Political representation in govt-linked funds to be reviewed

KUALA LUMPUR: Malaysia’s new government will review political representation in the country’s largest government-linked investment firms, including the main sovereign and state pension funds, the funds have said.

A joint statement from six funds said Prime Minister Tun Dr Mahathir Mohamad’s government, which took power after last week’s general election, had emphasised the importance of “separation between professional management of the institutions and any undue interference from political or any other external parties”.

Malaysia’s biggest funds are headed by executives mostly appointed during the nearly decade-long tenure of ousted prime minister Datuk Seri Najib Abdul Razak. It was not immediately clear if any of them would be affected by the review.

The funds include sovereign fund Khazanah, pension fund Employees Provident Fund, investment fund Permodalan Nasional Bhd, retirement fund Kumpulan Wang Persaraan, military retirement fund Lembaga Tabung Angkatan Tentera and pilgrimage fund Lembaga Tabung Haji. These funds control billions of dollars in assets, including significant shareholdings in some of the country’s biggest publicly traded companies, including banks.

On Saturday, Mahathir appointed a special team – a ‘Council of Eminent Persons’ – headed by former finance minister Tun Daim Zainuddin to advise the government on economic and financial matters for the next 100 days.

“For funds that had political representation on their respective board of directors, Daim reaffirmed that this will be reviewed and changed, as required,” the funds said in the statement, issued after meeting Daim on Sunday.

Yesterday, Daim met the heads of the national stock exchange, the securities regulator and the central bank for a briefing on the stock and currency markets, while former central bank governor Tan Sri Dr Zeti Akhtar Aziz, a member of the special team, met ratings agencies to brief them on new economic policies, a source familiar with the discussions said.

The ratings agencies wanted to know more about the new government’s plans to cancel the Goods and Services Tax, how it would deal with the revenue shortfall, and its plan to review projects signed off by the prior government, the source said.

Earlier yesterday, ratings agency Moody’s said if the new government fulfilled its campaign promises without any adjustments, it would be credit negative for the economy, adding that there was “little clarity” on the government’s economic agenda. – Reuters