KUALA LUMPUR: The government will table new legislation or amend laws to curb "Ali Baba" practices and rent-seeking, but an economist believes regulating such practices would make more sense.
Williams Business Consultancy Sdn Bhd founder and director Dr Geoffrey Williams said it would make no economic sense to criminalise Ali Baba practices as making them legal would allow them to be regulated and taxed while adding value to the economy.
He said no money was lost through the practice of Malaysians subletting licences and concessions to foreigners.
"No money is lost because all economic activity takes place in Malaysia and stays here, mostly in small businesses."
He said money was only lost or sent overseas in "grand corruption" schemes and added that major projects were heavily regulated, limiting Ali Baba activity in big businesses.
Economy Minister Akmal Nasrullah Mohd Nasir had said existing laws, including local by-laws prohibiting licence transfers, were inadequate to address the practice.
"The challenge right now is that the practice of selling licences or these 'Ali Baba' arrangements is not defined as a criminal offence.
"Therefore, assessing the need for an anti-rent-seeking law is important to enable the practice to be defined as an offence," he told the Dewan Rakyat.
Williams said criminalising the practice would create more enforcement problems and increase opportunities for corruption.
He said licences and concessions given to Malaysians were assets that should be freely transferable.
"If they want to sell those to Malaysians, they can do it. So why not let them sell to foreigners? If foreigners have money to buy licences and concessions, let them spend it. If they want to run companies, invest and employ people, let them do it."
Williams said regular renewals would prevent permanent transfers of licences to foreigners.
Criminologist Kamal Affendi Hashim said parties that awarded projects must be held accountable to curb Ali Baba practices, but maintaining proper oversight was good to provide checks and balances,
He said while any changes to existing laws were welcome, authorities must prepare for unintended consequences that may follow strict criminalisation.
"The jail time by itself is a good deterrent. But bear in mind that this same threat will push rent or lease fees higher.
"It may affect the quality or delivery of the project if the third party decides to proceed and pay."
Kamal said investigators have various tools and techniques at their disposal to detect suspicious activity and confirm any wrongdoing.
He said a database of contractors, for instance, served as a primary tool for investigators to verify credentials and genuine project handlers.
He added that authorities could also obtain financial records after a project was completed to detect anomalous transactions.
"It is not hard, but it does require in-depth investigation and different techniques."
Kamal added that process control standards dictate that genuine business transactions must remain completely transparent.
"Under these standards, any deviation from established controls must be treated as a red flag unless proven otherwise."
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