Journal of Contemporary Asia

ISSN: 0047-2336 (Print) 1752-7554 (Online) Journal homepage: http://www.tandfonline.com/loi/rjoc20

Money politics in Malaysia

Yik Koon Teh
To cite this article: Yik Koon Teh (2002) Money politics in Malaysia, Journal of Contemporary
Asia, 32:3, 338-345, DOI: 10.1080/00472330280000231
To link to this article: http://dx.doi.org/10.1080/00472330280000231

Published online: 14 May 2007.

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Money Politics in Malaysia

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Yik Koon Teh*

[Abstract: This article discusses the issue of money politics in Malaysia over the past two
decades. Firstly, it looks at the concept of money politics in Malaysia and how it is being
perpetuated. Secondly, it discusses the relevant laws in Malaysia that could contain money
politics. Lastly, the article concludes that Malaysia has the relevant laws to control money
politics, but they have not been enforced properly. Therefore, money politics has been allowed to persist rampantly in Malaysia.]

Money politics in the West has been generally taken to mean receiving illicit funds for
political campaigns. It had been a major issue in US with the Clinton administration
taken on trial for receiving campaign funds from overseas. In Malaysia, it had been frequently mentioned during the elections with the different political parties accusing each
other of engaging in money politics. However, in Malaysia, money politics also includes
using money, gifts, and contracts to "buy" supporters or voters, usually during elections.
Money politics is a form of corruption or bribery as the politicians are receiving
illicit campaign funds from individuals, businessmen or rich people who wanted something in return - especially government business contracts and joint business ventures.
The giving out of money, gifts, and contracts to buy supporters is also a form of corruption or bribery. Corruption had been defined by Nye (1967: 419) as, "...behaviour which
deviates from the formal du2ies of a public role because of private-regarding (personal,
close family, private clique) pecuniary or status gains; or violates rules against the exercise of certain types of private-regarding influence." Alatas defined corruption as the
subordination of public interests to private aims involving a violation of the norms of
duty and welfare, accompanied by secrecy, betrayal, deception and a callous disregard
for any consequences suffered by the public (Alatas, 1980: 12).
The money politics in Malaysia may be different from the West as Malaysian politicians, on their own or on behalf of their political parties, are allowed to hold business
posts (see Gomez, 1994). This practice was encouraged after the racial riot of 13 May
1969 where it became clear that there was deep racial discontent over the inequality in the
distribution of income and wealth among the different races in Malaysia - the Malays,
Chinese and Indians. The status quo seemed to benefit the non-Malays. The racial unrest
gave rise to the introduction o f the New Economic Policy (NEP), a two-pronged policies
for development to be adopted for a period of 20 years (Second Malaysia Plan, 1971: 1):
The first prong is to reduce and eventually eradicate poverty, by raising income levels and
increasing employment opportunities for all Malaysians, irrespective of race. The second prong
aims at accelerating the process of restructuring Malaysian society to correct economic imbal*School of Social Development, Universiti Utara Malaysia
Journal of Conteraporary Asia, Vol. 32 No. 3 (2002)

