In Malaysia, the local government is the third level of government after state and federal government, called as Pihak Berkuasa Tempatan (PBT) (Hussain, 2002; Norris, 1980; Nooi, 1997; Nooi, 2008). As stated in the Federal Constitution in 1957, the local
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governments are under the jurisdiction of the state government and the federal government. Under this Constitution, local government is one of the matters reserved for the state government, and Clause 76 (4) of the Constitution highlighted that the federal government has the authority to make laws to achieve equality in policy and law (Ineh, 1975). This means that any policies and aims decided by the federal government and the state should be accepted and implemented by all the local governments, except for the Federal territory subject to the minister in charge of the affairs of the Ministry of Housing and Local Government (Hussain, 2002).
Figure 2. 1: Malaysian Local Government System Level of Governments
Federal
Authority only to Certified Bodies
State Local Government/ District Advisory Committee Authority
Advisory, Liaison and Inspection
(Source: Hussain, 2002) Cabinet Ministers Branch Department Local Governments/ Federal Territory State National Council for Local Government Municipalities Mayor Secretary Departments State Local Government Committee District Councils President Secretary Departments
The content of power and regulation as stated in the Federal Constitution 1975 can be seen in the flow of authority between federal, states and local government as shown in Figure 2.1. This relationship shows that the federal government has the authority over branches of the councils. At the top, the federal government has full authority to determine policies and local government laws to avoid any conflict with central government as well as to give advice, provide technical support and maintain
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administrative reform. In certain cases, the federal government cooperates with the state government to produce policies or new administration for the local government (Hussain, 2002).
These three inter-governmental relationships were developed in the Malaysian federal constitution when the nation obtained its independence in 1975 (Nooi, 2008). The main concern was to have a balance between the need for a strong central government at the federal level, the right and powers of the states and the expectations and needs of the local level (Sheridan & Groves, 1987). However, in practice, the division of power between levels of government reveals central bias, particularly when most decision making remains at national level, although some federal functions have been decentralised (Morrison, 1994). According to the Federal Constitution, each state is recognised as an independent tier of government exercising legislative and executive powers within constitutional limits; federal laws take precedence over those of the states if for any reason there happens to be conflict or inconsistency. However, in practice, frequently state governments are tied to the federal government in any decision.
In the early days after the establishment of local government, there was a problematic relationship between state and local governments and that sometimes intervention by the federal government was needed, particularly in relation to financial and political matters (Norris, 1980; Nooi, 1997). On many occasions, local governments were funded by the federal government rather than the state governments, which seldom offer assistance to their LGs, although the states have responsibilities towards LGs.
In the 1970s, extensive reforms took place when the Minister for Housing and Local Government implemented laws for LG policy in Peninsular Malaysia under the LG Act 1976. In addition, the National Council for Local Government (NCLG) was established in 1960 and given the responsibility for monitoring the uniformity of LG laws and policies in Peninsular Malaysia. Under section 95 A, the NCLG has an obligation to formulate policies to promote, develop, and control LGs through federation and for the administration of any laws relating thereto (Hussain, 2002; Nooi, 2008). This means that the federal government directly monitored and controlled the development of LGs.
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In fact, in operations, state and local governments work in a situation in which the federal government intervenes in politics, financial and economic matters. In this regard, the LG system leads to LGs frequently being unable to meet the challenges of change and deliver what is required. As a result, LGs cannot deliver services that fully meet the demands and needs of the communities. This situation gives the public a negative impression in their assessment of LGs’ performance. However, both, LGs and community are keen to provide more effective and efficient service delivery and encourage public participation. In 1976, a Royal Commission of Enquiry to Investigate the Workings of Local Authorities in West Malaysia proposed the redistribution of responsibilities between governments and encouraged public participation, but LGs still remain controlled by the centre with limited revenues and a minor role (Nooi, 2008).
In reality, the concept of decentralisation has not been put into practice in daily work and some studies suggest a new approach whereby, in order to provide better services to the public, traditional functions should be altered and privatisation of LGs introduced (Nooi & See, 2006; Singaravelloo, 2001). These approaches enable the reduction of local autonomy and strengthen an apparent trend towards re-centralisation in the federal-local government relationship (Nooi, 2008). Global influence and community awareness need changes in local government management, which has to reappraise its role and contribute to local affairs. Therefore, from time to time, governments have introduced different reforms to increase LGs’ performance in alignment with federal government public reforms. Thus, this study investigates the aspect of management in new reforms such as the Star Rating System for governments to increased human performance with a concomitant enhancement of public service delivery.
