In politics, the power and influence you command in government comes with the post you hold.
Thus, there was envy when DAP secretary-general Lim Guan Eng was appointed to the powerful Minister of Finance (MoF) post under the new Pakatan Harapan (PH) government. Weeks later, it was announced that PKR deputy president Datuk Seri Azmin Ali would be Minister of Economic Affairs (MEA), a newly created cabinet post.
Soon, it became apparent that the MEA too would be powerful as some agencies currently under the ambit of the Prime Minister’s Department would be placed under it. They include the Economic Planning Unit (EPU), Felda and Lembaga Tabung Haji (LTH).
But it didn’t end there. However, Azmin has denied that the powerful Khazanah Nasional Bhd, the government’s investment arm which controls a slew of large listed companies, will be placed under MEA. Instead, Azmin confirms that Khazanah and Petronas will be moved from the MoF and placed under the Prime Minister’s Department.
However, it isn’t clear if Permodalan Nasional Bhd (PNB), another Bumiputera-focused government-linked investment company (GLIC), will be moved from the MoF to the MEA. Interestingly, Azmin was appointed to the Khazanah board while Lim was not. When asked if Lim should also be appointed to Khazanah’s board, Azmin said it is merely a provocative suggestion by the opposition.
However, there is growing perception that the Finance Minister is not as powerful as before and that the Economic Affairs Minister is slowly becoming an extremely powerful person.
Market observers claim a latent power game is being played behind the scenes in the PH government. Having control over key government agencies, especially the GLICs, gives the minister under whose care they are entrusted upon, tremendous clout and influence. It seems to be a political game of musical chairs with the restructuring of key government-linked companies (GLCs) and various agencies.
The focus is on who controls the powerful and strategic GLICs. The GLICs are one the main drivers of the country’s wealth and business via investments in GLCs, many of which are also listed on Bursa Malaysia.
For example, Khazanah had a realisable asset value (RAV) of RM157.2 bil as of end-2017. PNB, on the other hand, manages a total fund size of over RM225 bil. As for Petronas, as the oil and gas regulator and operator, it oversees all national petroleum assets. For the year ended Dec 31, 2017, Petronas turned in a profit before tax of RM65.652 bil on the back of a revenue of RM223.622 bil.
Overseeing Felda, PNB and LTH could make Azmin very influential among government ministries as well as the base of Malay voters. So would taking care of Ekuiti Nasional Bhd (Ekuinas), Majlis Amanah Rakyat (Mara) and SME Corp Malaysia.
So while Lim holds the government’s purse strings and oversees 68 MoF Inc companies and the government’s budget, Azmin will also be a very formidable minister in the cabinet. MCA deputy president and MP for Ayer Hitam Datuk Seri Wee Ka Siong had remarked recently that Lim merely acts as a “bookkeeper” while Azmin has the power. To that, Lim pointed out that he also oversees the Inland Revenue Board and Customs Department.
There is talk that Prime Minister Tun Dr Mahathir Mohamad is mulling abolishing MoF Inc altogether. If all this happens, MoF’s influence would not only be greatly reduced but MEA’s role and impact on the national economy might be more evident.
“Since the 80s the real power of MoF, apart from its traditional budget and treasury functions, was the control over GLICs via MoF Inc. If MoF Inc is to be dissolved as reported, then the current MoF would have less clout than the MEA,” a former senior civil servant tells FocusM.
May not be a fair comparison
Interestingly, both Azmin and Lim are former heads of state. Lim was Penang Chief Minister while Azmin was Selangor Menteri Besar. The two states are the richest in the country and are known to be progressive and investor-friendly.
But is it fair to compare the MoF and MEA since they have different functions?
“It is not accurate to say one ministry is more important than the other. They have different functions. One looks into the ringgit and sen matters, while the other looks into economic policies and other macroeconomic matters,” Charles Santiago tells FocusM. He is the PH member of parliament for Klang.
