Research & Policy Briefs From the World Bank Malaysia Hub No. 22, June 2019 Improving Governance through Enhanced Citizen Engagement: The Case of Malaysia Shahridan Faiez Vijayendra Rao Malaysia has focused on civil service reforms to improve the efficiency of public service delivery. This Research & Policy Brief argues that this method needs to be supplemented with an approach that makes officials more directly accountable to citizens. Improving governance by engaging citizens and strengthening local institutions is a policy implication that has lessons not only for Malaysia, but also for other countries around the world. Introduction of living increased in urban centers, they became a magnet for attracting out-migrating people from rural spaces to towns This policy note provides a framework for understanding why and cities. The share of urban population doubled from 34.2 it is important to pay attention to the demand side of percent in 1980 to 71 percent in 2010, making it one of the governance, particularly in the case of Malaysia, where most urbanized countries in southeast Asia. governance initiatives and reforms have almost entirely been focussed on the supply side. To meet the rising public expectations for service delivery, the government, already a federation of 13 states, passed the The Context in Malaysia for Public Service Delivery Local Government Act 1976, which rationalized a new subnational level of government through the creation of 144 Malaysia’s record in combating poverty and transforming its local authorities. Over the last three decades, Malaysia has agrarian economy into an industrialized middle-income undertaken a comprehensive program of reform initiatives. nation since its formation in 1957 has been impressive Innovative approaches were taken to promote the continuous (Ravallion 2019; World Bank 2018; World Bank 2009). This improvement of a citizen-oriented public service delivery, progress was achieved by relying on robust macroeconomic such as the formalization of the Malaysian Administrative planning and the deployment of effective state institutions to Modernization and Management Planning Unit (MAMPU) in build human capacity, provide critical infrastructure, and 1986. attract private investments to spur economic growth. This achievement is even more impressive considering the Limits of the Supply-Driven Model affirmative action policy that was simultaneously instituted to correct for long-standing ethnic differences in economic These reform programs have attracted well-deserved status. Between 1967 and 1997 Malaysia recorded international recognition and accolades (World Bank 2017). continuous average GDP growth of 7 percent, while achieving However, service delivery performance has continued to fall sharp and consistent drops in poverty levels from 49.3 short of public expectations. For instance, by far the largest percent to 1.7 percent between 1970 and 2012. proportion of complaints received by the Public Complaints Bureau has been about local authorities (33 percent) and A central part of this transformation was the creation, public amenities (27 percent). The perception persists that training, and production of high-quality public officials to the delivery system has not been attentive to citizen’s work in state institutions and deliver services necessary for concerns, and that government decisions felt at the local level nation building. From building irrigation canals, roads, and have not been made with public interest at heart. For bridges to establishing schools, courts, and health centres, instance, in the 2017 Edelman Trust Barometer, 48 percent of public service delivery was planned and implemented by a Malaysians reported distrust of public institutions, while 52 professional corps of highly motivated technocrats. From the percent stated that the overall system had failed them beginning, the concept of governance was framed as the (https://www.slideshare.net/EdelmanAPAC/2017-edelman- ability of technocrats to solve technical issues related to trust-barometer-malaysia) development objectives. This “supply-side” approach to service delivery yielded huge benefits in the transformation of How can one explain the disconnect between an the nation during the latter half of the twentieth century. apparently reform-oriented public service delivery system and its inability to translate the reforms into tangible By the turn of the century, the country had undergone improvements that are felt by citizens? One important answer dramatic structural change. As income growth and standards lies in the limits of the supply-driven service delivery Affiliation: Think City; Development Research Group, the World Bank. E-mail addresses: shah.faiez@gmail.com and vrao@worldbank.org Acknowledgement: This brief draws on a longer paper on “The Demand-Side of Service Delivery and the Strengthening of a New Malaysia,” which was published as part of the Think City Urban Policy Series (Web: https://thinkcity.com.my/wp/wp-content/uploads/2019/04/Urban-Policy-Series-No-1-The-Demand-side-of- Public-Service-Delivery-and-the-Strengthening-of-a-New-Malaysia-FINAL.pdf). The