The World Bank Approach to Public Sector Management 2011–2020 : lessons from the Malaysian experience

Introduction

In the World Bank’s new Approach to Public Sector Management 2011–2020, the Bank makes a number of observations on why public sector management (PSM) reforms have so often failed and on what should be a more sustainable approach to reform. This commentary focuses on two key observations to see how the Malaysian experience validates them – or otherwise. The first observation is that so-called ‘best practice’ is a weak basis for reform. Reforms that are diagnostic and problem-solving in nature have a better grounding in the specific reform context, the Approach argues, and therefore a better chance of success. The second observation is that an enabling environment – in terms of implementation and political commitment – is crucial.

Comparing and contrasting ‘best practice' and diagnostic approaches to reform

The World Bank’s Approach acknowledges (rather belatedly from the viewpoint of a particular country like Malaysia) that context is everything. Reforms based on thorough diagnosis are steeped in context; reforms based on ‘best practices’ tend to ignore it. Yet reforms in developing countries, especially, benchmark best practices. In the author’s experience, that is because they wish to be seen as modernizing in the eyes of an increasingly sceptical society that has a firm expectation of mediocre public service delivery. However, such reforms do have some substance as well as form: the drive to adopt best practices is also a response to the demand for reform by a political leadership that seeks tangible improvements in service delivery.

Thus best practices have, in part, a legitimizing function which should not be underestimated: reforms which lack legitimacy will not prevail. However, for them to go beyond legitimization to concrete service improvement, they need to be adapted to the host country’s environment. That means that the ‘best practice’ must be orientated to a specific problem of service improvement in a specific society.

So much by way of theoretical preamble. Turning to Malaysia’s experience, we can see that ‘best practices’ have indeed shaped Malaysia’s reforms. For example, privatization and corporatization initiatives have drawn from the UK experience, with the intention of injecting market principles into service delivery, while performance-based budgeting was framed to secure value-for-money in public expenditure. Likewise with the ISO system of quality certification, total quality management, productivity improvement, league tables of service performance, clients’ charters and electronic government: these were international ‘best practices’ that addressed the broad issue of services improvement (MAMPU, 2010).

Given their broad remit, individually these best-practice reforms have had a limited impact. Witness, for example, performance-based budgeting. After 40 years of experiment, the specific techniques of outcomes measurement and programme evaluation are still only limping along. Malaysia’s performance-related pay reforms since 1992 have attracted international attention, but in truth they never had any appreciable impact upon government performance. The most recent and significant attempt at performance-related pay in 2012 had to be abandoned amid public sector union pressure. The observance of other ‘best practices’ such as the ISO, TQM and quality control circles which are still in force has been more in form than in substance (McCourt, 2012; Siddiquee, 2010; Xavier, 2009).

Among those Malaysian reforms, it is arguably the reforms that were most specific regarding the problem to be addressed that had the greatest success. For example, inspired by the success of the performance management and delivery unit of Tony Blair’s Labour government in the UK (Barber, 2008), the latest major reform initiative, the Government Transformation Programme (GTP), identified seven specific problems to be resolved: corruption, crime, cost of living, poverty, access to quality preschool education, urban transportation and rural infrastructure development. In particular, the identification of those seven problems was based on public consultation and opinion polling. GTP is still a recent initiative at the time of writing and is controversial among observers. However, there is plausible evidence, including from independent assessors, that there have been real service improvements (McCourt, 2012; PEMANDU, 2011).

Notwithstanding that GTP was a ‘best practice’, its success must be put down to its diagnostic and consultative nature.

Our Malaysian experience makes us less inclined to dismiss the earlier ‘best practice’ reforms than is the World Bank. Those reforms were successful in legitimizing reform, partly because the coherence of the imported ‘best practice’ models provided an overall narrative for the reform initiative. At least the overall purpose of the reforms could be easily understood. Also, framing a reform as ‘best practice’, probably – if we are candid – with some degree of vagueness, intended or unintended as the case may be, was a way of neutralizing potential opposition from the very different and sometimes antagonistic stakeholders that the reform had to satisfy. Third, and probably most importantly, successive reforms have built on previous ones: past failures have been the paradoxical foundation for present success, through the momentum for change and the systems and processes that the previous reforms generated.

Having said all that, we recognize that we are implicitly conceding that those earlier reforms did not have a substantial impact in the end. And here the World Bank’s analysis seems to us to be correct: they failed because they were insensitive to the Malaysian context and its specific problems.

However, we are less sanguine about another aspect of the World Bank’s analysis. It advocates a targeted approach to reform which creates islands of success in the targeted areas of focus, even while the larger bureaucracy carries on undisturbed. Malaysia’s GTP is almost a textbook example of an ‘island of success’, but not wholly in the positive way that the World Bank assumes. While the seven national key result areas of the GTP get the concentrated attention of the government in terms of implementation and resource allocation and, therefore, discernible improvements in service delivery are apparent in those focus areas, for the larger bureaucracy it has been ‘business as usual’. A senior Malaysian official remarked in one of the interviews conducted in the preparation of this article that ‘The transformation programme is an island. Where the work involves [GTP] … you see pockets of success … [I]f it is [GTP] work, everything is urgent and things move. If it is not … people don’t see the urgency.’ Another senior ministry official sighed, ‘How nice … if it [urgency] is the same throughout.’ In that respect, this ‘islands of success’ approach to reform has caused a balkanization of PSM, with different sectors of the bureaucracy operating at different speeds.