However, the traditional functions of LGs are mainly considered to be ‘housekeeping’ and to depend on their capability and ability. Specifically, the main functions can be categorised into five sections: Environment; Public Health and Cleansing; Enforcement and Licensing; Public Amenities; and Social Services and Development (Abdullah, 1992; Nooi, 1997; Zahari, 1991). The implementation of these functions depends to a great extent on the financial capacity and manpower availability to each council; therefore, the provision of services to the community varies between LGs. However, the current function and practice of LGs goes beyond only providing physical development; it must consider the federal government’s vision to produce knowledge workers (Adam
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2010; Government of Malaysia, 2008), which is likely to be achieved through knowledge-sharing practices. For example, in the SRS introduced in 2008, LGs not only obey the traditional functions that carry 50% of their evaluation, but also have 30% focused on management (refer to table 2.2), providing the link with the focus of this study which is to investigate the aspect of management in the LGs, specifically in terms of sharing managerial tacit knowledge.
Historically, the local government administration system in Malaysia is greatly influenced by the British local government system, as Malaysia is a former British colony (Abdullah, 1992; Hussain, 2002; Norris, 1980; Nooi, 1997; Nooi, 2008; Zahari, 1991). However, there is a slight difference in local government administration between these two countries. Malaysian local government operates within a federal system while Britain implements a unitary system (Hussain, 2002; Norris, 1980). In Malaysia, local government depends on the State government before going to the Federal government as demostrated in figure 2.2. If any problem a local government needs to discuss at State level remains unsolved, then it will be referred to the Federal government. Conversely, in Britain, local government deals directly with the National government. The British system consists of unitary states, governed by a constitutional monarch, and many sub- central governments – the Scottish Parliament, the Welsh and Northern Ireland Assemblies and several hundred local authorities are necessarily subordinate. Britain is fundamentally a federal state where associations of largely self-governing regions are united by a central or federal government (Wilson & Game, 2006).
Further, local governments in England, Wales, Scotland and Northern Ireland differ administratively from one another, but they play an important role for the local people and the nation at large. Local Councils are among the largest employers in England and Wales. Among other key areas, these local authorities offer job opportunities in education and social services. Local Government in England and Wales consists of district (County), district (Borough) and colonies (Parish). LGs in the two regions are organised in two different ways. In Wales and some parts of England, one layer of an "all purpose council" is responsible for all services and functions of local authorities, while in other places there is a system of two layers (a two-tier system) in which responsibility is divided between providing district councils and districts (counties). However, in Malaysia, councils are given a wide range of powers to make them not
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only service providers but also development-oriented, which exist at the discretion of the state government and can be transferred to Chief Minister of the state (Cheema & Hussein, 1978). Thus, local communities depend on the national and state governments rather than on local governments where local communities always looked to higher level of governments for the solutions for their problems. This led to a situation in which, in a conflict between a local government and a state government, the local people are likely to support the state government. For example, in the 1960s, when elective local governments were abolished by various state governments, there was no visible discontent or protest. Another environmental constraint on the development of local government in Malaysia is the lack of skilled manpower where the local government is unable to hire professional people on its own initiative, but must go through the federal government (Cheema & Hussein, 1978). In summary, the power and scope of local government in Malaysia is limited by state and federal government decisions, while the local government in the UK has its own power and autonomy in terms of the wider economic, social and environment of local residents.
In addition, Malaysia also practices a governance system where the mayor/president and councillors of the local government are appointed by the State government, which is different from most developed Western countries, which have a democratically-elected local government system (Tooley et al., 2010).
In the western countries such as the UK, local government members of the Council are elected by the local population every four years. They are responsible for making decisions on behalf of local residents in connection with matters of local services such as land use, transportation, waste and recreational facilities. Council members are also involved in the approval of the local authority budget and policy. In addition, they are involved in the appointment of chiefs and officers in decision making on the constitution. Local councils are often investigated very carefully and thoroughly to ensure their effectiveness and efficiency in providing services. One way in which this is done is through the Audit Commission Comprehensive Performance Assessment (CPA) (Game, 2006).
