Overcoming Challenges in Public Service Delivery in Malaysia

Public service delivery is becoming increasingly more complex due to technological and cultural changes, demographic shifts, and the ever-faster movement of money, goods and people. Increased affluence and exposure to global services has led to more sophisticated demand and rapidly rising expectations from the public, further escalating challenges in public service delivery.

An important part of addressing these challenges requires adapting to new models of service delivery that are better suited to today’s technologies, norms and citizen-centric. Part of the problem is that despite their best intentions, many governments continue to design and deliver services based on their own requirements and processes instead of the needs of the people they serve. This will require the public sector to be leaner, facilitative, more efficient, more productive, more skilled, more open, more innovative, and less bureaucratic, in order to better deliver for the public and for Malaysia.

This article draws to illustrate one of the successful citizen-centric service delivery positive outcome to both citizen and government. Seeking the benefits of electronic tax systems and reflecting the government’s vision of more citizen-centric service delivery through leveraging online technology, Malaysia’s Inland Revenue Board (IRB) launched its electronic system for taxes in 2004.

IRB aimed to increase revenue collection by improving taxpayer services toward more citizen-centric service delivery. The goal was to cut time and cost and to allow taxpayers to comply with tax obligations more easily.

With the E-filing system, taxpayers can complete forms and provide needed payment details online instead of sending them by mail or taking them to a tax office. For every tax filing or payment, taxpayers have to log in, select and complete the appropriate forms, sign and submit them digitally. An acknowledgment is received immediately. The e-filing system automatically calculates the necessary payment details. It also limits deductions that taxpayers are entitled to base on deduction rules — enabling taxpayers to avoid mistakes that would result in penalties.

In addition, prefilled online tax returns have been available since 2006, starting with taxpayer’s basic information and later extended to include their incomes and reliefs. In addition, IRB introduced automatic refunds. Due to the big number of refund cases and to expedite refunds, refunds were directly credited to taxpayers’ accounts through electronic fund transfers hence reducing the number of unclaimed checks.

Malaysia’s efforts are showing results. Between 2006 and 2011 the share of individuals and companies filing electronically increased from 5% to 34%. Over the same period, tax collections increased from 14.5% of GDP to 15.3%. Further analysis would be needed to fully understand the link between e-filing and revenues. IRB’s ongoing efforts to improve its electronic tax system have lowered the administrative burden of complying with corporate tax obligations as measured by Doing Business.

In 2006, it took 24 fewer hours to file taxes than in 2005. By 2007 far more small and medium-size companies were filing electronically, further reducing time to comply with corporate income and labor taxes obligations from 166 hours in 2006 to 145 in 2007. In 2010 tax preparers deployed new software linked to IRB’s e-filing system. In addition, IRB improved its e-filing system and introduced online filing of tax estimates. These improvements cut compliance time to 133 hours a year.

Electronic systems for filing and paying taxes, if implemented well and used by most taxpayers, benefit both tax authorities and taxpayers. Malaysia’s experience has shown the opportunities that technology can provide as well as the challenges that may emerge as the users are phasing in the change over time.

When governments deliver services based on the needs of the people they serve, they can increase public satisfaction and reduce costs.