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By P Gunasegaram
Middlemen have cost the country and our collective pockets hundreds of billions if not trillions of ringgit through fancy names such as privatisation, public-private partnerships, out-sourcing, localisation, approved permits etc.
Let’s start with a recent example which is reverberating through the news right now. It’s a new digital system to manage migrant workers which is to be called The Universal Recruitment Advance Platform (Turap), by a company called Bestinet.
This company was founded by a Bangladeshi former migrant, now a Malaysian citizen and prominent connected businessman Aminul Islam Abdul Nor. You can read about him in this Malaysiakini report titled Who is Bestinet founder Aminul?
Bestinet is the company behind the Foreign Worker Central Management System (FWCMS), a system used by the government to process the hundreds of thousands of migrant workers arriving in Malaysia yearly.
Earlier this month Bestinet sued 10 parties, including media organisations Malaysiakini and Bloomberg, over their statements about Bestinet for RM1 billion and sought a gag order on further reports. The gag order was denied by the court.
The question which is being aske is why do we need yet another system which may require expensive outlays from the government and may even impose additional costs to the already expensive process of hiring foreign workers.
The answer seems to be, why, more money of course.
MACC should investigate
Former MP Charles Santiago raised exactly this issue when he asked the MACC to investigate why Bestinet is being considered as the operator for the new system, despite the company already managing the existing FWCMS.
“Were there other bids? Was there an open tender? Are there no other competent firms?” Santiago asked on Saturday. But this goes beyond. Does the government need a new contractor?
To add intrigue to this ongoing drama, human resources minister R Ramanan had two days earlier, denied the Bloomberg report which mentioned the details of the deal.
“It is shocking to me that they seem to know more about the proposed system than I do. I have not tabled anything to the cabinet, yet they are able to explain it in detail,” he added.
Ramanan’s volte-face
And then he made a volte-face. He effectively retracted his earlier strong statement saying that he had no issues with Bestinet getting the project and added that talks were ongoing, a clear indication that he was unaware of what was going on earlier and confirming part of the Bloomberg report.
Malaysiakini reported on Mar 27 that industry players, including an association of migrant workers recruiters, were concerned that a new digital system for migrant workers may not be necessary and may increase recruitment costs even further.
That report resulted in a police investigation with Malaysiakini senior journalist B Nantha Kumar being questioned as a witness for one and half hours.
This case is yet another strong example of rent-seeking, one working definition of which is “the act of increasing one's share of existing wealth by manipulating public policy or economic conditions—such as lobbying for subsidies, tariffs, or monopoly rights—without creating new wealth or adding productive value to the economy”.
This new system is exactly that because it simply adds another layer of bureaucracy which will eventually increase the cost of hiring foreign labour, with really no value-added at all except to Bestinet which will benefit from extra revenue.
Removing third-party costs
In fact the country could reduce costs considerably by simplifying such processes and removing third parties altogether which will lower the fees that have to be paid for these and other services.
All the government has to do is to source everything from the primary providers of service, not middlemen intermediaries, and own the systems directly, training its own people to run it. That’s it, no more middlemen, greater efficiency, less cost and more profit to the government.
You think it can’t be done? Think again. The Employees Provident Fund, a statutory body, maintains an extensive data base of perhaps 20 million workers or more. It does not use third parties. It manages everything with its own staff. Its service is impeccable and puts the private sector to shame.
Another example is the Inland Revenue Department which engages in tax collection. The problems arise when there is political interference.
Its political will, its utter lack, that is the problem. Currently, the fault falls fully like rotten fruit onto the lap of this Madani government headed by Anwar Ibrahim which is not at all concerned about wiping out corruption, using its weapons selectively against political opponents.
What this whole Turap episode indicates is that rent-seeking is not just alive and kicking, but is being taken to new levels by the Madani government which continues to hollowly promise that it will eradicate corruption.
No less than MACC Chief Commissioner Azam Baki said in May last year that corruption - of which the main component is very likely to be rent-seeking - cost RM277 billion in the five years up to end-2023.
The thing is that rent-seeking can be cut off just like that if the government chooses to do so. But that would also cut its source of funding for elections and other activities and a very useful side income for corrupt politicians. It’s unlikely to happen under the current regime.
Take privatisation. Why privatise electricity generations even though Tenaga Nasional produces at lower cost than the private sector? The answer is there is huge money to be made with many large groups today owing their seed money to lucrative independent power contracts.
At one time all roads were free to travel on. But then there was a plan to charge for their use and thus were born toll roads - the public pays for services which were free, creating in the process multi-millionaires and billionaires.
Now that we are running out of privatisation programmes we have to look at other things, sometimes milking it twice over like that system for migrant workers - one is not enough we need two.
Mahathir Mohamad did a lot of redistribution then through privatisation and other schemes, taking money from the rakyat and giving them to those already rich and to those cronies aspiring to be rich who will fund Umno’s nefarious programmes.
Reformasi ended
If you thought reformasi would change all these, you were wrong. For the leader whose sworn enemy was once Umno, from which he had sprung, is now firmly allied again with Umno, more valued and treasured than his own instrument of change PKR, now sidelined along with reformasi
And he has bought into the argument that to be in power you must have money to distribute, the age-old Umno justification for corruption. Now we have to wait for someone better to come along and take over.
In the meantime, our nation will continue to lose billions to this scourge called rent-seeking. Turap is a prime illustration of how this happens.
(P Gunasegaram says rent-seeking is the primary downfall of Third World countries. Those who have crushed it eg Singapore have prospered economically with far less resources than we have. )
P Gunasegaram (t.p.guna@gmail.com) is a content creator under the Newswav Creator programme, where you get to express yourself, be a citizen journalist, and at the same time monetize your content & reach millions of users on Newswav. Log in to creator.newswav.com and become a Newswav Creator now!
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