Embedding Good Government & Integrity in The Procurement Process

Bismillaahir rahmaanir rahim

Assalamualaikum warahmatullahi wabarakaatuh, Salam Sejahtera dan Salam 1Malaysia

Yang Berbahagia Dato’ Seri Haji Abu Kassim Mohamed,
Ketua Pesuruhjaya, Suruhanjaya Pencegah Rasuah Malaysia, SPRM

Yang Berbahagia Tan Sri Dato’ Seri Megat Najmuddin Megat Khas
Presiden, Institut Tadbir Urus Korporat Malaysia

Ketua-Ketua Jabatan dan Agensi Kerajaan

Para hadirin yang dihormati sekalian.

Terlebih dahulu, marilah kita memanjatkan kesyukuran ke hadrat Allah SWT atas limpah rahmat serta keizinan Nya jua kita dapat bersama-sama di dalam majlis ini, sempena berlangsungnya National Procurement Forum for the Public And Private Sector 2012.

2. Saya merakamkan penghargaan serta ucapan terima kasih kepada pihak penganjur, Institut Tadbir Urus Korporat Malaysia, di atas jemputan bagi saya menyampaikan ucapan di dalam Forum ini.

Ladies and Gentlemen,

3. Last Friday, all Ministers, Secretaries-General and members of the International Advisory Panel assembled at Sri Perdana for a special Cabinet Workshop to review the progress of the Government Transformation and Economic Transformation Programmes.  In his address to the group YAB  Perdana Menteri reminded us that this Government is about listening and responding to the people; of improving public service delivery to ensure we meet the targets set out under the ETP and the GTP. He stressed that it is important that people feel the benefits of the various initiatives “on their skin”.

4. He drew attention of the group, all of us, specifically to one of the projects that can bring benefit to the people, namely the MRT. For the people to appreciate the project, there must be transparency in the award of the tender for this project. The Prime Minster reiterated that he was pleased that the MRT project reflected the Malaysian Government’s procurement principles of public accountability, transparency, best value for money, and open and fair competition. He wanted this to be the template for all Government projects and procurements.

5. The members of the IAP recognised that the integrity pact that MRT Co has insisted upon lends credence to this Government’s push on the importance of transparency and governance in Government procurement.

6. There is always some level of cynicism when folks discuss GP. Yes, I’d be the first to admit that we have problems. But which government or entity doesn’t have that problems? No country can claim to have a perfect track record in GP. Okay, two wrongs don’t make a right. However, of importance is to ensure the basic tenets of transparency, predictability and consistency are applied to GP. And not just GP, but also in the implementation of all our policies and practices. Going further, I would state that these principles should govern all procurement processes, regardless of whether the procurement is undertaken by the Government, one ministry or another, the private sector or the GLCs.

7. Procurement undertaken by the Government, unlike that by the private sector, is always subjected to public scrutiny. I suppose this is to be expected given that GP amounts to 15-20% of Malaysia’s GDP. But I’d like to put it to you that in Malaysia we, the public sector, have allowed ourselves to be scrutinised. The Auditor-General’s annual report is an now open document. We do not keep it away from the public eye. While inevitably the shortcomings reported take centre-stage, I must point out the AG has also reported that over the years there has been much improvement in our procurement practices. We have acted on the weaknesses highlighted and will continue to make improvements. The controlling officers, the KSUs, are held responsible and do take corrective action.

8. Ladies and gentlemen, allow me to share with you how I see GP can be undertaken in a more transparent, predictable and consistent manner. I want to structure this from the perspective of human element; regulatory framework; leveraging on ICT; international participation; and the Government Transformation Programme.

9. Firstly, the human element. Systems are neutral. The people managing the systems make all the difference. The system is only as strong as its most trustworthy administrator. So it is incumbent upon all civil servants, or many of us, to exercise the highest level of integrity when discharging our functions.

10. Likewise, the suppliers of goods and services.  At the risk of sounding simplistic, procurement involves two parties, both of whom must operate with the highest level of integrity and governance. The entity procuring needs to be clear what the requirements and the specifications are. The supplier must likewise ensure that the products and services provided are of high quality, delivered promptly and at a fair price. The entire process of bidding and procuring should be above board.

