the Public Service
Department established promotion boards in
which interested parties were not represented
or had only a minority vote.

One way for reforms to be instituted in the
public service was indirectly through the
appointment of a commission or a committee
on salary revision. The Suffian Report which
was accepted by the Government in 1967 was
no exception. Besides upward salary revision,
more uniform and fewer salary scales and
fewer anomalies, the Report introduced a new
incentive, namely, the availability of housing
loans to government servants at a low interest
rate. The response from government servants
and from the many sectors involved in housing
construction was tremendous. This triggered
the housing revolution in the country which led
to a number of reforms in areas including land
management and local authority
administration.

THE SEVENTES

The Government formulated and launched the
New Economic Policy (NEP) with the twin
objectives of eradicating poverty regardless of
race and eliminating the identification of race
with economic functions. The Government set
itself twenty years to bridge the disparity. The
decade, therefore, began with resolve and
hope.

The NEP was public sector-driven. New
instruments of government were created:
Urban Development Authority (UDA), State
Economic Development Corporation (SEDC),
State Agriculture Development Corporation
(SADC), Pahang Tenggara Development
Authority (DARA) and other regional
authorities, and many more. Existing ones
were redesigned and revamped such as Majlis
Amanah Rakyat (MARA), nstitut Teknologi
MARA (TM), Malaysian ndustrial
Development Authority (MDA), and Malaysian
ndustrial Development Fund (MDF). With the
development of these authorities and public
enterprises, the Government thus entered the
private sector domain. They were mostly
headed and staffed by civil servants, many not
used to the less rigid ways and profit-driven
motives of the private sector. t was a new role
for the Government and its employees that
managed the enterprises towards achieving
the NEP objectives.

Aside from public enterprises, the Seventies
were also devoted to the implementation of
massive education and training programmes
involving civil servants, university teachers,
research staff and school leavers on a scale
unprecedented in the history of the Malaysian
civil service. This programme had twin
objectives: to increase the capability of the civil
service and to increase the number of qualified
or trained Bumiputras in the Government
service. The Public Service Department,
Ministry of Education, State Governments and
their educational foundations, MARA, Petronas
and the universities, all participated actively in
this human resource development process.

The Government also expanded the National
nstitute of Public Administration (NTAN) in
the early seventies. This was not only through
enlarging its size and courses offered, but,
according to its Director at the time, all
activities related to training were reviewed and
updated including course content, programme
designs, and periods for training. ts role was
meant to be not only as a training institution
but also as a change agent within the context
of the development administration. NTAN
began producing a large number of trainees
from its varied programmes from Diplomas in
Public Administration to in-service courses.

The system of public services continued to be
strengthened during the mid-seventies when
Dr. Mahathir Mohamad held a new position in
the Government. One of his first initiatives was
the establishment of a new administrative arm
to spearhead government modernisation- the
Malaysian Administrative Modernisation and
Manpower Planning Unit (MAMPU) located in
the Prime Minister's Department. Early reforms
targeted administrative improvements in
agencies whose clientele were the public at
large, such as government hospitals,
Departments of Road Transport, mmigration
and Registration. MAMPU devised an orderly
and efficient system at these counters with the
participation of the agencies involved and
support of central agencies and ministries
concerned. The waiting room was made client-
friendly with ample seating capacity and an
electronic number system for people waiting to
be served. Studies revealed that waiting time
and actual time taken for service completion
reduced significantly with this new system.

The most popular measure for the public was
the introduction of a one-stop agency where
bills could be settled at one place, usually the
Post Office. From the late seventies onwards,
government agency service counters
developed into systematic, efficient,
professional and orderly systems.

Besides the counter system, MAMPU also
initiated and streamlined measures to enhance
the quality of work of individual staff and
organisations. These included desk files, work
procedure manuals, work action files and
quality management. Routine organisational
issues developed into more complex ones.

t was at this time that the Government, on the
recommendation of MAMPU, introduced the
individual Excellent Performance Award which
provided motivation and incentives to staff,
encouraged competition, and thereby
increased productivity of the individual in the
workplace and the agency as a whole. The
reward itself was simple, consisting normally of
a certificate or plaque and an extra week of
leave. This would be entered into the person's
Service Record to support possible promotion
in the future. The Excellent Performance
Award was without doubt, the single most
motivating factor for enhancing productivity. t
was a forerunner to other recognition awards
in the coming decades for the performance of
individuals and agencies in public service
reform and innovation.

