Businesses require clear direction after political turmoil

GLCs especially are institutions with responsibilities to millions. A fast and resolute resolution irrespective of political inclinations is critical


AFTER the storm comes the calm. That seems the best way to summarise the country after what has been the nation’s worst political crisis since independence.

Pockets of uncertainties remain, but much of the worries have dissipated into a storm in the teacup. The coronavirus outbreak, with more than 3,500 dead globally, has taken the wind out of the sail.

Malaysia and Malaysians have confronted the deadly virus calmer than other countries. There are no shelves emptying, panic buying or ghost-like abandoned streets, despite heightened tension of a second wave of the Covid-19 virus.

Medical officers, nurses and health facilities administrators have been working on overdrive. They are the unsung heroes, risking their lives each time a patient walks in with a cold or a runny nose.

But the recent political upheaval has claimed more than the scalps of politicians with dented egos, failed ambitions and botched dreams.

Life is, after all, not all beer and skittles.

All eyes will be on the formation of the Cabinet, which could come as early as this week. The composition of leaders who will lead the Perikatan Nasional’s government will be scrutinised to the bone. It may make or break the alliance.

While some politicians rejoice and others lick their wounded pride and ego, businesses and the country’s economy are having a blister bigger than the size of a ball.

Foreign investment has practically come to a standstill until a clearer picture of the country’s direction emerges. Aviation, tourism and hospitality sectors are plunging into an abyss.

Reuters reported Malindo Airways Sdn Bhd is asking the staff to take a pay cut for a few months.

Hotel owners are counting their massive losses. It feels like a 100m high levee has just busted during a storm.

Businesses are seeing a spike in operational costs and delays as the flow of components from China dries up like an empty tap. Others are stuck with tender proposals at the doorstep of government agencies.

Companies and corporations are heading into uncharted waters — a global flu outbreak which would wipe trillions of dollars from the global economy and a domestic political turmoil. A fast and resolute resolution irrespective of political inclinations is critical.

The business community is the biggest contributor to the country’s taxes. Last year, the Inland Revenue Board collected RM145 billion and a huge portion is contributed by the corporate sector.

The country’s 2019 economy was estimated to be valued at RM1.35 trillion last year and any ambition of reaching RM1.6 trillion this year will require more than horsetrading at political tables.

Government-linked companies (GLCs) account for about 40% of the Bursa Malaysia’s total market capitalisation of RM1.59 trillion as of February 2020. That alone amounted to RM0.64 trillion in value. These companies related to the government employ over a million people.

Permodalan Nasional Bhd, the country’s largest fund managers, owns a substantial sum in these GLCs, a key money generator to its dividends to pay schemes like Amanah Saham Bumiputera with millions of depositors.

Petroliam Nasional Bhd (Petronas) has assets estimated at US$154 billion and is ranked 151 in the world by Forbes. Last year, the stateowned company delivered RM40.5 billion in net earnings backed by RM240 billion in revenues. Petronas gave more than RM80 billion to the government either through dividends or other petroleum-related taxes last year alone.

The Employees Provident Fund (EPF) will become a RM1 trillion fund manager and responsible to ensure acceptable dividends to 14.7 million members. EPF’s investment income is largely derived from listed GLCs.

The government has a herculean task beyond revolving domestic politics. The business community and the economy require more than the rearranging of the deckchairs on the Titanic.

Giving key positions in stateowned companies to incompetent individuals would be like giving a donkey strawberries.

The country can’t afford a repeat of the 1Malaysia Development Bhd (1MDB) scandal, the Lembaga Tabung Haji (TH) financial fiasco, the reckless use of GLCs’ funds for political benefits or heads who splurged more on a red carpet to connect two buildings to impress a leader.

These firms are not just companies. They are institutions with responsibilities to millions, and they are bigger than any politician.

Mohamad Azlan Jaafar is the editor-in-chief of The Malaysian Reserve.