(Agencies)
Updated: 2007-12-26 10:00

Since the drive was launched, businesses have reported improved service from customs and immigration staff. On the whole, however, complaints about sluggish bureaucrats and tardy service are still common.

Malaysia was ranked 24th in the World Bank's 2008 index on ease of doing business, down three places from 2007. It was behind Hong Kong and Thailand but ahead of South Korea, the Chinese mainland, Vietnam and India. Singapore topped the list of 178 economies.

CHANGING MINDSETS

Overseas investors helped build Kuala Lumpur's iconic twin towers and the main highway, which spans the length of the peninsula, while global oil majors are developing multimillion dollar energy fields in Malaysia.

But foreign companies have complained that the regulatory authorities sit on applications to set up offices here, and local businessmen allege that government officials have asked for payment in return for state contracts.

The government awards state contracts through open tender but in some instances it has expedited the process by shortlisting only proven contractors and then awarding the job to one of them.

Malaysia wants to attract foreign dollars into its Islamic finance industry to build on its success as the world's largest Islamic bond market.

The authorities are also setting up a $105 billion, electronics, food, health and education hub in Johor state in the south.

It also wants to transform its Malay heartland in the northern states of Kedah, Penang and Terengganu into a farming, tourism, energy and manufacturing powerhouse.

But its plans are at risk of foundering as it struggles to galvanize its roughly one million public servants, despite wielding the stick.

"The government might want one thing but the culture of the civil service might not react to it," said political analyst Ooi Kee Beng of Singapore's Institute of South East Asian Studies.

"That's the tough part to change: you can change the rules and all that but how do you, down the hierarchy, actually get people to work?" Ooi said.

In the Malaysian civil service, rewards are modest, punishments are few and jobs are usually secure for life, which offers little incentive for improvement.

Public servants are almost all ethnic Malays, due to an affirmative action policy which favors the race in jobs, education and business.

FALTERING ANTI-GRAFT DRIVE?

In the World Bank's Doing Business Index 2008, Malaysia got good marks for investor protection but scored less well for enforcing contracts, registering property and starting a business.

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