A brief commentary on the US State Department’s 2007 Investment Climate Statement on Malaysia, and how Malaysia’s lack of commitment in the promotion of human rights and a proper public administration system is affecting our economy.

“Recently some Asian governments have contended that the standards of human rights laid down in the Universal Declaration of Human Rights are those advocated by the West and cannot be applied to Asia and others parts of the Third World because of differences in culture and differences in social and economic development. I do not share this view and I am convinced that the majority of Asian people do not support this view either, for it is the inherent nature of all human beings to yearn for freedom, equality and dignity, and they have an equal to achieve that. I do not see any contradiction between the need for economic development and the need for respect of human rights. The rich diversity of cultures and religions should help to strengthen the fundamental human rights in all communities. Because underlying this diversity are fundamental principles that bind us all as members of the same human family. Diversity and traditions can never justify the violations of human rights. Thus discrimination of persons from a different race, of women, and of weaker sections of society may be traditional in some regions, but if they are inconsistent with universally recognized human rights, these forms of behavior must change. The universal principles of equality of all human beings must take precedence.”

– His Holiness The Dalai Lama delivering a speech on Human Rights and Universal Responsibility at the Non-Governmental Organizations, The United Nations World Conference on Human Rights, Vienna, Austria on 15 June 1993

Justice, human rights and transparent government are all essentials for a developed economy. Our economy is suffering without a transparent and accountable system for the appointment of Judges, when Parliament enacts laws without properly consulting the rakyat, when the police do not have independent oversight through an Independent Police Complaints and Misconduct Commission and when corruption is allowed to become a way of life without proper enforcement.

This was shown recently by a letter to the editor of Malaysiakini entitled ‘Judiciary killing off foreign investment’, where a “Foreign Investor Advisor” has pointed out that deficiencies in our justice system and endemic corruption in Malaysia is hurting our economy. Citing from the The United States Department of State’s 2007 Investment Climate Statement on Malaysia , the writer concludes that “This type of advice is very negative toward Malaysia as it simply implies severe corruption at the heart of Malaysia’s legal system and that there is virtually no law in Malaysia to protect US businesses.”

The Statement contains the following disconcerting comment on the deficiencies of our litigation system:-

“Dispute Settlement

“…The domestic legal system is accessible but generally requires any non-Malaysian citizen to make a large deposit before pursuing a case in the Malaysian courts, and can be slow and bureaucratic. The U.S. Embassy is aware of one case where a U.S. investor plaintiff reports that, after 31 months and 17 hearings, the Malaysian court has yet to address the merits of his case. Plaintiff claims to have provided the court with documentation both from Malaysia and from a U.S. court case involving the same company that the company’s assets continue to be drained through ongoing fraud. However, the court stayed his petition that the company be put in receivership until the matter is resolved. The court also stayed plaintiff’s petition for discovery.

“One local law firm reports that cases involving intellectual property rights generally take five to eight years, with more complex patent infringement cases taking ten to fifteen years.

“Many firms choose to include mandatory arbitration clauses in their contracts. The government has set up the Kuala Lumpur Regional Center for Arbitration (http://www.rcakl.org.my) under the auspices of the Asian-African Legal Consultative Committee to offer international arbitration, mediation, and conciliation for trade disputes. The KLRCA is the only recognized center for arbitration in Malaysia. The U.S. Embassy is aware of one contractual dispute with a U.S. company where the Malaysian firm chose not to honor mandatory arbitration clauses as stated in their contract. Resolution of that case is pending.”

Their comments on corruption in Malaysia is perhaps even more damning:-


“Malaysia’s ranking in Transparency International’s Corruption Perception Index worsened, dropping from 39th to 44th place this year.

“The Malaysian government considers bribery a criminal act and does not permit bribes to be deducted from taxes. Nevertheless, corruption remains a serious concern. The Anti-Corruption Agency (ACA) began operations in 1967 under the Prime Minister’s department. Since June 1997, senior state-level officials have been required to declare their assets to the ACA upon taking office. Foreign businessmen are asked to report any individuals who ask for payment in return for government services. The ACA is authorized to conduct investigations and prosecute cases with the approval of the Attorney General. ACA investigations are sometimes reported in the newspapers, but are rarely targeted at high-ranking officials or business representatives with well-connected companies. Prime Minister Abdullah declared after assuming office that the fight against corruption was one of his priorities, but by 2005 the battle had slowed. There were a few high profile prosecutions in 2004 but little more since. By the end of 2006 the government has done little to implement recommendations from an April 2005 royal commission on police reform.

“Malaysia has signed but not yet ratified the UN Convention against Corruption.”

[Emphasis my own]

What about the perception of US business on transparency generally (or the lack of it) and the vagaries of the regulatory system? The State Department points out that the Official Secrets Act “denies stakeholders an opportunity for input into the drafting of legislation that affects their interests.”

Lawyers have seen this happen when the Attorney General’s Chambers refused to allow full, open and transparent discussion of the Legal Profession (Amendment) Act 2006 and instead shackled the hands of the Bar Council from discussing the content of the proposed amendments with its members. Roger Tan, a member of the Bar Council, in the New Straits Times on Thursday, 17th August 2006 said “The authorities have made it clear that if the Bar Council, when consulted, then sets in motion a process of consulting 12,000 lawyers, then consultation with the Bar Council will not take place at all.”

Doctors faced a similar predicament. Dr A Krishnamoorthy a former President of the Malaysian Medical Association is reported in Malaysiakini on the same day as saying that “I had objected to most of the proposed legislation [which eventually became the Private Healthcare Facilities and Services Act 1998] made by the ministry from the very start but they warned me against discussing the Act with my fellow doctors.They cited the Official Secrets Act when I said I wanted to go back to my doctors to discuss these clauses. If I cannot go back to my doctors, there’s no point for me staying on the committee and so I resigned.”

In a country where the rule of law is supposed to be one of the guiding tenets of our national philosophy as embodied in the Rukunegara, we nevertheless ind ourselves ruled by policy rather than by law. The Statement paints this devastating picture of governmental bureaucratic idiocy:

“In addition to secrecy laws regarding proposed new legislation, Malaysia maintains a complex network of practices for which no documentation is available. In response to U.S. government requests for a list of laws and regulations pertaining to market access in various sectors, one government official responded that ministries and agencies were “not in a position to make available an exhaustive list of the laws and regulations pertaining to their respective sectors,” in part because these were “still being streamlined and in some cases being developed,” and in part because “a number of market access issues are addressed by way of administrative circulars/guidelines/polices which not may be stated explicitly in any document.”

[Emphasis in original]

Malaysia must improve on its democratic processes, and on its commitment to human rights. It is only by ensuring basic human rights for all Malaysians will we see true development, both in terms of economic success as well as in terms of a united nation competing on the world stage on the basis of our human skills rather than merely with the richness of our natural resources and the cheapness of our labour.

Shanmuga K sometimes sees a purple banana emerging in his sub-conscious. An article seems to then be magically written. He is @shanmuga_k on Twitter. When he does not see those purple bananas, he practices...