Regulate, tax 'Ali Baba' deals instead of criminalising them, economist says

The Malaysian government plans to introduce new legislation or amend existing laws to regulate and tax Ali Baba practices, according to Dr Geoffrey Williams, founder and director of Williams Business Consultancy Sdn Bhd. Williams argues that criminalizing Ali Baba practices would be economically detrimental, as it would not result in any lost money, as all economic activity remains within Malaysia and contributes to the local economy.

Instead, Williams suggests that regulating and taxing such practices would add value to the economy by allowing licences and concessions to be freely transferred between Malaysians and foreigners.

Williams Business Consultancy Sdn Bhd's director emphasizes that the current issue stems from the fact that Ali Baba practices are not considered criminal offenses, making it challenging to assess the need for an anti-rent-seeking law. He believes that criminalizing the practice could lead to increased enforcement problems and opportunities for corruption.

Criminologist Kamal Affendi Hashim suggests that parties responsible for awarding projects should be held accountable to curb Ali Baba practices, yet proper oversight is crucial in maintaining checks and balances. While criminalization could deter potential wrongdoers, it might also lead to higher fees for rent or lease, potentially affecting the quality of projects.

Hashim asserts that investigators possess various tools, such as databases of contractors and access to financial records, to detect suspicious activity and confirm wrongdoings. He emphasizes the importance of maintaining transparency in business transactions, with any deviations treated as red flags unless proven otherwise.