The salary scheme of the public service was
again revised towards the end of the decade.
The most significant revision apart from the
standard salary up-scaling, was the extension
of the pension scheme to beneficiaries of a
retiree after his/her death: to his/her widow for
life, and to his/her children until the age of
eighteen years or twenty-one in the case of
children attending college.

The new pension scheme required an
improvement to the administrative machinery
of the Pension Division in the Public Service
Department. The Division had long been
criticised by pensioners for delays in providing
their first pension and even subsequent ones.
A review of the process was therefore carried
out. Under the revised procedure, as long as
pension papers were in order and submitted
according to the specified time schedule, the
pensioner was assured of receiving the first
pension within two months of retirement.
Normally pensioners receive their gratuities on
the day they retire; this can sustain them far
longer than the said two months.
Other aspects of the delivery system have
been improved from time to time such as
payments through banks instead of warrants,
and special procedures for the sick and ailing.
There have been hardly any complaints about
delays even though the number of pensioners
and dependants has shown a marked increase
since the expansion of the scheme.

Towards the end of the seventies the
Government decided to establish a Public
Complaints Bureau (PCB) whose functions are
similar to those of an Ombudsman. The PCB
is placed under the highest office in the land,
the Prime Minister's Department, with its
Steering Committee chaired by the Chief
Secretary himself and members including the
heads of the Public Service Department,
Attorney General Chambers, the Police, the
Treasury and the Anti-Corruption Agency. The
high authority of this committee means speedy
handling of any disciplinary action or provision
of any additional resources required that may
arise from the investigation.

THE EGHTES

The decade of the eighties witnessed a
change of leadership at the highest level of
government when Dr. Mahathir took over as
Prime Minister. His tenure since 1981 signaled
a dynamic change in government
administration, very different from his
predecessor. Under his administration, a
series of policies and actions initiated a new
dimension in Malaysia's political and socio-
economic development and highlighted the
need for a civil service that must work closely
and in tune with the political leadership in all
aspects of government operations.

Mahathir's administration began simply
enough with the wearing of name identification
tags by government servants of all ranks and
the introduction of the punch-card system. The
Prime Minister set the example by doing both
and, in the case of the latter, arriving early and
leaving late. The wearing of name-tags may
appear minor in terms of reform, but it signifies
to the wearer that they are members of the
government and as civil servants, should act
and behave with dignity. The punch-card
system signifies a professional approach
within the public service and highlights the
value of time and punctuality. This was quickly
followed by a string of other administrative
measures such as management of meetings
and leadership by example.

The decade of the eighties is recognized as
the beginning of the industrialisation stage of
the country. From this period onwards the
country depended less on agriculture and
primary products for wealth and relied more on
the fast-growing industrial and service sectors.
For its part, the Government invested
considerably in heavy industries, notably the
national car and steel projects. t also spent
significant funds on infrastructure such as
highways, ports, telecommunications and
industrial estates.

To attract investors and promote the country
as a whole, trade and investment missions
were sent abroad, offering generous
incentives. State visits by the Prime Minister
emphasised investment opportunities in
Malaysia and his entourage usually included
corporate figures.

With the assistance of MAMPU, administrative
processes were streamlined and shortened to
the bare minimum. At the State level, the
formation of one-stop agencies or technical
committees consisting of relevant departments
seemed to be the answer to the common
complaint that an investor had to run around to
seek clearance from too many authorities. The
public sector adjusted itself to the country's
industrialisation status and to the increasing
role of the private sector as the engine of
growth.

The public sector had became too large
because of the many public enterprises formed
for the implementation of the New Economic
Policy in the previous decade. The cost for
providing infrastructure for the industrialisation
programmes had been high and had continued
to rise. There was also the urgent need to
overcome domestic economic problems as a
result of global economic slowdown in the
early eighties. The Government, therefore,
launched the privatisation policy in 1983. t
was a form of development implementation
strategy whereby activities that traditionally
rested with the public sector were transferred
to the private sector. n the 1980's about 20
major projects were privatised under various
methods. Among them were: (1) Sale of
equity; (2) Sale of assets; (3) Lease of assets;
(4) Management contract; (5) Build-Operate-
Transfer (B.O.T.) and Build-Own-Operate
(B.O.O.); and (6) Management-buy-out.

Privatisation helped to achieve the objective of
reducing the financial and administrative
burden of the Government as well as
improving efficiency and productivity.
Eventually Malaysia became a model for other
countries. Privatisation is, therefore, a radical
and a successful administrative reform
measure though it has had its fare share of
critics in later years.

