Pa­tron­age is king?

The Star Malaysia - StarBiz - - Viewpoint - Com­ment ED­MUND TER­ENCE GOMEZ [email protected]­tar.com.my

WHEN Tun Dr Ma­hathir Mo­hamad led the op­po­si­tion to a stun­ning elec­tion vic­tory, he had an ef­fec­tive ral­ly­ing cry that re­flected why Umno’s form of gov­er­nance was prob­lem­atic: “Cash is king!” If Dr Ma­hathir is not care­ful, wor­ry­ing re­cent trends in­di­cate a sim­i­larly dis­con­cert­ing prob­lem about Pakatan Hara­pan’s gov­ern­ment: “Pa­tron­age is king!”

When Pakatan wanted to cap­ture power, the coali­tion’s lead­ers told Malaysians to ex­pect real change if Umno was ex­pelled from gov­ern­ment.

These re­forms in­cluded end­ing eth­ni­cally-based poli­cies, un­fail­ingly ap­plied since the 1970s to jus­tify pa­tron­age favour­ing bu­mipu­tras, though ex­tremely abused to en­rich politi­cians in power. The Prime Min­is­ter would no longer con­cur­rently serve as Fi­nance Min­is­ter who had un­der his con­trol a slew of gov­ern­ment-linked com­pa­nies (GLCs) like 1MDB and Tabung Haji, en­ter­prises that had been al­legedly abused by Umno. Politi­cians would not be ap­pointed as di­rec­tors of GLCs.

These pledges con­trib­uted to Pakatan’s con­sid­er­able achieve­ment of end­ing au­thor­i­tar­ian rule in Malaysia.

How­ever, Pakatan has been in power barely eight months and al­ready alarm­ing trends are ap­pear­ing which sug­gest that this coali­tion is find­ing ways and means to re­nege on its pledges.

Equally trou­bling is a grad­ual and per­cep­ti­ble at­tempt to re-in­sti­tute the prac­tice of se­lec­tive pa­tron­age in the con­duct of pol­i­tics and in the im­ple­men­ta­tion of poli­cies, hall­marks of Umno pol­i­tics that led to its fall.

Soon after Pakatan formed the gov­ern­ment, it cre­ated the Eco­nomic Af­fairs Min­istry, led by Datuk Seri Mo­hamed Azmin Ali. Sub­se­quently, nu­mer­ous GLCs con­trolled by the Fi­nance Min­istry (MoF), un­der the ju­ris­dic­tion of Lim Guan Eng, were trans­ferred to the Eco­nomic Af­fairs Min­istry.

Malaysia’s only sovereign wealth fund, Khaz­anah Na­sional, was chan­nelled from the MoF to the Prime Min­is­ter’s De­part­ment. The gov­ern­ment did not pub­licly dis­close why the shift­ing of these GLCs be­tween min­istries was nec­es­sary, but it is now clear that the MoF no longer holds enor­mous in­flu­ence over the cor­po­rate sec­tor.

With Khaz­anah un­der his min­istry, Dr Ma­hathir, though not also func­tion­ing as the Fi­nance Min­is­ter, had se­cured con­trol of Malaysia’s lead­ing in­vest­ment arm.

When Dr Ma­hathir ar­gued that Khaz­anah had de­vi­ated from per­form­ing one of its orig­i­nal ob­jec­tives, help­ing the bu­mipu­tra, this con­tention was dis­puted by nu­mer­ous an­a­lysts. Dr Ma­hathir went on to ap­point him­self as chair­man of Khaz­anah, though this was, by con­ven­tion, the prac­tice. The con­ven­tion also was that the Fi­nance Min­is­ter should be a mem­ber of Khaz­anah’s board.

In­stead, Azmin was given this ap­point­ment. Whether the Prime Min­is­ter and the Eco­nomic Af­fairs Min­is­ter should have been ap­pointed board mem­bers of Khaz­anah mer­ited de­bate as Pakatan had pledged that politi­cians would not be ap­pointed as di­rec­tors of gov­ern­ment en­ter­prises.

On Sept 1, a Congress on the Fu­ture of Bu­mipu­tra & the Na­tion was con­vened by Azmin’s min­istry.

Dr Ma­hathir stressed at this con­ven­tion the need to re­in­sti­tute the prac­tice of se­lec­tive pa­tron­age, tar­get­ing bu­mipu­tras, though no longer would the gov­ern­ment al­low for the distri­bu­tion of what he re­ferred to as “easy con­tracts”.

Tun Daim Zain­ud­din, the chair of the Com­mit­tee of Em­i­nent Per­sons (CEP), es­tab­lished to pre­pare a re­port re­view­ing the state of the econ­omy, en­dorsed the need for such a bu­mipu­tra pol­icy, though he ac­knowl­edged prob­lems of the past when he said: “We want to get it right this time”.

Daim also stressed that the gov­ern­ment would strive to change the bu­mipu­tra mind­set. The na­tion was not told how this pol­icy will be al­tered to get it right, nor how mind­sets will be changed.

Mean­while, the CEP re­port, though sub­mit­ted to the gov­ern­ment, was not pub­licly dis­closed.

In­stead, the bu­mipu­tra pol­icy was stressed when the Eco­nomic Af­fairs Min­istry re­leased its Mid-Term Re­view of the 11th Malaysia Plan, while other min­is­ters have ac­tively af­firmed that GLCs will be di­vested, an is­sue also in the 2019 bud­get. Given Malaysia’s long his­tory of po­lit­i­cal pa­tron­age, wor­ry­ing ques­tions come to mind of these di­vest­ments.

