Reform at GLCs, GLICs should go beyond sackings

UM professor proposes PACs have guardianship of GLICs as these entities face little scrutiny

By ALIFAH ZAINUDDIN / Graphic By TMR

Any changes to state-owned enterprises should go beyond the resignations of political appointees but measures to avert future intervention, said political economist Prof Dr Edmund Terence Gomez.

The market is rife with news of changes at government-linked companies (GLCs) following Pakatan Harapan’s historic May 9 win of the general election.

Board members have exited sovereign wealth fund Khazanah Nasional Bhd, pilgrim fund Lembaga Tabung Haji (LTH), Petroliam Nasional Bhd and the Federal Land Development Authority or Felda.

Telekom Malaysia Bhd also saw changes at the CEO level and the market reckons more heads are expected to roll.

Speculations are rife that Malaysia Airports Holdings Bhd chief Datuk Mohd Badlisham Ghazali’s contract will not be renewed when it ends this month, while Malaysian Resources Corp Bhd CEO Tan Sri Mohamad Salim Fateh Din will retire at the end of the month, to be replaced by his son Mohd Imran.

Gomez said the purging of political appointees at GLCs and government-linked investment companies (GLICs) are necessary, but it must be accompanied by structural changes within the public-private domain.

A bulk of the local corporate sector is currently governed by the Finance Ministry through its investment arm, Minister of Finance Inc (MoF Inc). This is done through equity ownerships in GLICs, namely Khazanah, Permoda- lan Nasional Bhd, Retirement Fund Inc, the Employees Provident Fund, LTH and Lembaga Tabung Angkatan Tentera.

The University of Malaya (UM) professor said the pre- sent debate centres on political appointees’ removal and less on how new appointments will be selected and who they will report to.

“Will it just be the finance minister or will there be a separate body that looks into matters related to GLICs? The new government has to lay that out,” he told The Malaysian Reserve.

Gomez said the alleged abuses at GLCs and GLICs, in particular, 1Malaysia Deve- lopment Bhd’s financial scandal, proved the need for a stringent check and balance system with greater oversight of these entities.

He proposed parliamentary action committees (PACs) should have guardianship of GLICs as these entities are not publicly listed and face little scrutiny.

“This is my concern. When reforms are instituted, how sure are we that politicians will not interfere in company affairs?

“We cannot be sure unless there is an institutional body that overlooks into the operations of GLICs. There has to be an urgent discussion on this.”

A study by Institute for Democracy and Economic Affairs showed that GLCs account for more than half of the Bursa Malaysia main index and 36% of its market capitalisation. Seven out of the top 10 listed firms in 2018 are GLCs.

Tun Dr Mahathir Mohamad had likened GLCs to “monsters” as the prime minister said these institutions have grown to be “huge and rich”, but shied away from their intended purpose of reducing the disparity between the rich and the poor.

US-based political critic Dr M Bakri Musa was recently quoted as saying that GLCs are “a nest for plunderers” and that the government should “sell them all”.

“Malaysia should not be satisfied with the current exercise of only punishing those corrupt and incompetent individuals in 1MDB and other GLCs. They should demand more.

“Get rid of the sources of the problem. Get rid of all GLCs. Sell them,” he said.

Gomez said while it is important to ensure that politicians do not interfere in GLCs, the government can have a golden share in the company if it serves the national interest.

“But whatever decisions that are taken should be transparent and held accountable.”