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ance, so as to reduce and eventuallyeliminatethe identification of race with economicfunction. The process involvesthe modernization of rural life, a rapid and balanced growth of
urban activitiesand the creation of a Malay commercialand industrial communityin all categoriesand at all levelsof operation,so that Malaysand other indigenouspeoplewillbecome
full partners in all aspectsof the economiclife of the nation.
The NEP required greater state intervention in resource allocation, as well as public
sector ownership and control of business enterprises. The public enterprises were set up
to help expand the opportunities for participation by the Bumiputras (Malays and other
indigenous people in Malaysia) in the commercial sectors through financial, technical,
practical, advisory and other assistance to help them start and sustain their own commercial ventures. The public enterprises took up share capital and held them in trust for the
Bumiputras until they were able to purchase them. Quotas were introduced in certain
areas to safeguard Bumiputras' participation, for example, a quota for the different business licenses. Subsidies were given to the Bumiputras in certain areas, for example, to
paddy farmers to help poverty reduction. The people who managed these public corporations and agencies were mainly politicians, Government officials and members of the
Royal households.
In 1987, Sieh reported that more than 900 Government companies and statutory
organisations in various activities and operations were set up (Sieh, 1987:17). The Government had provided loans worth ringgit 2.5 billion to Government-owned companies
and ringgit 14 billion to statutory organisations. The Government was guarantor for
loans amounting to ringgit 12 billion taken out by these corporations and organisations.
As the Government had set up different types of public enterprises and institutions to
help the Bumipulxas, the Chinese and Indian politicians and businessmen decided to do
something to help their own communities. They set up self-help collective business institutions. The Malaysian Chinese Association (MCA) set up Multi-Purpose Holdings and
the Malaysian Indian Congress (MIC) set up Maika Holdings. This trend still persists
today where UMNO has become a more active corporate player than the MCA or MIC.
Jomo (1990: 235) reported that, "In fact, it is openly acknowledged that business interests
now influence politics more than ever before in recent Malaysian history. For instance, at
the last general assembly of UMNO, the dominant partner in the ruling coalition, about
half the delegates were businessmen." The increasing involvement of ruling parties in
business became an important means to dispense patronage and also led to conflict-ofinterest situations and allegations of favouritism and corruption (Gomez, 1994: 7).
Malaysia, where its politicians and political parties are allowed to own and run businesses, is particularly prone to money politics. The opportunities for the nexus between
politics and corrupt money are in abundance. According to Teh (1994: 132), "Opportunities present themselves when the chances of detection are remote, the control or supervision system is inadequate and where moral stigma is absent. The opportunities are also
greater higher up the social and economic order where the chances of detection are fewer."
The businessmen or rich individuals with vested interest seldom hesitate to give money
to politicians for their political career in return for securing favours - especially business
favours. By involving in business, the political parties and politicians will develop ties
and relationships within the business network. This will expose the political parties to the

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JCA 32:3

opportunities and temptation of money politics which has been defined by Loh and Kahn
(1992: 2) as covering "a range of practices whereby the benefits of State economic sponsorship and protection are channeled to individuals, groups and private companies associated with the ruling political parties, in particular UMNO."
In 1990, Jomo reported that, "It is now widely believed that most new opportunities
for wealth accumulation are crucially determined by political access rather than entrepreneurial ability" (Jomo, 1990: 231). He said that, "It is a well known fact (although there
are no actual data) among Malaysians that many business politicians and politically wellconnected businessmen have secured businesses from the public sector projects and policies" (p. 236). The business opportunities, both legal and illegal, opened to politicians
who are entrepreneurs as well as decision-makers are extensive. The New Economic
Policy where the Government tried to upgrade the living standard of the Bumiputras as
well as to eradicate poverty, has created ample opportunities for politicians and the politically well-connected to make money through development projects. As Ahmad Noordin,
the then Auditor General and leader of the Committee of Enquiry into the Bumiputra
Malaysia Finance scandal, said, "Politics in Malaysia is the art of possible" (Teh, 1994;
236). It is widely believed that wealth, especially new wealth in Malay hands, has little to
do with entrepreneurship. It depends on the right political connection.
The get-rich syndrome is not confined to politicians and the politically well-connected businessmen and rich individuals. In 1986, Aliran reported that the then Attorney-General, Abu Talib Othman, was made chairman of the Malaysian Building Society, a prominent financial institution controlled by the Government (Aliran, 1988:181).
The conflict of interest would no doubt occur.
Money Politics and the Election Laws in Malaysia
The definition of money politics in Malaysia includes:
1. Getting illicit campaign funds from business people and rich individuals with vested
interests;
2. vote buying during elections.
The practise of money politics has been made illegal by the election laws in Malaysia such as the Election Acts 1958, Election Offences Act 1954, and Election Regulations 1981. Section 7 to section 10 of the Election Offences Act 1954 clearly made
provisions for bribery and corruption, undue influence and threats used on voters, and
treating voters during elections. The laws also cover corrupted acts that are carried out
after the election which are connected to influencing the decisions of the voters during
elections. For example, section 10(h) of the Election Offences Act 1954 stated that a
bribery case has taken place during the election if:
every person who directly or indirectly, by himself or by any other person on his behalf, on
account of and payment for voting or having voted or for agreeing or having agreed to vote for
any candidate at an election, or on account of and as payment for his having assisted or agreed
to assist any candidate at an election, applies to such candidate, or to his agent or agents, for
the gift or loan of any money or valuable consideration, or for the promise of the gift or loan of
any money or valuable consideration or for any office, place or employment or for the promise
of any office, place or employment.