Besides privatisation, there were two other
policies in the eighties which brought fresh
perspectives to Malaysian management. The
first launched in the early 1980's, was the
"Look East policy in which Malaysians, while
taking the best from the West, were
encouraged to look East to the work ethics and
culture, among others, of the highly successful
apanese and (South) Koreans. n the field of
education and training, the Government has
been sending a number of Malaysians
including senior civil servants, to the two
countries.

The second policy was "Malaysia
ncorporated which was announced towards
the end of the decade. Malaysia ncorporated
was based on the premise that successful
national development required public-private
sector collaboration and cooperation and
adherence, and the perception of the nation as
a corporate or business entity jointly owned by
both sectors. The policy has been
implemented in various ways through
consultative panels between the two sectors to
exchange information and promote
understanding as well as through training
programmes in NTAN, department training
institutions and the State Governments. The
Government also facilitated the private sector's
international trade. This smart partnership
between the private and the public sectors
worked very well in the privatisation exercise.
t was a policy very much tested during the
economic downturn when the public sector
had to come to the assistance of those in the
private sector who were badly affected by it.

The decade ended positively for the public
sector in the form of a new (upward) salary
revision. No commission was appointed this
time. The revision was undertaken by the
Public Service Department itself but it was
comprehensive and imaginative. t was
officially called Sistem Saraan Baru (SSB),
(New Remuneration Scheme, NRS). The basic
principle of the SSB seems to be that those
who are outstanding will be rewarded with
accelerated salary increases. A matrix scheme
is introduced for the annual performance of
officers, namely static, horizontal or good,
vertical or very good, and diagonal or
excellent. Those achieving the diagonal or
excellent rating will be given double
increments, a month's annual bonus and can
expect a good career ahead. They are "high
fliers. However, the quota for the vertical or
very good rating and the diagonal or excellent
rating is limited to 5 per cent of all staff in the
agency. Hence, there is still some
controversy.

The decade ended on a bright note as the
foundation for rapid economic growth was
well-laid. The annual growth was around 8 per
cent in the latter years.


THE NNETES

The nineties began with the ending of the New
Economic Policy (NEP) and its replacement by
the National Development Policy (NDP). Some
elements of the NEP were retained in the NDP
as not all the objectives had been met though
the disparity and poverty had been greatly
reduced. However, what caught the
imagination of the people was the
announcement by the Prime Minister of Vision
2020, to turn Malaysia into a developed
country by the year 2020. Both the public and
the private sectors organised seminars and
dialogues to achieve this vision and integrate
the findings in their planning process. With
sustained growth and hard work both sectors
were optimistic that Vision 2020 could be
achieved.

The decade also began with the Government
declaring October 31st as Civil Service Day or
Hari Q (Quality Day). The objective is to
reinforce values of quality culture in an
organisation. Hari Q is celebrated at all levels
with more and more offices participating every
year through "Open Day talks on quality and
other activities relating to productivity and
quality of work in the organisation. The
celebration put aside, the Government has
issued not less than 18 Development
Administration Circulars on various aspects of
quality and productivity including quality
management strategies and total quality
management.

n conjunction with Hari Q, the Government
launched national quality awards to give
recognition to agencies for quality
achievement. The awards include: (a) Prime
Minister's Quality Awards (public sector); (b)
Chief Secretary to the Government Quality
Awards; (c) Director General of Public Service
Quality Award; (d) Director General of MAMPU
Quality Award; (e) District Office Quality
Award; (f) Local Authority Quality Award; and
(g) Human Resource Management Award.

The various Government quality awards
invariably lead to competition among public
sector agencies and have improved public
service delivery. A panel of examiners visit and
inspect the competing agencies according to a
set of criteria. The increasing number of
agencies at various administrative levels
competing for the "lesser award for Human
Resource Development, give an indication that
quality improvement is taken seriously and is
an on-going process.

The Government also introduced the Civil
Service nnovation Award from 1991 followed
by the Public and Private Sector oint
Research nnovation Award from 1993. n the
context of the Civil Service, innovation is
defined as the, "introduction and application of
new ideas to a particular situation or system
which improves the quality of services and
products of an organisation. t should be
successfully implemented and produce
positive results that include reduction of
operation costs, time savings, increase in work
output and increase in customer satisfaction.
Based on reports submitted by Government
agencies in 1993, a total of 241 innovations
were implemented.

As with quality awards, the number of
competing agencies for innovation awards has
been increasing. There were 119 in 1992, for
example, which increased to 509 in 1993. The
interest shown therefore, has been very
encouraging.

