Changes seen at state-owned firms after BN’s defeat in 7 states

Structural changes need to be rolled out for companies that are underperforming or not performing at all, says expert

By SHAHEERA AZNAM SHAH

Massive restructuring and personnel changes are expected at state-owned companies including listed firms, after seven Barisan Nasional (BN)-led state governments were voted out in the recent general election.

Pakatan Harapan ousted BN-led governments in Kedah, Perak, Negri Sembilan, Melaka and Johor. PAS defeated BN in Terengganu, while Parti Warisan Sabah captured Sabah, leaving BN with only Perlis, Pahang and Sarawak under its rule.

State governments have substantial shareholdings in listed and non-listed companies, especially in firms that operate in their respective states.

A state government also appoints selected individuals to the board and management of the companies owned by them.

Among the major companies are Perak Corp Bhd, Bina Darulaman Bhd (BDB) and Johor Corp.

Troubled Perak Corp is 52.27%- owned by the state’s development agency, Perbadanan Kemajuan Negeri Perak.

Johor Corp has interest and stakes in Kulim (M) Bhd, KPJ Healthcare Bhd, QSR Brands (M) Holdings Bhd and Johor Land Bhd.

In Kedah, BDB has Perbadanan Kemajuan Negeri Kedah as the majority shareholder, while Terengganu Inc Sdn Bhd (TI), the state investment arm, owns about a 61% interest in planter TDM Bhd.

Perak Corp is already seeing a bruising battle as the new government demands changes in the company.

Perak Corp group CEO Datuk Aminuddin Md Desa recently resigned. The state DAP has called for the resignation of all the board members.

Previous governments had also made these listed and non-listed firms as heavens for “political appointees” to land a position.

Changes at the state-controlled companies are expected to follow what is currently happening at the government-linked companies (GLCs) and federal-owned firms, said economic experts.

This followed BN’s shocking ouster after leading the federal government for 61 years.

Sunway University Business School economics professor Dr Yeah Kim Leng said corporate restructuring is likely at the state level with high-impact companies being given the priority.

“It is advisable for the corporate revamp to be extended to entities in other states as the review can be considered as systemically important.

“In terms of priorities, the high-impact corporations need to be looked at first to enhance their performance in meeting the state’s objectives,” he said when contacted by The Malaysian Reserve.

Yeah said structural review is critical especially for the non- performing or underperforming corporations.

“Structural changes need to be rolled out for companies that are underperforming or not performing at all. The review is necessary to improve their contribution to the state.

“Their current roles under the state government need to be revisited and determined if the companies would be better without a state affiliation. Then, they could perhaps redefine their roles,” he said.

But more importantly, Yeah said new appointments at these state-owned entities must take into account the candidates’ competency and capabilities in generating income and contributing to the state’s performance.

“The main challenge in GLCs currently is the ineffectiveness in meeting their policy objectives.

“It could be due to the political constraint and inefficiency associated with the vested interest group that could hinder the performance of these companies.

“The new government may have selected appointees. But whether they are competent and capable to contribute to the organisations without making political interest a priority (remains to be seen),” Yeah said.

Asian Strategy and Leadership Institute director Tan Sri Dr Ramon Navaratnam said the government should be transparent on the policy changes over the state-owned companies to avoid misinterpretation.

“The new policy will make the corporate world more competitive and efficient, but the public should know the reasonings behind them,” he said.