We are paying the price for PH’s weak GLC reforms
By Emmanuel Samarathisa |   |  Featured, Opinion, Politics

By Emmanuel Samarathisa

PARLIAMENTARY and Legal Affairs Minister Takiyuddin Hassan caused a stir over the weekend when he announced that all Perikatan Nasional (PN) MPs not in government would be made heads of government-linked companies (GLCs). 

“Alhamdulillah, I understand all government MPs will be given the responsibility to manage GLCs,” he was quoted as saying by news portals Malaysiakini and Astro Awani

He had also worked out the maths for his party. “PAS has 18 MPs, eight are ministers and deputy ministers, one has been made the prime minister’s special envoy to the Middle East. This leaves nine more MPs,” He said. “This is because all of them are qualified.”

Assuming that Muhyiddin still commands the support of 115 MPs, he will need to reward the remaining 45. Seventy are in government as ministers and deputy ministers. 

That raises some questions, such as: will Pekan, Bagan Datuk and Putrajaya, represented by Najib Razak, Ahmad Zahid Hamidi and Tengku Adnan Tengku Mansor, be given posts too? They are after all the infamous trio yet to be acquitted over a string of criminal charges.

To be sure, GLCs are a sizable, heterogeneous cluster of companies tethered to the government primarily by law or ownership. There are government-linked investment companies (GLICs), the country’s largest institutional investors with combined assets under management north of RM1 tril. There are listed GLCs usually controlled or owned by GLICs. There are unlisted GLCs, including a bevvy of shell companies or “special purpose vehicles”, as well as statutory bodies, some of which are GLICs. 

And each category has its own reporting standards. For example, listed GLICs are subject to periodic financial and non-financial reporting requirements per Chapter 9 of the Bursa Malaysia Main Market Listing Requirements. 

Non-listed GLCs will be subject to the Companies Act 2016 with financial statements to be prepared within six months of its financial year end. The act does not require public disclosure but the statements can be obtained for a fee through the companies commission Suruhanjaya Syarikat Malaysia (SSM). 

Statutory bodies, which include GLICs, are subject to the reporting provisions of the Statutory Bodies (Accounts and Annual Reports) Act 1980, which requires each entity to submit an audited statement of accounts, an activities statement and the auditor-general’s report to the responsible minister who in turns submits those documents to Parliament. 

Typically, a change in government ushers in a change in GLC heads, among others. That was what we witnessed when Pakatan Harapan (PH) formed government after winning the 14th general election two years ago. 

Naturally, Muhyiddin is expected to carry on the tradition. But Takiyuddin’s vexatious statement was, perhaps, too much for some because, for the first time, we had a minister being unabashed about the government’s plan to reward its faithful. 

The loudest critics, naturally, came from the PH camp. For example, Setiawangsa MP Nik Nazmi Nik Ahmad wrote in an op-ed on Focus Malaysia titled “The unhealthy trend of replacing technocrats with politicians”, arguing that this was “an unhealthy trend if many MPs are appointed to replace professional technocrats.” 

And most arguments have been whittled down to something along those lines of political appointees vs “professional appointees”, which ones were better, why PH did or did not fulfil its electoral promise of hiring only professionals to the boards of all GLCs. And, yes, PH very much did prop up MPs to GLCs such as Klang MP Charles Santiago who chaired the water services commission Suruhanjaya Perkhidmatan Air Negara (SPAN). 

But researcher Fikri Fisal rightfully pointed out on Twitter that going along that train of thought of politician versus political appointments is nothing but a simplistic take on what is a complex issue. 

And he is right in underlining the point that PH, just like its predecessor Barisan Nasional (BN), failed to do much in tackling a system that lacks transparency. And that there were missed opportunities by PH in reforming GLCs, especially by way of making them accountable to their ultimate stakeholders – the public. 


We can glean lessons from PH’s dismal run in reforming GLCs during the coalition’s time in government. Three examples suffice in hitting home the point that PH failed to get tough with its pledges for reforms, as espoused in its manifesto, and that “professional appointments” may not move the governance needle much. 

When Nik Amlizan Mohamed took over leadership of armed forces fund Lembaga Tabung Angkatan Tentera (LTAT), she and her team got down to cleaning up the fund’s financials. They hired Ernst & Young (E&Y) to conduct an audit report. Months later, LTAT came out with a sensational statement accusing Nik Amlizan’s predecessor Tan Sri Lodin Wok Kamaruddin of financial mismanagement. 