Well-known economist Prof Yeah Kim Leng, who is also Sunway University’s Business School professor, agrees with Santiago.
“They have different roles and both are equally important in sustaining growth and raising living standards through sound economic policies, including fiscal, monetary, industrial and trade policies on the one hand, and prudent management of public finance,” says Yeah. However, he also agrees that whether one is more powerful than the other is dependent on the areas covered. “One is more powerful than the other in its own area of jurisdiction. Of course, in politics, one can argue which is more powerful to suit one’s agenda,” Yeah explains.
According to him, the main task of MoF is to ensure stability through prudent and efficient spending. It also needs to oversee and drive the reduction of government debt.
In contrast, the MEA is given the humongous task of restructuring the country towards a high-value, high-wage and innovation-driven economy. Interestingly, says Yeah, the MEA is also tasked with “rationalising the role of GLCs in the economy to unleash private sector-led growth”.
Another ministry which is also critical for the country is the Ministry of International Trade and Industry (MITI), which oversees all aspects of foreign direct investment as well as economic growth. MITI is led by a Sabahan minister, Ignatius Darell Leiking, who is the co-founder of Parti Warisan Sabah and MP for Penampang in Sabah.
Nevertheless, other than Mahathir and his deputy, Datuk Seri Dr Wan Azizah, it is Azmin and Lim who are seen as the main forces to drive the national agenda of the government. Wan Azizah is also the current president of Parti Keadilan Rakyat.
Overlap in functions?
When making the bookkeeper remark against Lim, Wee had said that in addition to overlapping ministerial functions, the distribution of powers between these two important ministries needs further clarification.
The creation of the Entrepre-neur Development Ministry, said Wee, further adds to a situation where some government agencies are unsure which ministry to report to.
“In the past, 15 ministries and 64 agencies were involved in the development of the SME sector. Who will take care of the sector now?” asks Wee in the parliamentary debate. “Is it the Finance Minister? Is it the Entrepreneur Development Minister or the Economic Affairs Minister? This needs to be answered.” Wee, however, did not respond to FocusM’s questions.
But these criticisms could be premature as the PH governent is not even past its first 100 days of rule.
All eyes on who will ultimately control GLICs
There are a total of seven GLICs – the influential Employees Provident Fund (EPF); Kumpulan Wang Persaraan (Diperbadankan) or KWAP; PNB, Khazanah; Lembaga Tabung Haji (LTH), MoF Inc and Lembaga Tabung Angkatan Tentera (LTAT).
According to the MoF website, “GLCs are defined as companies that have a primary commercial objective and are under the control of a GLIC. A GLIC has control over a GLC when it is the majority shareholder or single largest shareholder and when it has the ability to exercise and influence major decisions such as appointment of board members and senior management and so on.”
In 2017, University Malaya’s Professor Edmund Terence Gomez said these seven GLICs oversee a total of over RM1 tril worth of investments. Moreover, they control 35 of the top 100 Bursa Malaysia companies. The combined market capitalisation of these 35 companies account for about 42% of the total market capitalisation of Bursa Malaysia companies.
Hence, whoever controls or is able to influence these GLICs, also indirectly exerts influence on the performance of the benchmark index, the FBMKLCI. This is mainly because many of the GLCs are also among the basket of 30 companies of the index. Some of the GLCs in the FBMKLCI include Axiata Group Bhd, Malayan Banking Bhd, Malaysia Airport Holdings Bhd, Sime Darby Bhd, Sime Darby Plantation Bhd, Telekom Malaysia Bhd, and Tenaga Nasional Bhd.
While Wee claimed there were overlapping functions between the MEA and MoF, Santiago says issues concerning overlapping of functions can be easily solved. “Both the MoF and MEA need to have a better interface with one another as they need to work together to improve the country’s economy,” says Santiago. “At the end of the day, what is more important is how the Prime Minister is driving these ministries. As the PM, Tun Dr Mahathir ultimately makes the final decision on all matters.”