authors are grateful to Rajni Bajpai, Yew Keat Chong, Norman Loayza, Hamdan Abdul Majeed, Firas Raad, Fabian Mendez Ramos, and members of the World Bank Knowledge and Research Hub in Malaysia for valuable comments. Nancy Morrison provided excellent editorial comments. Objective and disclaimer: Research & Policy Briefs synthesize existing research and data to shed light on a useful and interesting question for policy debate. Research & Policy Briefs carry the names of the authors and should be cited accordingly. The findings, interpretations, and conclusions are entirely those of the authors. They do not necessarily represent the views of the World Bank Group, its Executive Directors, or the governments they represent. Global Knowledge & Research Hub in Malaysia Improving Governance through Enhanced Citizen Engagement: The Case of Malaysia Figure 1. Comparing Malaysia’s Local Government Share of Consolidated Public Sector Expenditure with Selected Countries Ratio of Local Expenditures to Total Public Expenditure 60 51 50 38.3 40 30 27.7 26 24.5 21.7 20 20 12.5 10 2.9 0 China Poland South Africa Uganda Indonesia Kazakhstan Brazil Argentina Malaysia Source: Shah 2006. Note: Data are from 1997 for Poland; 2001 for Indonesia and South Africa; and 2003 for Argentina, Brazil, China, Kazakhstan, and Uganda. Malaysian data are from Commonwealth Local Government Forum Country Profile for Malaysia 2017-18. paradigm, with its highly centralized and top-down allocation health services, payment for services, and cost of living issues. of resources. The term “service delivery” as used in Malaysia The demands by the private sector on the government have reflected this mindset as public officials fashioned themselves also increased with requirements for greater levels of data into a simple binary relationship with citizens – the former’s transparency, clarity of policies, and enforcement of laws to job was to deliver, while the latter were required to behave allow firms to innovate and provide goods and services to simply as clients. Such a paradigm worked well when citizens increasingly complex and segmented urban consumer had limited access to the latest information and technologies markets. for services and goods and thus had to rely on the public sector to meet their needs. However, three major changes 3. Change in the nature of the citizen. Meanwhile, the have challenged this paradigm: outlook and nature of urban Malaysians changed. as the nation’s GDP per capita increased, and the size of the middle 1. Centripetal decision making. As Malaysia’s government class expanded. New aspirations began to take root centred administration evolved, the government structure became around individual and group identity, long-term economic highly decentralized, with state and local level governments, security, and issues affecting the quality of service delivery. regional development authorities, and deconcentrated With greater economic prosperity, stronger linkages to federal agencies, while decision making became highly domestic and global markets, and the rapid utilization of centralized (Hutchinson 2014; Loh 2016; Ostwald 2017). internet technology, citizens have been better able to access These centripetal forces have been shaped not by objective information, goods and services by themselves, rather than developmental imperatives, but by the political economy of depending on the public administration for information and interest groups – to the point that . the decision of where to support. Citizens now have greater voice and can locate a bus stop in the state of Penang requires the approval communicate their demands with greater levels of of the city of Putrajaya! sophistication. Citizens expect services to work and are more sensitive to their quality. The debates surrounding 2. Change in social structure. While two-thirds of dissatisfaction with the quality of education are testimony to Malaysians now live in urban areas – reflecting increased this phenomenon (Asadulah 2014). population density, greater social differentiation within ethnic groups, and greater complexity of spatial relationships, rural Local Governance and the Demand-Driven Public Sector spaces have experienced depopulation, labor force outmigration, and low levels of public and private Malaysia’s public administration system has not kept pace investments. These changes intersected with shifts in power with the changing social and economic landscape. This is relationships within cities. Urban areas became the locus of unlike many other middle- and high-income countries, where new forms of struggle between elites, the state apparatus, the principle of subsidiarity – that powers and jurisdiction and dispossessed citizens (Harvey 2008; Loh 2006; Tong 2013; devolved to local governments should be those that are best Gomez and Jomo 1999. Citizens became more engaged with managed locally – is well established in the governance conflicts over land use, environmental quality, education and framework. Local governments in these countries tend to be 2 Research & Policy Brief No.22 elected and planning systems are enhanced by high levels of 