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Section 19 of the Election Offences Act 1954 stipulates the maximum amount of
money that a candidate can use as election expenses. The maximum amount at present is:
a. Ringgit 50,000 in the case of an election to the Dewan Rakyat (Parliamentary seat);
b. ringgit 30,000 in the case of an election to a Legislative Assembly (state election);
c. ringgit 10,000 in the case of an election to a local authority other than a local
council;
d. ringgit 3,000 in the case of an election to a local council.
As for the last two posts, they are now being appointed by the government instead
of going through the election process. Besides the election laws, Malaysia has an AntiCorruption Agency (ACA) to deal with corruption cases. Under the Anti-corruption
Agency Act 1982, the Director-General of the agency has the powers of a Deputy Public Prosecutor under the Criminal Procedure Code and all the powers of the agency. The
act also stated that an officer of the ACA should be deemed to be a police officer and
should have all the powers and immunities of such officer appointed under the Police
Act 1967 and the Criminal Procedure Code, and any written law should be construed
accordingly. This means that section 21 of the Prevention of Corruption Act 1961 would
apply to the officers of the ACA which stated that:
Whenever it appears to arty officer of or above the rank of Inspector that there is reasonable
cause to believe that in any place there is a concealed or deposited any evidence of the commission of an offence under this Act, or of any prescribed offence; and the police officer has
reasonable grounds for believing that by reason of the delay in obtaining a search warrant the
object of the search is likely to be frustrated, he may exercise in and in respect of the place all
the powers mentioned in subsection (1) in as full and ample a measure as if he is empowered
to do so by warrant issued under the subsection.

Malaysia clearly has adequate laws and machinery to control money politics. However, it is still rampant. The illicit campaign funds are usually welcomed by many politicians as political campaigns in Malaysia are very expensive and competitive, for example, when the then vice-presidents of UMNO, Musa Hitam and Tengku Razaleigh,
vied for the post of Deputy Prime Minister in 1981, each took blocks of rooms at leading hotels in Kuala Lumpur for the last few days before the party assembly and filled
them with state delegates and supporters, all expenses paid (Teh, 1994: 233). Musa
won, but had to go through the same contest in 1984. When he resigned as Deputy
Prime Minister in 1986, he told the Prime Minister he had not wanted to contest in 1984
because he "could not afford it" (Far Eastern Economic Review, 2 April 1987). The
aspiring politicians with no money of their own have to play the game by the same rules
when they compete with their opponents. If they do not have access to huge financial
resources, they must have wealthy friends or backers who can help further their career.
When they win the election, they will be able to repay the favours through business
contracts. It is a vicious circle.
In Malaysia, where politics and business can be legitimately mixed together, money
politics can be covered up in many ways. The illicit campaign funds can be covei'ed up
as business dealings (see Gomez, 1994).
Vote buying takes many different forms. They can, however, be categorised into
two categories - direct and indirect buying of votes. The direct way is used mainly
during election time where money and presents are distributed to voters. The indirect

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way is done over the long term to win the support of the people, for example, giving
government business contracts to the supporters, approving development projects at
the supporters' area and nominating the supporters as office bearers at sometocal community organisations.
The forms of vote buying in urban areas are different from the rural areas. In the
urban areas, where the polity is richer, more sophisticated, educated and well informed,
the bribes given will be more costly. There were reported cases of direct vote buying
such as giving luxury holidays overseas to the voters, expensive pens, hotel accommodation, endless rounds of lunches and dinners at leading hotels and cash payment of a
few hundred ringgit per voter. For indirect vote buying, the preferred method involves
business contracts or joint venture projects with the government. Other methods include helping individuals secure employment in the public or private sector, helping
hawkers, petty traders and owners of entertainment outlets to get the necessary permits,
and helping individuals to secure scholarships or a place at educational institutions.
In the rural areas, where the polity is poorer, less sophisticated, less educated and
less informed, the bribes given to the voters are simple compared to those of the urban
dwellers. There were reported cases of direct vote buying such as giving away batik
cloth, rice, lavish meals in restaurants, cows and chickens for village celebrations, cellular phones, free trips to Thailand and Indonesia, free hotel accommodation, cash payment of ringgit 200 to ringgit 300, subsidies to farmers and ferrying delegates to the
polling stations. The indirect vote buying includes approving development projects as
the rural area has poor infrastructure. The poor and less educated rural voters are generally very easy to please. The Members of Parliament have access to ringgit 300,000 of
the slush funds called minor-rural-project fund (MRP). The MRP allows the incumbent
Members of Parliament to sign a note to the District Officer to release the money. Such
a privilege is not accorded to the Opposition Members of Parliament, thus, putting them
at a disadvantage. The Ministers get additional MRP from their ministry which they can
pour into development projects in their constituencies.
In 1986, Shamsul reported many cases of "buying off the opponent" in the rural
kampungs such as awarding o f low cost h9uses in the politician's constituency to a
loyal supporter, even though he or she may not be qualified or deserving it, for his or
her past political contribution and for his or her continued support in future (p. 218);
purchasing of sports equipment for local teams, contributing towards the crockery tontine fund (kutu pinggan) (p. 223); and buying jerseys and other equipment for the soccer and sepak takraw (Malay ball game) teams of the kampung.
Among the worst reported cases of mass buying of votes occurred in Sabah from
the early 1960s to late 1980s when the Government, under Tun Mustapha and followed
by Datuk Harris Salleh, gave every adult Sabahan about ringgit 60 through the Sabah
Foundation just prior to every Sabah state election.
Besides money politics, other dirty tactics of getting votes were used. A branch
leader related that a delegate from his branch who managed a school canteen was subtly
threatened that his contract would not be renewed if he continued to support a certain
candidate (The Star, 1 April 1998).