There were however, negative aspects of
public administration in the field of
development planning and implementation
which surfaced regularly throughout the
decade. Delays in project implementation and
shortfalls in the spending of development
funds continue to be highlighted in successive
Malaysia Plans. And at a more serious level, a
few fatal occurrences in the mid-nineties led to
criticisms of the professional role and
competency of the public sector in the
development process.

The Government continued introducing more
administrative measures and reforms as the
decade moved on. One was the Client's
Charter, a written commitment made by an
agency to its customers, which was
implemented in 1993. The purpose was to be
customer/client-friendly. The Charter was
publicly displayed in every premise of an
agency. Another, SO 9000, was more
ambitious with the objective of achieving an
international standard in government delivery
services. A few departments have already
been awarded the SO 9000 status including
the Public Service Department. Others are
striving to achieve it within the target date set.

The decade was also marked by the rapid rise
in information technology. The creation of the
complementary "Multimedia Super Corridor
and "Cybercity was a giant step taken by the
Government to lead Malaysia into the future
electronic lifestyle of industrialised countries.
The public sector, for its part, is in the process
of implementing electronic government. t has
already introduced public service networks,
electronic data interchange and civil service
links. The use of T: computer, nternet, e-mail
and others is widespread. t is significant that
the Government did not curtail or shelve the
MSC and Cybercity mega projects during the
economic downturn in the late nineties. Nor
was major technological hardware required by
the government agencies.

When the economic crisis struck the Asia
region, the Government quickly established a
high-powered crisis management body called
the National Economic Action Council (NEAC),
headed by the Prime Minister. However, it
comprised only public officials, i.e. relevant
Ministers, Chief Ministers, and heads of the
Treasury, the Negara Bank and the Economic
Planning Unit which also acted as the
Secretariat. Later, Tun Daim, the former
Finance Minister credited for overcoming the
1987 recession, was recalled and appointed
Minister with Special Functions and Executive
Secretary of the NEAC. The Executive
Committee, also headed by the Prime Minister,
was a smaller body responsible for steering
the NEAC, which met almost daily at the
height of the crisis.

From the deliberations of the newly-constituted
NEAC, the Government identified the root
causes of the crisis, and then introduced its
own unconventional and controversial formula
to tackle it. The salient ones were selective
exchange controls, namely, eliminating
offshore ringgit, fixing the exchange rate at RM
3.80 to the US dollar, and prohibiting the
repatriation of portfolio funds for 12 months.
The Government also appointed two separate
bodies, Danaharta and Danamodal, to address
the main problems suffered by corporations in
the crisis, namely, non-performing loans and
bank capitalisation. There were other
programmes and measures to get the
economy moving again under the National
Recovery Plan. After two years the crisis was
alleviated and Malaysia was on the road to
economic recovery. All was done without
outside help, be it finance, institutions or
expertise.

n essence, this was made possible through
the collaboration of qualified professionals and
top managers from the public and private
sectors, the planners and regulators on the
one hand and the practitioners on the other,
led by a bold and pragmatic Prime Minister.
Such a team has to be led by knowledgeable,
strong political elites who are bold enough to
make political decisions, if need be, on certain
sacrosanct policies, that contribute to
overcoming the crisis.

The decade had come to a close on this
positive note. There have been three decades
of administrative reforms in the public sector.
Analysing Malaysia's administrative reform
efforts and programmes during the last two, a
writer concludes (based on empirical evidence
gathered through questionnaires provided to
500 civil servants), that the programmes, "had
succeeded (though more could have been
done), in making a substantial contribution to
enhance efficiency, effectiveness and
productivity of the Malaysian bureaucracy
towards realigning the pace of the national
development goals.

n summary, administrative improvements and
reforms in Malaysia have been taking place in
the public service since the early sixties, a few
years after Merdeka (ndependence).
Administrative leaders such as Tun Abdul
Razak and Dr. Mahathir who were supported
by the top leadership of the bureaucracy,
played a ground-breaking role in the country's
successful reform programme. There seemed
to be a meeting of minds between the political
leadership and the top civil servants to bring
about changes in the administrative machinery
and deliver goods and services efficiently to
the people. The politicians have a mission to
improve the lot of the poor and the
underprivileged as well as that of the citizenry
as a whole. The civil servants, many of whom
came from a humble background, also
supported the mission to develop the country
both socially and economically. This may not
be true in some other developing countries but
in Malaysia the background and training of the
civil servants helped sensitise them to the
common problems of the Third World such as
poverty, illiteracy, and disease. n tandem with
the political leaders, they set about to deliver
the fruits of development to the population at
large.

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