11. The Bribe Payers Index issued by Transparency International is equally, if not more telling than the Corruption Perception Index. Public officials are easy targets in the finger-pointing game of corruption. The Bribe Payers Index measures private sector corruption. When you put together the CPI and the BPI you see the correlation between public and private sector corruption. And the BPI shows clearly that the lack of governance and integrity is NOT a disease of “poor” countries. Or of Government officials! It reflects the level of integrity of the private sector. Malaysia ranks 15th on the BPI, but we can surely do much better!

12. Let me bring you back to the MRT case. Projects of this size come with immense opportunity for doing either what is right or otherwise. They can either be examples of good governance OR serve to reinforce cynical public perception about GP. As Chair of MRT Co, I promised to God and I promised to myself that integrity and governance will guide this process. And, Insya Allah so it shall be.

13. Secondly, regulatory framework. In Malaysia we have in place the necessary regulations to guide the GP process. Our laws and regulations are comprehensive and help to balance transparency and national interests with that of protecting the confidentiality of the bidding entities.

14. In December 2010, the Government issued guidelines for the “Integrity Pact” in Government procurement.

15. The Integrity Pact, an idea taken from Transparency International, is our effort at promoting integrity and fighting corruption. It informs public officials and potential contractors their duties and obligations before, during, and after the bidding process; as well as the consequences should either party breach the pact.

16. Thirdly, leveraging ICT. I am a firm believer in the use of technology to reduce discretion and human intervention. The MyPROCUREMENT portal serves to ensure that procurement becomes more transparent and accountable, and creates a level playing field for all parties involved. Information about contracts awarded by the Government is available for public viewing. Information is being added I hope even as we speak. Tenders can also be called through this portal, thus eventually eliminating any ill-intended human intervention.

17. Fourthly, the international front. While Malaysia is not a member of the Government Procurement Agreement of the World Trade Organisation, WTO, we are  active participants in the APEC Government Procurement Experts’ Group and the United Nations Commission on International Trade Law, or UNCITRAL Procurement Working Group. In these we participate to take on board best practices around the globe.

18. Malaysia is also a signatory to the United Nations Convention Against Corruption, UNCAC, as well as active in the Anti-Corruption Action Plan, ACAP, for Asia and the Pacific. This lends credence to our commitment to fight on corruption.

19. Fifth, the Government Transformation Programme. One of the 6 National Key Result Areas, NKRAs, is the fight against corruption. This is done through a number of initiatives, including the Whistleblower Protection Act 2010, Integrity Pact, and the MyProcurement portal which I explained earlier.

Ladies and gentlemen,

20. Trust and integrity are values that cannot exist in the abstract. Systems can serve to ensure transparency, predictability and consistency of processes and procedures. Integrity is inherent. In dealing with the challenges of governance in procurement, systems are important but integrity of the people handling the system is even more critical. And, trust must be earned. The proof of the pudding, they say, is in the eating. And that’s where we all must head. The challenge for us in the public sector is to dispel the notion that our GP system is flawed. We have to show through our actions that the system works and it works well.

21. In this context I have also highlighted that governance is not just about the members of the public sector but equally important are the suppliers and the service providers. To have a procurement system that is transparent, predictable and consistent all parties must abide by the same moral code. And this applies not just to public procurement but procurement in general. Corporate sector included.

22. I laud the efforts of the organisers of this forum for bringing together such a diverse group of people, to share views, experiences on procurement practices in Malaysia. The challenge I want to leave you with is this: let a significant outcome of your deliberations at this Forum be some concrete ideas to further strengthen not only Public but also Private sector procurement. When both systems operate with the highest level of integrity and governance we will be able to truly say that we have arrived!  Beyond the system, even if the system fails us.

23. With that, I thank the Malaysian Institute of Corporate Governance for giving me the opportunity to address you today.

Thank you for your attention.

Wabillahittaufik walhidayah
Wassalamualaikum warahmatullahi wabarakatuh.