KUALA LUMPUR, June 12, 2008 (AFP) - Corruption in Malaysia has reached a critical level as the country falls in international rankings, a graft watchdog announced Thursday, warning the government to act or lose its competitiveness.The UN's Asia-Pacific Human Development Report highlighted an International Country Risk Guide finding which saw Malaysia decline from a score of 4.00 in 1996 to 2.38 in 2006, with a lower score representing greater corruption.
"It is worrying because it is a business index which reflects on our domestic investment, foreign direct investment and confidence in the economy," said Ramon Navaratnam, country head of graft watchdog Transparency International.
"Corruption is at a critical level here," he said.
He said corruption in Malaysia was deeply entrenched in the negotiation of contracts. Bribes were paid to government officials to speed up trade licences, for police protection and for loan transactions.
"Our economic structure, the way we do business here, needs to be reviewed, renewed and redesigned," Navaratnam said, warning that Malaysia could lose its competitive edge if it remained "complacent and inefficient."
"Malaysia can do much better if there is stronger political will to fight corruption. Given the rapid pace of globalisation and increasing economic competition among Asian countries, it's time to pull our socks up," he said.
Prime Minister Abdullah Ahmad Badawi was elected on an anti-corruption platform in March 2004, but opposition leaders say progress has been slow.
Following his government's recent drubbing in national polls he announced several measures to tackle corruption and reform what many view as a compliant judiciary.
A royal commission recently authenticated a tape showing a top lawyer brokering judicial appointments with the help of politicians during the premiership of former prime minister Mahathir Mohamad.
Earlier this week, a senior judge said judges were indoctrinated and threatened with dismissal to pressure them into making pro-government decisions during the former premier's rule.