There is no pressure on the directors to quit, says finance minister
By P PREM KUMAR, DASHVEENJIT KAUR, KEVIN WONG & MARK RAO / Pic By TMR
The government is expected to accept the en bloc resignations of nine Khazanah Nasional Bhd board members as the Putrajaya administration speeds up the reform at the state-owned funds and companies.
The Pakatan Harapan government had sounded the urgent need to revamp government-linked companies (GLCs) and government-linked investment companies (GLICs) at a time when questions had been raised over their roles, productivity, profits, dividends and remuneration of heads at these institutions.
Yesterday, nine members of the sovereign wealth fund, which was created 25 years ago to manage Bumiputera equities, “offered” their resignations to the government.
The board members, who sit at the fund’s decision-making body, tendered their resignation and they are Tan Sri Azman Mokhtar (picture), Datuk Seri Mohamed Nazir Razak, Tan Sri Md Nor Md Yusof, Tan Sri Mohamed Azman Yahya, Datuk Mohammed Azlan Hashim, Tan Sri Andrew Sheng Len Tao, Raja Tan Sri Arshad Raja Tun Uda, Datuk Dr Nirmala Menon and Yeo Kar Peng. Azman is also the Khazanah MD.
Khazanah in a statement yesterday said the offer to quit by the board members would “facilitate a smooth and orderly transition under the new government”.
Resignations at Khazanah had been widely expected following the changes at other state-owned investment funds like Permodalan Nasional Bhd (PNB) and Lembaga Tabung Haji (TH).
Tan Sri Dr Zeti Akhtar Aziz had replaced Tan Sri Abdul Wahid Omar at Malaysia’s biggest state- owned fund manager, PNB, and Md Nor was made TH chairman.
Other GLICs are the Employees Provident Fund, Retirement Fund Inc, Lembaga Tabung Angkatan Tentera and Ekuiti Nasional Bhd.
Listed firms with substantial shareholdings by GLICs account for about 30% of Bursa Malaysia’s market capitalisation, making these state-owned investment firms a powerful influence on the country’s equity market.
News of the resignation had sent shockwaves in the corporate world, but analysts expect any negative impact would be short-lived.
Economist Prof Dr Barjoyai Bardai said nobody is “indispensable” and the country will be able to find the talents, especially among the younger generation, who can take over the job.
“With that said, the government could accept the resignations and probably reappoint some of the previous directors to maintain some continuation, as they need to have the resources to oversee ongoing policies, missions and visions,” said the Universiti Tun Abdul Razak lecturer to The Malaysian Reserve.
He expects the sovereign wealth fund’s future management will be very different as the country moves towards new realities.
“I foresee that Khazanah will be managed more by the Industry 4.0 mechanism, of which they may not need so many chartered accountants to be on the board.
“This will open more opportunities for different expertise needed for the future. These include professionals from business analytics, marketing, talent management and leader- ship,” Barjoyai said.
Although Khazanah acts like a conglomerate that manages many other companies, the challenge is no longer qualitative skills, but the ability to lead an organisation towards excellence, he said.
He also does not expect investors to be shaken by the changes as Khazanah is run by the government.
“It (Khazanah) has been pumping into the industry. However, it has been misdirected as mentioned by Prime Minister (PM) Tun Dr Mahathir Mohamad,” Barjoyai said.
He said Khazanah was incorporated to garner a certain vision and mission for the country, but it went towards a different direction and became a competitor to the business industry.
“For now, Khazanah needs to realign and perhaps change its format. And if we are now going into inclusiveness of objectives to replace the new economic policies, we need to reorganise investment institutions such as Khazanah and PNB, and to be aligned with the direction of accumulating wealth and distributing inclu- siveness to the citizens,” he added.
Sunway University Business School economics Professor Dr Yeah Kim Leng said the changes at Khazanah will likely lead to restructuring at Khazanah’s stable of companies.
“It will not just be the changing of personnel, but the overall direction and their role in the economy.
“In addition, they need to relook at their active involvements in the different sectors of the economy and how their roles can be better undertaken by the public sector,” he said.
Finance Minister Lim Guan Eng had described the move by the board of directors as “a wise move”.
Lim said there was no pressure on the directors to quit, and the matter was not even discussed in the weekly Cabinet meeting.
“This was not discussed in the Cabinet. This is primarily their decision to resign. It is their decision that they want to leave,” he said at the Parliament lobby yesterday.
Lim said Dr Mahathir will decide on the next step for Khazanah.
“It is now up to the PM to decide whether to keep the old directors or appoint new leadership,” he added.
Former PM Datuk Seri Mohd Najib Razak had defended Khazanah’s management, claiming that the fund has created wealth for the country, more than what they were tasked to do.
He said Khazanah was founded to help generate wealth for the country and not for the purposes of Bumiputera equity alone.
He disputed Dr Mahathir’s interpretation of Khazanah’s objective, even though the fund was set up in 1993 during the latter’s first term of premiership.
“That was never the raison d’etre of Khazanah. It was envisioned as an institute to create wealth for the country,” Najib said.
Meanwhile, Khazanah is expected to brief the staff next week on the recent development at the sovereign wealth fund.