HAMTARO CONSULTANTS

Malaysia Public Policy Competition

September 4, 2011
Ang Jian Wei Kung Lim Siew Ghee Michelle Tan Mei Yi Ngai Jin Tik
1

HAMTARO CONSULTANTS: DELIVERING IMPACTFUL SOLUTIONS

HAMTARO CONSULTANTS

Outline

1. 2. 3. 4.

Defining the Problem Establishing the Payoffs Identifying the Players Prescribing the Policies

HAMTARO CONSULTANTS

The problem in numbers

7 in 10 respondents paid a bribe RM 60 million squandered through

corruption every year What are we referring to?

People paying bribes for driving licenses

3

Defining the Problem

HAMTARO CONSULTANTS

Setting the scene

Even a well-established driving school

offers a

guaranteed pass for a car licence to prospective students for RM1,500. The Sunday Star, 22/4/2007
[Corruption] is the result of networking between

driving schools and Road Transport Department officers. NST, 6/5/2010

Defining the Problem

HAMTARO CONSULTANTS

The 2 models of bribery

The Kao Tim Model

Hello, you nak kao tim besok tak? Apa maksud you? You bayar, esok semua settle. Gerenti lulus! OK OK, kao tim semua

The Pakej Sampai Lulus Model

HAMTARO CONSULTANTS

Outline

1. 2. 3. 4.

Defining the Problem Establishing the Payoffs Identifying the Players Prescribing the Policies

Establishing the Payoffs

HAMTARO CONSULTANTS

What are the payoffs to reducing driving license corruption?

Lowered cost of living for consumers Reduced leakages Lowered car insurance premiums Nip the pervasive culture of corruption Tackling perception of high frequency corrupt practices Lead to a positive ripple effect Reduced negative externalities Lower road accidents positive selection Less cars on the road petrol consumption, carbon emissions, traffic jams

HAMTARO CONSULTANTS

Outline

1. 2. 3. 4.

Defining the Problem Establishing the Payoffs Identifying the Players Prescribing the Policies

Identifying the Players

HAMTARO CONSULTANTS

Conceptual Framework

Redefining

driving school
roles

Realigning

test taker
incentives

Deterring corrupt

examiner
behavior

HAMTARO CONSULTANTS

Outline

1. 2. 3. 4.

Defining the Problem Establishing the Payoffs Identifying the Players Prescribing the Policies

10

Prescribing the Policies

HAMTARO CONSULTANTS

Realigning test taker incentives

Extorted by examiner

Why do people bribe Likely to fail

Cost of bribing vs cost of resitting

If cost of re-sitting is lower than the cost of bribing, no one would bribe

Cost of re-sit

Time taken to re-sit

Dollar value of re-sit

To lower the cost of re-sitting, we could reduce the dollar value of re-sitting

Upfront cost

Re-sitting cost

Test takers are allowed to make tradeoffs between upfront cost and re-sitting cost to suit their confidence

11

Prescribing the Policies

HAMTARO CONSULTANTS

Redefining driving school roles

Current
Driving School

Test takers Examiners

Besides providing driving lessons, driving schools also collect test fees on behalf of the JPJ. As a result, driving schools have become the intermediary facilitating the solicitation of bribes.

Ideal
Driving School

Test Takers Examiners JPJ web portal / post office

We recommend the relationship between driving schools and examiners be decoupled. Instead, JPJ would collect the exam fees directly through a web portal or through a post office.

12

Prescribing the Policies

HAMTARO CONSULTANTS

Deterring corrupt examiner behavior

Rationale

Measure

Re-emphasize grievance 1. To reiterate commitment towards resolving the issue process 2. To increase the (perceived) cost of corrupt transactions Video surveillance 1. To provide an additional avenue for possible grievance investigations 2. To capture and deter possible fraudulent behavior for both test taker and examiner 1. To discourage test examiners from engaging in corrupt practices in light of stiffer penalities

Increase penalties on corrupt practices

13

Prescribing the Policies

HAMTARO CONSULTANTS
Sep

Implementation Roadmap
Oct Nov Dec Jan 2012 Feb 2012 Mar 2012 Apr 2012

JPJ web portal

Obtain user requirements

Develop web portal

Testing
Go Live

Pricing plan to be outlined

Dialogue with stakeholders

Engage consultants

Preliminary Report

Final Report

Installation of webcams in test cars

Proof of concept

Procurement of webcams

Installation of webcams

Grievance process to be outlined

Draft a protocol outline

Put infrastructure in place to facilitate the process

Go Live

Creation of database and tracking system

Obtain user requirements

Develop database and tracking system

Testing
Go Live

Putting in more severe fines

Obtaining approval

Marketing / Grace period

New fines are enforced

14

Prescribing the Policies

HAMTARO CONSULTANTS

Possible Implementation Roadblocks

Proposed Solutions

Cost

Technology, process change

Economies of scale; long-term benefits

Resistance to Reforms

Loss of extraneous revenue + shortcuts

Leveraging positive loops

Enforcement

Inconsistent implementation

Rigorous auditing

15

HAMTARO CONSULTANTS

Conclusions

1. There is scope for change. 2. We believe these changes are workable with the right political will. 3. Questions?

16

Notes for Q&A

HAMTARO CONSULTANTS
Problem

INTERNAL

Appendix A: 4P s of Public Policy

People pay bribes for driving licenses Pakej Sampai Lulus Normal kau tim fee Players Test Takers Driving School Examiners (JPJ) Policy Driving School Decoupling driving schools from JPJ assessment centers. Right now, the driving schools act as an intermediary between the test taker and the examiner. (where the driving schools collect bribes on behalf of JPJ) Test taker Why do people bribe? 2 reasons, dollar and time. The cost factor is essentially present if the cost of a bribe is less than the cost of a re-sit. Therefore, if we make re-sitting cheaper than cost of bribing, bribing is less attractive. A driver that is less competent and confident has more incentive to bribe. Therefore, to serve these people, we can offer them lower cost of re-sitting exams for a higher upfront cost, and vice versa. Examiner We don t want the examiner to extort the test taker Webcam Grievance process if bribe is demanded / requested and follow up by relevant authorities Comprehensive data set on all tests to look for anomalies from pov of instructor / car license plate passing rates Severe fines Payoff Lowered cost of living for consumers Reduced leakages (RM 24 billion per year) Lowered car insurance (RM5 billion per year) Nip the pervasive culture of corruption (63.28% of us pay bribes) Reduced negative externalities Lower road accidents positive selection Less cars on the road petrol consumption, carbon emissions, traffic jams

17

Notes for Q&A

HAMTARO CONSULTANTS

INTERNAL

Appendix B: Rationale for bribing

Q: Why should I pay more for a second chance, and not just bribe it away? A: We believe in two premises; The system has to be designed in such a way that the cost of corruption will always outweigh the cost of the initiative Corruption occurs out of necessity; we believe that there are pockets of society that on principle (of integrity) will not want to bribe. This initiative targets this group and swings them over.

18