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Conclusions and Suggestions

The Prime Minister of Malaysia, Mahathir Mohamad, first publicly acknowledged the
growth of money politics in UMNO during his speech at the 35th UMNO general assembly in 1984 (Khoo, 1995; 258). He again admitted that members of his ruling political party were corrupt in June 1994 (The-Time, 20 June 994). He said that rising wealth
and power among Malays and other groups represented by UMNO had created "individuals who are morally decayed..... We no longer choose people who are qualified and
capable in terms of party leadership caliber. We choose people who offer us money or
gifts or other things." Till today, the Prime Minister continues to admonish politicians
for practising money politics and has admitted that it is still being rampantly practised
among unscrupulous politicians.
In 1993, the Economist reported that money politics had become rampant in Malaysia. The article quoted Tengku Razaleigh, the ex-Finance M~nister of Malaysia and
also the leader of the dissolved opposition party, Semangat '46, "Everything is on offer
there (UMNO) - money, women, shares, company directorships. It's corrupt to the core"
(The Economists, 6 November 1993).
In March 1997, a High Court judge ruled that "vote buying was so extensive (that) it
had affected the election result" in the BukitBegunan state constituency in the September
1996 Sarawak state election. (Chin, 1998: 401). There was clear evidence including photographs showing cash being handed out to voters just prior to the voting day.
At the 1998 UMNO division elections, money politics was rampant. The Selayang
UMNO division chief, Datuk Saidin Thamby, claimed he was being blackmailed into
not defending his post. He said that a Datuk had promised him ringgit two million if he
could ensure a bid for a project was successful and admitted to receiving ringgit one
million for services rendered. He also said that he met the Selangor Chief Minister
twice before the project was approved (The Star, 1 April 1998). Another UMNO division chief, Abdul Rahman Sulaiman said, "I saw it happening in my division - the way
some contenders distributed money, we could be misled into thinking that it was either
Haft Raya (Muslim celebration) or the Chinese New Year when the ang pows (money
packets) were in abundance" (The Star, 27 March 1998).
It cannot be denied that money politics is still rampant today in Malaysia although
the Government has tried to curb all forms of corruption. Since Malaysia received its
independence, the Government had launched three big campaigns against corruption.
The first was in 1970s when the then Prime Minister, the late Tun Hussein Onn, said
that he would arrest anyone practising corruption, be they mousedeer or dragons. The
second time was in the early 1980s, when the Mahathir Government launched the "Clean,
Efficient and Trustworthy" campaign after the country was wrought with a number of
major financial scandals. In mid 1997, a Bill to amend the Prevention of Corruption Act
1961 was introduced. The Government said that "the big ones and the small ones will
not be spared" (The Star, 20 July 1997). In conjunction with the introduction of the Bill,
a conference on "Consensus Against Corruption" was held on 19 July 1997. The Attorney General, Tan Sri Mohtar Abdullah, was invited, but he declined the invitation. It