For ex­am­ple, one im­por­tant eq­uity sale by Khaz­anah, an is­sue that barely se­cured any anal­y­sis in the press, was that of its in­ter­ests in CIMB, the coun­try’s sec­ond largest bank. Khaz­anah re­duced its eq­uity hold­ing in CIMB by 0.66%, a seem­ingly small divest­ment.

How­ever, does this sale mark the be­gin­ning of the trans­fer of con­trol of CIMB to well-con­nected busi­ness peo­ple, even prox­ies of politi­cians, a com­mon prac­tice by Umno in the 1990s? Will Pakatan, through such di­vest­ments, move to cre­ate a new breed of pow­er­ful well-con­nected busi­ness groups, even oli­garchs, a trend seen in other coun­tries tran­sit­ing from au­thor­i­tar­ian rule to democ­racy?

An­other wor­ry­ing is­sue oc­curred re­cently. Ru­ral & Re­gional De­vel­op­ment Min­is­ter Datuk Seri Rina Harun of Dr Ma­hathir’s party, Parti Pribumi Ber­satu Malaysia, ap­proved the ap­point­ment of politi­cians from her party to the boards of di­rec­tors of GLCs un­der her con­trol. This is ex­tremely wor­ry­ing be­cause, un­der Umno, the Min­istry was per­sis­tently em­broiled in al­le­ga­tions of cor­rup­tion, with Mara be­ing the prime ex­am­ple.

The prac­tice of pa­tron­age through GLCs to draw elec­toral sup­port was ram­pant un­der this min­istry as it has a huge pres­ence in states with a bu­mipu­tra-ma­jor­ity pop­u­la­tion. So im­por­tant is this min­istry, in terms of mo­bil­is­ing elec­toral sup­port, that it was al­ways placed un­der the con­trol of a se­nior Umno leader.

Dur­ing Datuk Seri Na­jib Razak’s ad­min­is­tra­tion, then Umno vice-pres­i­dent, Datuk Seri Mohd Shafie Ap­dal, served as its min­is­ter be­fore he was un­cer­e­mo­ni­ously re­moved from of­fice.

Shafie was re­placed by Datuk Seri Is­mail Sabri Yaakob, Na­jib’s close ally. What Rina, once an Umno mem­ber, has done by ap­point­ing politi­cians to GLCs un­der her au­thor­ity is so rem­i­nis­cent of pa­tron­age prac­tices that had un­der­mined the ac­tiv­i­ties of these en­ter­prises.

Azmin sub­se­quently en­dorsed what Rina had done on the grounds that “there are some politi­cians who have pro­fes­sional back­ground such as ac­coun­tants, engi­neers or ar­chi­tects, who can con­trib­ute to GLCs”.

Dr Ma­hathir should know bet­ter than to al­low this. After all, he had stressed that GLCs func­tion to ful­fil a “no­ble vi­sion”, in­clud­ing the al­le­vi­a­tion of poverty, eq­ui­table wealth distri­bu­tion and spa­tial de­vel­op­ment, pro­mo­tion of ru­ral in­dus­tries and the fos­ter­ing of en­tre­pre­neur­ial com­pa­nies in new sec­tors of the econ­omy.

Dr Ma­hathir had also per­sis­tently re­ferred to Malaysia’s com­plex en­sem­ble of GLCs as a “mon­ster”.

Dur­ing Na­jib’s ad­min­is­tra­tion, this vast GLC net­work, cre­ated pri­mar­ily to ful­fil the bu­mipu­tra agenda, be­came tools eas­ily ex­ploited by Umno, so vis­i­bly man­i­fested in se­ri­ous cor­rup­tion as­so­ci­ated with Felda and Tabung Haji.

How­ever, Pakatan has re­fused to es­tab­lish an in­de­pen­dent com­mit­tee to re­view this ex­tremely com­plex GLC net­work that op­er­ates at the fed­eral and state lev­els. Is this re­luc­tance be­cause Pakatan plans to sim­i­larly em­ploy GLCs for the prac­tice of pa­tron­age, as re­cent trends sug­gest?

What is clear, even be­com­ing the norm, is Pakatan’s con­sis­tent mes­sage to the na­tion: se­lec­tively tar­geted pa­tron­age will con­tinue. The pri­mary ad­vo­cate of this mes­sage is Ber­satu, an Umno off-shoot.

At Ber­satu’s first con­ven­tion after se­cur­ing power, held last week, its pres­i­dent, Tan Sri Muhyid­din Yassin, was quoted as say­ing: “As a party for the ‘pribumi’ or indige­nous group, Ber­satu should not be apolo­getic to cham­pion the bu­mipu­tra agenda”.

Muhyid­din went on to say: “No one in our so­ci­ety will be left be­hind. Hence, this agenda is not a racial agenda, but a na­tional agenda.” These state­ments are strik­ingly sim­i­lar to what Umno had stressed when in power.

These trends sug­gest that for Pakatan, and Ber­satu in par­tic­u­lar, con­sol­i­dat­ing power, by mar­shalling bu­mipu­tra sup­port, is its pri­mary con­cern, not in­sti­tut­ing ap­pro­pri­ate eco­nomic and so­cial re­forms.

If the gov­ern­ment hopes to change mind­sets, Pakatan must fo­cus on just uni­ver­sal-based poli­cies that as­sist all Malaysians. In the process, dis­en­fran­chised bumiputeras will also be sup­ported. Pa­tron­age need not be king.

Ter­ence Gomez is Pro­fes­sor of Po­lit­i­cal Econ­omy at the Fac­ulty of Eco­nom­ics & Ad­min­is­tra­tion, Uni­ver­sity of Malaya.

Mind­set change: Daim stressed that the gov­ern­ment would strive to change the bu­mipu­tra mind­set.

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