Implementation is important for successful reform

Another important criterion for reform success – which the World Bank merely alludes to but which Malaysia’s experience highlights – is reform implementation. In pinpointing service delivery issues and their solutions, central top-down bureaucratic fiat will not do the trick, even though that has been the approach taken with past best-practice reforms. In the fashion of GTP ministries, public and businesses will have to be consulted as equal partners in determining areas for service improvements and developing implementation roadmaps (McCourt, 2012; O’Flynn, 2007).

For example, the GTP solicited the views – and, consequently, the commitment – of all the relevant stakeholders through ‘laboratories’. These laboratories assembled civil servants from related agencies and other relevant representatives from the private and third sectors. For six weeks at a stretch they spent all their time on defining the issues in service delivery and detailing an implementation plan. In describing the work of the laboratories, one director in the performance management and delivery unit of the prime minister’s department (PEMANDU) remarked, ‘We took a 30,000-foot-high agenda and developed a three-foot-level of implementation detail.’ Open days linked to the laboratories solicited public feedback on the national key result areas and on the implementation roadmap.

Such consultation and commitment, combining top-down and bottom-up approaches, have ensured that the reform effort has not proceeded solely under the steam of the central authority but on the combined strength of all the parties concerned, creating a momentum at the implementation stage which had been absent from previous reforms, including in Malaysia.

Understanding Malaysia’s implementation experience: resources and political tenacity

There are two additional reasons why Malaysia’s recent reforms have been implemented in full. The first reason is resources. Substantial reforms require substantial resources (Chan and Mourbourne, 2006). Here we discover a subtle connection with the diagnostic approach. Having a reform agenda with a firm diagnostic basis made policymakers more confident that the money – US$3.07 billion was budgeted for GTP initiatives in 2011 alone – would result in tangible improvements.

The second reason is Malaysia’s sheer tenacity in persisting with its reforms, buffeting the public service with one reform after another.

Much of this tenacity can be attributed to the long and uninterrupted reign of the ruling coalition since independence in 1957, leavened by just enough political competition to sustain the appetite of the political leadership for service improvements, believing as they did that the improvements would be critical at the ballot box. Indeed, the lack of service delivery improvements which citizens felt they had been promised contributed to what by Malaysian standards was a disastrous performance by the governing coalition, the Barisan Nasional (National Front), a performance to which the Barisan reacted by unceremoniously disposing of its leader and Prime Minister, Abdullah Badawi.

Political leadership alters the reform landscape

The World Bank argues that to change the way governments operate requires the highest level of political commitment. In Malaysia, each change in political leadership brought its brand of reform for the public service. Tunku Abdul Rahman, the first prime minister (1957–70), focused on administrative development. His successor, Tun Abdul Razak (1970–74) redirected that focus to promote rural development. Mahathir Mohamed (1981–2003) unleashed a slew of administrative and economic reforms to inject efficiency into the public service. These ranged from the mundane – name tags, machines for public servants to clock in and out – through massive privatization and corporatization of government agencies in a Thatcherite fashion, to heavy industrialization along the Korean and Japanese economic models. His successor, Abdullah Badawi (2003–08), focused on cutting bureaucratic red-tape, human capital development and outcomes-based performance management.

To demonstrate responsive governance, the present Prime Minister Najib (2008–present) made ‘1 Malaysia, People First, Performance Now’ the rallying cry for GTP, and its sister Economic Transformation Programme. In heeding the disgruntled voice of a public that was increasingly disenchanted with a bloated public service without commensurate improvement in public services, Najib downsized the number of ministries to 24 (from the previous 33) and put the brakes on the size of the public service.

Poltical commitment to improvements in service delivery was tangible and remains so. For example, Mahathir wore a name-tag and chaired all nine meetings of the cabinet committee that produced the performance-related remuneration system (McCourt and Foon, 2007). He spearheaded the public–private partnership under the Malaysia Inc. policy. The current prime minister, or his deputy, has individual meetings with the ministers responsible for the seven national key result areas every month, and with the rest of the Cabinet every six months, to review their performance against key performance indicators (KPIs) set by the prime minister himself (Iyer, 2011). Such political commitment lends credence to the view that polls are won or lost on the back of service delivery improvements.

Conclusion

Our review of Malaysia’s reform experience leads us to broad agreement with the World Bank’s new Approach. Ultimately, the World Bank is right: there is no ‘correct’ or ‘best-practice’ path to reform. Overall, the Malaysian approach to reform supports and, indeed, exemplifies the problem-solving approach Moreover, our analysis has shown the latent benefit of the process of diagnosis in generating political commitment at the highest level which, in turn, generates resources and the commitment of the bureaucrats, including at street level. The diagnostic approach also allows for greater participation of all relevant stakeholders, including the public, in problem definition as well as problem resolution. ²

Yet we caution against dismissing reforms inspired by ‘best practices’ with a broad agenda to improve efficiency in government, especially where successive reforms build on past efforts. In Malaysia, relating reforms to international best-practice models has provided a reform narrative that might otherwise be lacking, and has also deflected opposition from stakeholders who might otherwise have opposed reform: this legitimizing aspect of ‘best practice’ should not be discounted. Finally, the present author’s hands-on role in Malaysia’s reform leads him to emphasize the importance of the implementation stage of reform, something that is not highlighted in the Approach; and, in doing so, to point to the way that the diagnostic process can generate a powerful momentum for reform – an unexpected but very significant final advantage of the problem-solving approach.