1. Public participation. This is the defining component of any innovation that incorporate citizen feedback. With effective demand-driven service delivery system. Without it the levels of local participation, they are able to develop solutions capacity for responsive, responsible, and accountable based on citizen’s needs and their own national governance is compromised as public expenditure and characteristics to enhance public sector performance. programs become susceptible to manipulation and capture. Various mechanisms for empowering citizens participation Evidence from around the world establishes a strong link have been developed (such as citizens charter, sunshine between effective public service delivery and governments rights, citizens report cards, and participatory budgeting) and that are accountable to citizens (World Bank 2004). there is now a rich literature on their application in different Particularly at the local level, citizens’ needs are better countries and cities (Mansuri and Rao 2012). In Malaysia the matched with the supply of services when service providers principle of public participation is provided for in various have a downward accountability relationship with the planning and development instruments, such as the consumers of those services. In contrast, Malaysia’s local Malaysian Town and Country Planning Act 1129 (Sections 9 governments are not downwardly but “upwardly” and 13). These, however, have largely been observed in the accountable to centrally managed bureaucrats and politicians breach or rendered impotent through by administrative (Nooi 2011). actions (Dola and Mijan 2006; Siddique 2014). There are many different mechanisms for enhancing 2. Local government elections. The free and fair election of accountability (Heller and Rao 2015), in addition to elections. local public officials is a key mechanism for strengthening Two important examples are participatory budgeting, and accountability. This is not a new idea in Malaysia. Various consensus-building on local plans for the year. These municipalities had a history of local elections before innovations have had a wide influence all over Latin America. Malaysia’s independence, but the practice was discontinued Elsewhere, economies as diverse as the Republic of Korea; in 1964 (Loh 2011), when the responsibility of governance was transferred to appointed officials. It would be prudent, Taiwan, China; and the United Kingdom have developed however, to note that while local elections help strengthen systems of participatory planning for local governments. For accountability, it is not a panacea against corruption. Global countries like Estonia that have high levels of literacy and experience has shown that, without adequate safeguards, effective internet access and connectivity, new ways of elected local governments are also susceptible to collusion building online citizen planning systems have been pioneered and elite capture (Mansuri and Rao 2012). where feedback from people is constantly monitored by government officials who are incentivized to act on them and 3. Financing, capacity building, and performance-based to respond (Jonsson 2015). (More information on citizen grants. The devolution of power requires careful thought planning innovations in the world is available via two very about the authority and jurisdiction of local governments, informative websites: Participedia, https://participedia.net, and keeping in mind the principle of subsidiarity . A good place to Latino.net, https://www.latinno.net.) start is the devolution of jurisdictional authority within the existing structure. The financing of local governments also For Malaysia, strengthening local governance is central to must be carefully thought through – with attention paid to the the crafting of a demand-responsive public sector. This will generation of local revenues and other fiscal considerations. entail enhancing political and institutional processes at the Substantial attention will have to be paid to building local local level through which decisions are taken and capacity of local politicians, bureaucrats, and citizens, via implemented. Such a system would address three key such means as formal training, web-based training, and governance principles that are weakly represented in the participation in public events. In addition, consideration will current service delivery system: have to be given to establishing incentives for improving the performance of local governments. Various questions will • Responsiveness. To ensure that government does the right need to be addressed, such as: how will performance be thing by delivering services that solve citizen’s problems measured so that the data are objective and not subject to and that are consistent with citizen priorities. compromise? Should incentives be just symbolic, such as • Responsibility. To ensure that government activities are awards for the best performing local government, or should done correctly, fiscal resources are managed prudently, they also include performance-based grants? and activities produce the intended impact. • Accountability. To ensure that government