How can it be that people who should have the most fulfilling jobs in the world are generally far less engaged and productive than those we encounter in the private sector? The root causes, we believe, are organizational cultures that are strangled by rules. Myriad rules define the public-sector workplace—rules spelling out procedural red tape, layers of decision making, regulatory compliance, and employee safeguards. These rules are put in place for the best of reasons, such as to ensure fair hiring practices and prevent corruption, favoritism, and the influence of special interests. But as rules proliferate, they often congeal into inefficient, costly bureaucracies that slow decision making, stifle initiative, discourage cooperation, and frustrate employees.

It is evident that administrative reforms are undertaken by many countries in the world today and in fact, administrative change appears to be a constant factor in regimes that desire to reform their social, political and economic systems. Normally, reform initiatives are regarded as necessary for organizations that want to adapt to the changing environment and to be able to expand and cope with increasing activities and global challenges. Nevertheless, strategies for reform initiatives will differ between sectors and also between nations as each country tries to handle reform in accordance with the country’s administrative traditions, political and cultural nuances and level of economic development. The process of reform may involve a particular sector or administration of the government or an entire level of the government such as the local government. The main characteristic of administrative reform is normally projected in attempts to decentralize powers and autonomy to lower levels of government. It connotes importance that such transition of powers is supposedly significant to the unification and development of a nation. This is especially so, as some studies have shown, where the shift of power to local government has created a series of hierarchically ordered units of administration at some of the lowest levels of government. The implication is a movement of power from the centre and may determine the scope of decentralization, nonetheless it involves a transition process that ultimately may change the characteristics of power structure of the different levels of government.

This commentary reviews contemporary changes in aid modalities and their impact on processes of decentralization. The main change in aid delivery and disbursement considered is towards a greater emphasis on general budget support (GBS) and sector wide approaches (SWAPs). This includes considering the broad questions of firstly, the impact of emphasising GBS on local government and governance systems, and secondly, the extent to which processes of decentralization can fit in with this new approach.

Local government in Malaysia occupies the third and lowest level after federal and state governments. Under the Malaysian federal constitution (paragraphs 4 and 5 of the Ninth Schedule), local government is the responsibility of the states, but the federal government also exercises considerable power and influence over local government, especially in peninsular Malaysia. The dynamic of the Malaysian federal system is such that it has shifted the balance of power to the centre.Local government accounts for only 1% of GDP. There are 144 local authorities divided into cities (major administrative and commercial centres), municipalities (other urban areas), and districts (chiefly rural areas). Executive powers rest with the Mayor (cities) or President, supported and/or overseen by a system of committees. Currently, local councils in Malaysia are not elected: councillors are appointed by the state government for 3-year terms (with the option of re-appointment) and in most cases come from the ruling coalition.