We know the story of Ali Baba and his 40 thieves. The legendary Tan Sri P. Ramlee created a satire to poke harmless fun, depicting the uncontrolled greed of Ali's brother, Kassim Baba.
In the business world, the Ali Baba company in China has made impressive economic gains in the Internet domain, becoming a global brand.
But, in Malaysia, the "Ali Baba" business model is about making money through rent-seeking, where individuals obtain business licences, often through political patronage, and rent the rights to a partner. Such practice has existed for decades in the country.
Most people are aware of the practice, but there has been little attempt to stop it.
Thriving under the cronyism ecosystem, it has denied more capable individuals from venturing into business without having to endure unfair competition from Ali Baba businesses.
A recent announcement by the current Madani government to put a stop to such unsavoury business practice has been lauded by many.
According to experts, the Ali Baba business arrangement has bled billions from government coffers.
Economists say as a country blessed with abundant natural resources, Malaysia could have become a developed nation much earlier.
Instead, we continue to wallow in the middle-income category. Unless we take immediate steps to rectify the system, many predict the country will sink deeper into economic malaise.
A recent report by an international group of economists has warned that as issues of sustainability confront the world, many economies will succumb to economic obscurity.
Kudos to the government for deciding to take bold steps, which may be unpopular to some, to end such rent-seeking business culture.
To address the issue of rent-seeking business practices in Malaysia, experts have long prescribed measures. Many are already in place, but enforcement is a challenge.
One has to do with anti-corruption laws and regulations to combat rent-seeking behaviour.
An independent anti-corruption agency has also been established with sufficient authority and autonomy to investigate and prosecute cases.
Even the suggestion to pro-mote a culture of integrity and ethical behaviour through awareness campaigns and training programmes has long been taken up.
Some gaps may still exist in the transparency of government procurement processes, licensing and permit approvals. They may need further enhancement to reduce rent-seeking opportunities.
Many have suggested implementing open and competitive bidding processes to ensure equal access and fair competition among businesses.
There have also been suggestions to further simplify regulations to minimise bureaucratic hurdles and reduce red tape. The aim is to make it easier for businesses to comply with regulations.
A dedicated team should be put together to review and eliminate outdated regulations that contribute to rent-seeking practices.
Encouraging competition through market liberalisation, and promoting a level playing field for businesses should be given serious consideration.
We already have an independent competition authority to prevent such market distortions. Robust public procurement processes with clear criteria and more transparency are also useful.
Regular audits and monitoring of public procurement activities are a must to detect and prevent unsavoury practices. There have been suggestions to establish mechanisms to protect those who expose rent-seeking practices, providing them incentives and legal protection.
The judicial system has been under a lot of pressure lately. There is a need to enhance the independence of the judicial
system to ensure fair and impartial adjudication of rent-seeking cases.
We must promote public trust in the judiciary by fostering transparency, accountability and professionalism.
Other measures include encouraging businesses to adopt and enforce strong codes of conduct and ethical standards. Implementing such measures requires an approach involving the collaboration of government agencies, private sector entities, civil society organisations and the public.
By addressing rent-seeking practices and fostering a transparent and competitive business environment, Malaysia will be able to promote sustained economic growth and ensure equitable opportunities for businesses, as well as incentivise a more robust culture of innovation and entrepreneurship.
The country has performed poorly in innovation, a prime denominator of competitiveness. And, there is no doubt that the rampant Ali Baba rent-seeking culture has contributed much towards stifling innovation and true entrepreneurship. Not too late to reform!
* The writer is a professor at the Tan Sri Omar Centre for STI Policy, UCSI University