In Malaysia, prior to reorganisation, a council member was elected by local people through the electoral process, but since the reorganisation in 1967 to date the council
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members are appointed by state authorities (Hussain, 2002). Members of the Council for local government are appointed for one to three years. Most of the state governments appoint a council member for a term of two years, although there is a council member appointed for one year only. After the official term expires, the council members may be reappointed or not, depending on the state government (Nooi, 1989).
The abolition of elections for local councillors has resulted in Malaysians losing their right to decide whom or which political party should represent them in the local councils. To people who hold dearly the concept of ‘government of the people, for the people and by the people’ the demise of elected local government is unacceptable. However, the gist of most complaints against appointed councillors is not the lack of democracy, but rather the lack of accountability in appointed councillors. To most of the complainants it is this lack of accountability that is the main factor for the weak performance of local authorities. Although the state governments appoint councillors, the appointment process is largely a formality. Almost all the councillors are, in fact, appointed from candidates nominated by political parties that form the state government. The few that are not ‘political appointees’ are largely government officers, such as District Officers or Directors of state Departments. They are appointed based on their position and not on their personalities (Lee, 2005).
The constraints facing Malaysian LGs would probably have an effect on the development of LGs, as any programmes run by LGs, including knowledge management programmes, are subjected to approval by federal or state governments. At the same time, local residents do not have the option to vote for the specific leaders who represent their needs, as LGs are tied to federal and state. Therefore, as the focus of this study is on management aspects in the Malaysian LGs context, the drafted theoretical framework needs to consider any current reform undertaken by LGs. Since this study was carried out in 2008 and a new rating for LGs’ performance was also introduced in 2008 by the federal government; this study has also developed the objective of examining the implementation of knowledge-sharing practices in local government with different levels of performance, in the evaluation of the star rating system.
Local government in Malaysia was established in the 1850s with the establishment of two municipalities, namely George Town and Malacca, under the Municipal Ordinance
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of the Straits Settlements 133/19131874 (Norris, 1980). After 1874, local government administration was under the Municipal Ordinance of the Straits Settlements until the Election Ordinance of local government was approved. This Ordinance was established in 1950 to enable local governments to operate independently and autonomously. As a result of this ordinance, for the first time members of municipal councils were voted in through elections (Beaglehole, 1974). These elections offered the councils some measure of autonomy and enabled about changes in the members of council through voting, unlike previously, when councils depended largely on Federal government decisions.
In 1954, the Ordinance (Amendment) Town Councils approved the updating of councils’ financial status to that of fully self-governing powers. In 1956, the George Town municipality was upgraded to a Municipal Council, with Mayor appointed from among council members. However, 1963 was the last election for local governments in Malaysia to date. The local government elections that were supposed to be held in 1965 and 1966 were suspended. The main reasons were that the country was undergoing the emergency of confrontation with Indonesia following the formation of Malaysia. During this period of suspension beginning in 1965, some local governments were taken over by the state government (Lee, 2005).
Issues in local government such as administrative, financial, and racial problems resulted in the establishment of the anti-Nahappan Commission in 1965. The Commission's report suggested that the election system suspended in the mid-1960s should be brought back. In addition, the report suggested that the chief administrative and executive officers in local government must function as district secretary, while the district secretary can act as executive and chief administrative officer.
This Commission indicated that their aims were to reduce workloads and delays in making decisions, but not to create any changes (Hussain, 2002). However, the continuation of the election process in local authorities involved a great deal of expenditure, which was not affordable for a small country like Malaysia and there were not enough staff to conduct the elections. Thus, the Local Government Act 1976 was formulated giving the full authority to State Government to restructure local government into two types of local government - Municipal Councils and District
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Councils. The distinction between these councils was based on the differences between more progressive and financially stronger urban areas and the weaker rural and less urbanised areas (Beaglehole, 1974). Hence, the Local Government Act 1973 and the Local Government Act 1976 changed the local government system, giving it greater administrative powers, financial autonomy, and responsibility for social activities than ever before. However, all policies and laws of Municipal Councils and District Councils must be consistent with State requirements and the Ministry of Local Government acts as advisor to the State government.