is accountable 4. Nurturing collective action. When the state, private sector, and adheres to appropriate safeguards to ensure that it and civil society work meaningfully together, impressive serves the public interest with integrity. results can be obtained with high levels of public satisfaction. Malaysia’s ThinkCity provides a good example of such a These governance principles have shaped the design of successful initiative. Utilizing small grants and the power of successful reform programs in public service delivery around social networks to bring key stakeholders to the table, the world. In the Malaysian context, the reform agenda may ThinkCity created effective platforms to promote collective be framed around a local governance strengthening program action to solve issues and challenges, particularly in urban built on the following six pillars: areas (Khor and Benson 2019; Englehart and Khor 2019). 3 Improving Governance through Enhanced Citizen Engagement: The Case of Malaysia Similar initiatives around the country have emerged in 6. New generation of talent. For the creation of a demand- response to the vacuum created by the failure of the service driven public service, a new type of public official is required – delivery system to promote collective action. Malaysia and one who is as much focused on service delivery as becoming southeast Asia have a very long history of community action, a facilitator and interlocutor between the citizen and the as exemplified by the Malay term gotong-royong, which state. As more activities and processes get replaced by digital- loosely translates to group-work or collective action (Rao and AI-based systems, the function of public officials will also 2008). With innovative and successful Malaysian models change, with greater emphasis on relationship building with already in existence, what remains is to support the communities, problem solving, and strategic planning. This ecosystem and scale up. new generation of public official will need to possess skills that enable them to both engage with local communities and 5. Digital governance. The convergence of new communication manage intelligent machines. Ineffective old hierarchical technologies with artificial intelligence (AI) has created structures would need to be replaced by new network-based powerful new possibilities for local governance. The public organizational systems that understand the power of can now communicate with government agencies in real time informational flows that can deliver positive development and provide timely evidence-based feedback. Satisfaction outcomes. The current preoccupation with public-official with public service delivery can now be obtained with a high competency based on twentieth century metrics will quickly level of precision, identifying performance levels of specific become outdated as the demand for digital government units within agencies and individual officers. Systems are now increases rapidly, with its attendant need for a new generation being developed in Indonesia and India to give citizens the of citizen-responsive, tech-savvy talent. ability to collect and analyze their own survey data to track their well-being and the quality of public services. There are Conclusion many other new innovations on improving monitoring systems and feedback processes to improve the performance All over the world our familiar ideas of state and society are of ground level staff. (For more see http: // socialobservatory. http://socialobservatory.worldbank.org/categories/democratizing-data being reshaped by the power of information flows emanating worldbank.org/categories/democratizing-data, http://socialobservatory.worldbank.org/categories/democratizing-data Jakarta Smart from ever-changing and increasingly interconnected City initiative, https://govinsider.asia/ https://govinsider.asia/smart-gov/inside-jakartas- smart-gov/inside-jakartas-new-smart-city-hq/ networks. Older command-and-control governance new-smart-city-hq/ and https://www.brookings.edu/blog/future- https: / /govi nsi der. a si a / smart-gov/i nsi de-j a kartas-new-smart-ci ty-hq/ https://www.brookings.edu/blog/future-development/2019/06/07/can-technology-improve-service-delivery/ structures are no longer as effective in this new landscape. A development/2019/06/07/can-technology-improve-service-d https://www.brookings.edu/blog/future-development/2019/06/07/can-technology-improve-service-delivery/ new type of engagement based on network arrangements elivery/). These systems of citizen-generated data greatly aligning the state, the private sector, and civil society needs to facilitate participatory planning at the local level, provide higher take shape in the emerging new Malaysia and in many levels of government access to high-frequency census data countries around the world. Fundamental to this concerning the delivery of public services and citizen well-being, reconfiguration is the role of local governance in providing and improve performance monitoring of frontline staff. public services that are well matched to the needs of citizens. 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