EXECUTIVE SUMMARY

1. • A functioning federal system offers important social, economic, and political benefits. For this reason, over the past three decades many countries have constructed or strengthened lower tiers of government and decentralized operational and revenue-raising responsibilities.

2. • However, Malaysia is an exception to this trend, as it has an established federal system, with a central government, thirteen state counterparts, and a long history of effective sub-national government. And, rather than strengthening its federal system, the country has, over the past fifty years, enacted a far-reaching centralization drive. This has been enabled by: links between the ruling coalition and the bureaucracy; a long-running dominance of this coalition at both federal and state levels; and a lack of constitutional safeguards.

3. • This drive has often gone unnoticed, as it has manifested itself in a variety of ways, influenced by national policy frameworks in place at the time, the specific responsibility or revenue source sought by the federal government, and underlying legislation. These ‘centralizing tactics’ include: outright appropriation of state government responsibilities; altering incentive structures; privatizing state government- owned assets; and ‘organizational duplication’.

4. • Recent political developments have, however, put these centralizing processes on hold. Since 2008, a significant number of state governments have been governed by the Opposition, converting this previously shrinking political ‘space’ into an area of contestation. State governments of both coalitions now compete with each other to provide new and better services to their constituents. This competition can slow down centralization processes, help separate state and federal issues, and also increase the democratic space for Malaysia's citizenry.

INTRODUCTION

Over the past thirty years, a “Silent Revolution” has taken place across the globe, as countries decentralize, devolve, or delegate power and responsibility from the national to the subnational level.

In so empowering provincial, state, and local governments, citizens have benefited from policy innovations in areas such as public transport, e-tendering, and solid waste management. In addition to providing a closer connection between citizens and public servants, these empowered political entities provide more accessible and diverse settings for training tomorrow's leaders. And by parcelling out power to different locations, it is prevented from coalescing into one location which can then be appropriated by powerful interest groups.