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has yet to be seen whether this attempt to control corruption will be successful or just
another political pity to improve the image of the ruling party.
In 1996, Chandra Muzaffar, President of the International Movement for a Just
World, raised the question of whether money politics in Malaysia was the actual disease
or was it merely the symptom of a more complex ailment (The Star, 5 September 1996).
He said that money politics within UMNO had developed as a result of other trends and
attitudes present in the Malay community and the Malaysian nation. This was because
in the last twenty years, UMNO had come to be perceived as the key that opened the
doors to fabulous wealth and riches. A position of power or influence within the party
hierarchy was seen as providing easy access to lucrative contracts, licenses and shares.
This was one of the main reasons for the intense competition for position and power.
Party activists and delegates had learnt to use their votes to extract favours from party
elites. He said that, "the umbilical cord that binds power to wealth has to be cut if
money politics is to be checked. Otherwise, power and position within UMNO will
continue to be seen as a passport for the acquisition of wealth. What seems to be emerging within UMNO is a subculture of sorts that views the very dignity of the Malay
community in terms of the number of millionaires it has produced. It is erroneous to
argue that the dignity or the economic strength of a community is dependent upon the
number of millionaires it has." His last comment was a criticism on a statement made
by the Prime Minister, Mahathir Mohamad, in the late 1980s - " ... in trying to redress
the imbalance it will be necessary to concentrate your effort on the Malays, to bring out
more Malay entrepreneurs and to bring out, and to make Malay millionaires, if you like,
so that the number of Malays who are rich equals the number of Chinese who are rich,
the number of Malays who are poor, equals the number of Chinese who are poor and the
number of unemployed Malay equals the number of unemployed Chinese, then you can
say that parity has been achieved" (Muzaffar, 1989; 17). The practice of allowing politicians and political parties to own businesses and/or taking an active part encourages
conflict of interest and money politics. In Malaysia, it cannot be denied that the practice
has become rampant and may already be part of the system.
The election and anti-corruption laws in Malaysia are clearly adequate. The problem
lies with the adherence to these laws. The vfte buying through distribution of gifts has
been done openly in front of the police and other officials. The practice seems to have
become an acceptable act during elections in Malaysia. It is not surprising that election
campaigns are costly affairs as candidates will have to try to outdo their opponents with
their bribes. It is not surprising that the opposition parties frequently claim that the ruling
party's expenditure during electoral campaigns far exceeded the stipulated maximum of
ringgit 50,000 for a parliamentary constituency and ringgit 30,000 for a state seat.
In addition, political parties should be required to publicly declare the donations
and contributions they have been receiving. This is a safeguard against corruption by
political parties as well as by business people who are tempted to use their wealth to
influence the Government decisions. It is also to ensure that the political parties are
accountable for their future actions, specifically in their dealings with their donors.
The Anti-Corruption Agency should be given a more prominent role during election

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campaigns. An ACA officer may be sent to every election campaign to ensure that vote
buying and other corrupt practices do not take place. The ACA should be given more
prosecutorial powers instead of leaving the decision of a case to the Attorney General.
Money politics like fraud and corruption will occur as long as there is a) the opportunity to commit them; and b) the perpetrators feel that they could get away with it. The
perpetrators will get away with it if nobody complains about the corrupted act. The fault
also lies with the general public for accepting the bribes and voting for the perpetrators.
Many voters do expect gifts to be given for their votes during elections. The problem
seems to have become part of the election culture in Malaysia. As a local commentator
recently wrote, "If we choose a morally questionable person because he has money to oil
his election machinery and is willing to present himself as an upright person, we must
accept the risk of living with his moral standard and values" (New Straits Times, 15
March 1998) - the society deserves the corrupt leaders whom they support.
Although money politics is a deep seated problem in Malaysia, it is not confined to
Malaysia. It occurs in many countries. The dynamics of money politics is very similar in
these countries. For example, the United States of America has highlighted the problem
of money politics as evidenced by the controversy surrounding political donations given
to the Democratic Party during the Clinton administration to influence decisions. The
illicit donations have crossed boundaries and international waters as China and Indonesia
have been linked with contributing to the campaign funds of the Democratic Party. The
laws in US forbid foreign governments from contributing to political campaigns.
In conclusion, money politics can only be eradicated if the politicians and the public are sincere in their efforts to eradicate it. The existing laws, if adhered to properly,
should have controlled the problem. However, the effort is not there to enforce it properly and the problem has been allowed to persist.
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