Corruption remains a significant challenge in Malaysia, undermining public trust, economic development, and corporate integrity. Between 2018 and 2023, an estimated economic loss of RM277 billion (based on 3.4 per cent of annual gross domestic product) was incurred due to corruption. Findings from a nationwide survey conducted by Universiti Sains Islam Malaysia (USIM) in 2023 showed that 69 per cent of Malaysians felt that corruption in the country is high, with one in four respondents believing that it had worsened over the past year. ¹

National Strategic Thrust

Up until the end of 2023, the National Anti-Corruption Plan (NACP) was the governing framework for anti-graft measures in the country and had an overall completion rate of 77 per cent as of December 2023. Some of the plan’s initiatives were not completed due to the time taken to amend the Federal Constitution, as well as challenges in revising existing legislation and delays in feedback from relevant stakeholders. Notwithstanding, the remaining NACP initiatives are either included in the NACS or their implementation will continue through other federal government committees.

Given the national aspiration to build Malaysia into a ‘sustainable, prosperous, creative, mutually respectful and courteous country, based on belief in each other and trust between the government and the rakyat on the basis of transparency and cooperation’ (the goal of Malaysia MADANI), the National Anti-Corruption Strategy (NACS) 2024-2028 was formulated and launched by Prime Minister Anwar Ibrahim in May 2024 as a continuation of the NACP’s efforts to combat corruption. The NACS focuses on fundamental issues such as the welfare of the Malaysian people through the Malaysia MADANI agenda.

As Malaysia’s governing anti-graft framework for the next five years, the NACS aims to create a corruption-free and prosperous nation by upholding the rule of law, creating a culture of transparency and accountability, and encouraging participation among communities in anti-corruption efforts. It outlines critical strategies focused on promoting integrity, transparency, and accountability across diverse sectors in Malaysia, including elected officials, public administration, government procurement, law enforcement, legal and judicial institutions, the private sector, and civil society.

While the NACS outlines clear and actionable initiatives that are led by government agencies, the collective participation from private sector companies and non-governmental organisations is essential to ensure its successful implementation.

In addition, private sector companies and other entities can draw on the document for guidance as well as to leverage on the NACS sub-strategies in developing their own anti-corruption plans.

Benefits of Anti-Corruption Strategies to the Private Sectors

Apart from mitigating the risk of corruption and serving as a defence against corporate liability, the implementation of anti-corruption strategies also provides the following benefits.

1. Demonstrates the board and senior management’s commitment to zero-tolerance of corruption.
2. Cultivates a corporate culture that values ethics and compliance, thus fortifying accountability and responsibility. This increases the attractiveness of the company as an employer of choice in a competitive labour market.
3. Provides a competitive advantage in markets where transparency and sustainability are increasingly valued by consumers and investors.
4. Implementation of the anti-corruption strategies re-enforces the stance of the organisation, contributing to the clarion call for ethical business practices as a responsible corporate citizen and improvement to the overall business environment in their respective sectors and sphere(s) of influence.

Developing an Organisational Anti-Corruption Plan

All corporations can refer to the step-by-step Organisational Anti-Corruption Plan (OACP) Guide developed by the National Centre for Governance, Integrity and Anti-Corruption (GIACC), which is now part of the National Governance Planning Division or Bahagian Perancangan Governans Nasional (BPGN), when developing their anti-corruption plans.

The development and successful implementation of the anti-corruption plans is premised on the organisation’s corruption risk assessment. A successful OACP effectively addresses weaknesses in corporate governance, integrity and corruption in an organisation. The eight components and steps in the OACP development are:

Taking Guidance and Leveraging on the NACS Sub-Strategies

Three of the five key strategies of the NACS — public accountability, voice, and incentives — are particularly relevant for public-listed companies. This segment looks at how these strategies can be leveraged upon when developing OACPs within the corporate sectors.

1. The adoption of recognised standards – Companies are encouraged to participate in the free and voluntary Corporate Integrity System Malaysia (CISM) programme. The CISM programme can also be an initial preparation for the certification of MS ISO 37001:2016 Anti-Bribery Management System (ABMS).
2. Tax rebates – The NACS proposes tax rebates for individuals and companies that participate in and contribute to anti-corruption programmes recognised by the MACC. At an organisational level, companies which obtain the ISO 37001 ABMS accreditation can enjoy tax incentives.
3. Adapting useful anti-corruption control measures – Companies can emulate relevant sub-strategies proposed for implementation by the public sector. This includes measures such as background checks and security screening of employees or board members, periodic anti-corruption training & communication, due diligence reviews of potential business partners and vendors, declarations of gifts and potential conflicts of interest, and duty rotation for roles at high risk of corruption.
4. The declaration of beneficial ownership – This measure, which applies to shareholders of the company but also potential vendors and business partners participating in procurement tenders, can be effective in deterring corruption as it ensures transparency and prevents decisions being made on the basis of personal favour or bias.

New Beneficial Ownership Requirements

Disclosing beneficial ownership is a requirement for Malaysian companies under the Companies (Amendment) Act 2024. Starting 1 April 2024, businesses must declare the details of beneficial owners, which are the parties that ultimately control a company’s shares and exercises ultimate effective control over a company. This declaration must be made through a dedicated register called the Electronic Beneficial Ownership System (e-BOS) by the Companies Commission of Malaysia (SSM).

The disclosure is part of SSM’s initiative to prevent money laundering, corruption and illegal financial flows. Failure to comply with the new regulation can result in fines of up to RM 3 million, imprisonment of up to 10 years or both.

5. Whistleblower programmes – Speaking up against misconduct is a fundamental step in eradicating corruption. Employees and stakeholders must be empowered to voice their concerns regarding corruption, as well as to disclose instances of graft through the right channels. As such, companies must strengthen their whistleblower protection policies by improving the reporting structure and whistleblower protection that aligns with the Whistleblower Protection Act 2010, which promotes the disclosure of information about corruption and other forms of misconduct.

Monitoring & Evaluation

Finally, to measure the progress and effectiveness of anti-corruption strategy implementation, it is crucial to establish targeted outcomes and indicators that would be monitored and reported to the head of the organisation and/or the board of directors. Evaluation of the efficacy of the anti-corruption strategies enables the identification of successful initiatives as well as areas of improvements that require fine-tuning of the strategies, overcoming of challenges or addressing shortcomings.