By Emmanuel Samarathisa
THE political machination of Prime Minister Tan Sri Muhiyddin Yassin has been chugging along as Malaysia combats the Covid-19 crisis, the latest being the customary removal of government-linked company (GLCs) heads. These were personalities installed by Muhyiddin’s predecessor Tun Dr Mahathir Mohamad.
While GLCs are a heterogeneous lot, they are influential. GLCs listed on Bursa Malaysia make up some of the largest companies on the local bourse.
But despite being public companies, the government, through the use of the golden share, can appoint certain people to the board of companies like Tenaga Nasional Bhd and Telekom Bhd.
This raises concern over whether Muhyiddin would appoint friendly parties to these listed entities in the name of consolidating power to himself and whether investors will react negatively to such overtures.
One analyst with a local research house noted that there might not be a large reaction from investors to political appointees given the negative reaction due to the Covid-19 crisis.
“All attention is focused on that because, ultimately, investors want earnings per share growth which has been short on the benchmark FBM KLCI. So they (investors) are willing to overlook any management changes as long as there is a clear path to growth,” the analyst said.
To be sure, one of the flashpoints of the government flexing its golden share muscles happened last year when then prime minister Mahathir determined who would be appointed Telekom CEO.
A fund manager, however, said the market might react negatively as changes on the board would trigger uncertainties.
“We were moving towards greater transparency and independence. So these changes might send a signal that we are reverting to past practices of opacity and a lack of governance,” he said.
“There are certainly issues like the golden share that need to be sorted out but for now, it’s best to maintain the current names on these listed GLCs so that some stability can be ascertained by investors.” — April 15, 2020
