By Brendon Beliku
Brendon Beliku is a Regional Corporate Mobility Coordinator for an international corporate immigration firm specializing in East Malaysian immigration regulatory compliance. He is also an independent public policy analyst.
KOTA KINABAlU: -A Question Governments Avoid-
For years, governments have encouraged businesses to embrace Environmental, Social and Governance (ESG) principles as the benchmark for responsible corporate conduct.
Companies are increasingly expected to demonstrate transparency, accountability, ethical governance and sustainable business practices, not merely because regulators require them to do so, but because investors, financial institutions and global supply chains now regard these qualities as essential indicators of resilience, credibility and long term value creation.
Yet one important question has received comparatively little attention. If governments expect businesses to govern responsibly, should governments themselves be held to the same governance standards?
The answer should be yes.
-Governance as Economic Strategy-
As Sabah advances the implementation of the Thirteenth Malaysia Plan (RMK13) alongside the Sabah Maju Jaya development agenda, the scale of economic ambition is unmistakable. RMK13 places governance, institutional reform, digital transformation and public sector efficiency alongside infrastructure and industrial expansion as fundamental drivers of national competitiveness, recognising that sustainable economic growth depends not only on what governments build, but equally on how effectively they govern.
As one of Malaysia’s principal development frontiers, Sabah is expected to translate these national priorities into tangible economic outcomes through strategic investment, regional connectivity and institutional capability.
That distinction is increasingly important because investment competitiveness is no longer determined by infrastructure alone. Roads, ports, industrial parks and fiscal incentives remain indispensable, yet they have become baseline expectations rather than decisive competitive advantages.
Investors now evaluate the institutions responsible for regulating, facilitating and sustaining those assets, namely the predictability of regulation, the efficiency of public administration, the coordination between government agencies and the consistency of policy implementation.
Governments are therefore judged not only by what they build, but by how they govern.
This shift is reflected internationally. The World Bank’s Business Ready (B-READY) framework moves beyond assessing whether regulations exist and instead evaluates how effectively governments implement them, recognising that regulatory quality, institutional capability and public service delivery are increasingly central to investment competitiveness.
In other words, governance has evolved from a public administration concern into an economic variable.
This is no longer merely a philosophical proposition. It is an economic necessity. Investment decisions today extend well beyond taxation, labour availability and physical infrastructure because businesses increasingly assess regulatory certainty, institutional credibility and administrative efficiency as indicators of operational risk.
A jurisdiction may possess world class infrastructure, yet if regulatory processes remain fragmented, approvals become unpredictable or agencies fail to coordinate effectively, investors ultimately bear higher costs.
Businesses, therefore, do not invest only in infrastructure. They invest in the quality of the institutions that govern it.
-From Regulation to Administration-
The challenge, therefore, is not whether governments should regulate. Strong regulation remains indispensable to protect public interests, uphold environmental standards and maintain confidence in the rule of law.
Rather, the challenge lies in how regulation is administered. Excessive documentation, duplicated approvals and inconsistent regulatory interpretation rarely strengthen governance. More often, they reveal fragmented institutions operating independently rather than as a coordinated public administration.
-ESG as an Internal Standard-
Consequently, governments should begin viewing ESG not merely as an external framework imposed upon businesses but as an internal operating standard for public institutions.
Transparency should be reflected through clear administrative procedures and open decision making. Governance should be demonstrated through regulatory consistency, institutional accountability and coordinated implementation. Social responsibility should be evident in accessible, efficient and citizen centred public services.
Environmental stewardship should continue to guide development approvals without creating arbitrary administrative barriers. Under such an approach, ESG evolves beyond corporate reporting and becomes a practical framework for governing the public sector itself.
This requires moving beyond traditional compliance towards what may be described as ‘Competitive Compliance’.
Competitive Compliance recognises that compliance and competitiveness are not opposing objectives. Instead, they are mutually reinforcing.
Businesses rarely object to regulation when expectations remain clear, proportionate and consistently applied. What undermines confidence is uncertainty, namely conflicting regulatory interpretations, avoidable delays and administrative complexity that increases costs without improving regulatory outcomes.
Effective compliance therefore depends not only upon robust legal standards but equally upon capable institutions that administer those standards intelligently.
This approach also requires governments to measure success differently. Public sector performance has traditionally been assessed through outputs, namely the number of projects approved, expenditure disbursed or regulations enforced. While important, these indicators reveal comparatively little about the quality of governance experienced by businesses and citizens.
Governments should increasingly evaluate institutional performance through measures such as regulatory turnaround times, interagency coordination, administrative consistency, digital interoperability and public confidence because these are the indicators that shape investment decisions and institutional trust.
-Sabah’s Institutional Future-
For Sabah, the implications are significant. The state’s strategic location within the Brunei Darussalam, Indonesia, Malaysia and Philippines East ASEAN Growth Area, together with its strengths in manufacturing, logistics, tourism, renewable energy and the blue economy, provides considerable economic opportunity.
Rather, comparative advantage alone does not guarantee sustained competitiveness. Other jurisdictions can build ports, expand industrial parks and introduce attractive fiscal incentives. Institutional credibility, however, cannot be replicated as quickly.
It is earned gradually through consistent governance, transparent administration and predictable public institutions that businesses learn to trust.
Ultimately, ESG should no longer be viewed solely as a framework through which governments evaluate businesses. It should equally become the standard through which governments evaluate themselves.
Public institutions that embody transparency, accountability and regulatory integrity create more than administrative efficiency.
They strengthen investor confidence, build public trust and reinforce long term economic resilience. Infrastructure may attract investment. Institutions determine whether it remains.