Because of purported creative accounting, Nik Amlizan had to restate previous dividend payouts, among others, leading to the fund declaring its lowest-ever dividend of 2% for the financial year 2018. But when pressed at a press conference last year, Nik Amlizan, a professional appointed to helm the organisation, said LTAT was not going to make that E&Y report public. 

Nothing much has come out of LTAT since last year. And what do we have today? Retired armed forces group Patriot recently begged LTAT for reassurance that its assets, which includes naval shipping group Boustead Heavy Industries Corp Bhd, will not be victim of hostile takeovers.

Then, there is former transport minister Anthony Loke who took to Facebook to decry the removal of professionals Afzal Abdul Rahim and Ragunath Kesavan whom he appointed as authority members of the Civil Aviation Authority of Malaysia (CAAM). 

Among the two, Afzal’s appointment to CAAM raises questions, especially regarding what expertise does he have, aside from being the chief of listed telecommunications group Time dotCom Bhd, in regulating the aviation industry? 

Loke said: “Afzal is the CEO of TIME dotCom, independent board member of CIMB Group and a licensed FAA commercial pilot. When I first met him, he was very critical about CAAM's efficiency but very passionate about aviation-related issues. I then invited him to join the board of CAAM to turn his criticism to constructive suggestions to improve CAAM.”

If you’d been tuned in to the goings-on of the aviation sector, then you’d know that Loke had been orchestrating a merger between CAAM and fellow regulator the Malaysian Aviation Commission (Mavcom). The latter was an independent regulator, so that’s another grievance where PH undermined a regulator’s independence by forcefully merging both entities. The merger is now in limbo.

But imagine allowing a man who is just “very passionate” about aviation, with a commercial pilot’s licence to boot, being front and centre of a merger that puts the very safety of our airspace in his hands? That happened during PH. 

And, finally, there’s Majlis Amanah Rakyat (Mara), the country’s largest statutory body with a staff strength of 22,000. The defunct Council of Eminent Persons (CEP) installed Hasnita Hashim, a seasoned finance professional, as Mara chairman and appointed a council consisting of corporates to help her execute reforms. 

For the first time in a long while, the Mara leadership had no politicians on the council. If you glean the agency’s 2017 annual report, you’ll find everyone mentioned there, save for the civil service representatives, an Umno member.  

This was a break from the norm. From her interviews and engagements with the media, Hasnita was vocal about steering Mara back to education and entrepreneurial development and less about being in investments. 

That, too, on paper seemed logical, given Mara’s track record of controversial purchases abroad through its investment arm Mara Corp Bhd. But that put Hasnita and her team in a collision course with Mara Corp chairman Akhramsyah Muammar Ubaidah Sanusi, who had his own plan for the company.

Such tensions were only made known two years after her appointment in January this year when Hasnita’s letter to then prime minister Tun Dr Mahathir Mohamad had been leaked to news portal Free Malaysia Today. In that memo, she said Mara was never meant to invest in businesses and was never allocated funds by the government to do so. 

“It (Mara) has used funds it collected from student and business loans to invest in businesses, something it never had the competency to do,” she was quoted as saying. And that drew intense pushback from Malay interest groups such as the Malay Economic Action Council and the Malay Chamber of Commerce. 

These groups didn’t want Mara Corp closed, but fact is, it had scandalous subsidiaries such as Mara Inc Sdn Bhd. In 2017, that subsidiary was the subject of investigations for being involved in a property scam in Melbourne

Such instances could have been tackled early on, but even calls to set up select committees to audit the financial and social goals of GLCs fell on deaf ears. Amendments to some of the larger institutions, such as Mara and Felda, to grant them independence from aggressive political interference were also not prioritised. 

Other measures that could be easily implemented include having a dedicated website with all the GLCs with disclosures on board remuneration and fees, procurement policies as well as their balance sheets for the latest financial year.

These are easily available for listed GLCs since they are compelled to fulfil Bursa requirements but they represent a small handful in the overall GLC universe.

And forget talking about penalties for financial malfeasance which countries like South Korea have in place for its own state-owned entities.

PH did drop the GLC reforms ball when it could have clearly hit a home run with transparency and accountability. But it failed to climb up the moral high ground. And you can be sure Muhyiddin will use these governance gaps to further his agenda – because that is what every savvy politician will do. - April 14, 2020

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