More transparent approach needed to reform GLCS

PETALING JAYA: The Institute for Democracy and Economic Affairs (IDEAS) is urging the government to consider a more transparent approach toward reforming government-linked companies (GLCS).

In a brief titled “GLC Monitor 2019: State of Play Since GE14,” IDEAS noted that the Pakatan government in its election manifesto had promised to reform the governance of GLCS.

“This reform includes ensuring that the appointment of their board of directors would be made based on merit, not on political considerations.

“These were important pledges because Datuk Seri Najib Razak, in his dual role as Prime Minister and Finance Minister, had effective control over government-linked investment companies (GLICS), which had majority equity ownership of a broad range of commercial enterprises.”

IDEAS added that this concentration of political and corporate power in the hands of the Prime Minister, had contributed to serious abuse of public institutions to advance the political interest of his party, Umno, in key parliamentary constituencies while also contributing to serious corruption.

It also said Pakatan, since coming into power, has made good on one key election pledge.

“For the first time since 1999, the Prime Minister does not concurrently serve as Finance Minister.

“However, Tun Dr Mahathir Mohamad, the Prime Minister who started the practice of simultaneously serving as Finance Minister, has commenced reconfiguring Malaysia’s long-standing government-business nexus in a manner that suggests concentration of corporate power in his party, Parti Pribumi Bersatu Malaysia.”

Soon after retaking office in 2018, IDEAS said Dr Mahathir changed the ministerial reporting lines for multiple GLCS in five key ministries, namely, the Prime Minister’s Department (PMD), Finance Ministry (MOF), Rural Development Ministry, Entrepreneur Development Ministry and the newly-formed

Economic Affairs Ministry.

“Although Lim Guan Eng was appointed Finance Minister, effective control of key government enterprises under its jurisdiction, including the sovereign wealth fund, Khazanah Nasional Bhd and the leading bumiputra-based investment fund, Permodalan Nasional Bhd, were transferred to Dr Mahathir’s PMD.

“These two GLICS have enormous investments in Malaysia’s leading public-listed companies, thus giving the Prime Minister significant influence over these enterprises.”

Additionally, IDEAS said the once powerful MOF, in terms of its equity control over the corporate sector, is now more akin to a regulator where public spending made across all ministries is monitored and assessed based on the annual budget allocation.

“The MOF also remains saddled with some rather poor performing GLCS, held through its holding company, Minister of Finance Inc. Finance Minister Lim has spoken of the need to reform and eventually divest these GLCS.”