Two powerful pillars of government
The fact that the PH government is made up of equal partners with strong personalities leading the various political parties, means there is bound to be perception of power play.
Collectively, the cabinet manages the government’s machinery and the public service delivery system. Two of the ministries which traditionally receive much attention are the MoF and MITI. While the MoF manages the finances, budgets and indirectly oversees the entire banking system, MITI is also powerful in that it oversees trade and inbound investments.
As Malaysia is primarily a commodities, petroleum and manufacturing-based economy, the role of MITI cannot be underestimated. But placing Azmin in charge of the newly created MEA effectively places him in a very strategic role in working closely with MITI and MoF. This means the three ministries have to work very closely together.
With the EPU placed under the MEA, the latter could have more clout than the MoF. “(The) EPU vets and approves development plans, programmes and projects of all federal agencies and state governments. MoF approves the final Development & Operating Budget,” says the former civil servant, who believes the existing structure will likely not be changed. “I don’t think this will change as MoF puts together the national budget as part of its treasury and financial management as core functions,” he opines.
Politically, Azmin is still fighting to retain his PKR deputy presidency in the upcoming party elections this month in August. Latest reports say that Azmin is even mulling contesting the PKR president’s post against former deputy prime minister Datuk Seri Anwar Ibrahim who has confirmed he is contesting the president’s position. The current PKR president is Anwar’s wife, Wan Azizah, who has announced she will not be contesting.
PKR is the largest component party of PH. Out of the 113 seats that PH contested in GE14, PKR won 48, followed by DAP with 42. The other two are Mahathir’s Parti Pribumi Bersatu Malaysia (PPBM) with 12 seats and Parti Amanah Negara (PAN) with 11.
Hence, Azmin’s influence in PKR, which has the largest representation in the PH coalition, is not to be underestimated. However, DAP is also no pushover as it has the second highest number of seats after PKR. But PKR’s seats are four times more than that of PPBM.
With the stage set as it is, the power play is more than just a show. The friendly competition is indeed real although Azmin and Lim are good friends and strong partners within the PH coalition.
At one time in 2015, their friendship was tested when there was reportedly a political tussle brewing between the two men when five PKR assemblymen opted to abstain from voting against an Umno motion in the Penang Legislative Assembly. This irked Lim who was Chief Minister at the time.
It was also an open secret that Lim at that time preferred Parti Amanah Negara (PAN) to Azmin’s preference for Islamic-based party, PAS. But both men have since ironed out their differences.
While Lim and Azmin are known to be relatively successful in managing their respective states when they were leading Penang and Selangor, they both have had their share of setbacks. Lim was embroiled in the RM6.3 bil Penang Undersea Tunnel scandal, which is slowly becoming a headache to manage. On the other hand, Azmin was also not able to resolve Selangor’s water woes. Interestingly, Azmin was one of the most vocal critics of former Selangor menteri besar Tan Sri Khalid Ibrahim for failing to resolve the state’s water issue for six years.
Strong sense of camaraderie
Despite the friendly competition between MEA and MoF, it cannot be denied that there is now a strong sense of camaraderie amongst the PH leaders. There is a strong commitment towards fairness, equitable approach in distributing the wealth of the nation and also unfettered devotion to good governance.
Malaysians in the “New Malaysia” were quick to notice that the phrase “Rule of Law” was Mahathir’s favourite response when asked how he will approach various matters regarding the 1Malaysia Development Bhd (1MDB) scandal, corruption and mismanagement of the nation’s wealth.
Unlike the previous Barisan Nasional government, Pakatan Harapan wants not only to be different but also seen to be different. Hence, it may just be too early to begin speculating who will be the ultimate “victors” in this power play. What happens between Lim and Azmin is left to be seen. But both men’s friendship and cooperation are key to holding the PH government together. It is a New Malaysia after all. FocusM