Hands off GLCs please


Politicians should stay off GLCs- pix from The Star


By V. Shankar Ganesh

We have all heard about government-linked companies (GLCs) and the issues related to them.

Some are good but they usually hog the limelight for the wrong reasons.

GLCs are defined as companies that have a primary commercial objective and in which the Malaysian or the state government has a direct controlling stake.

With their controlling stake, the government has the right to appoint its directors, senior management and have a say on major decisions.

This looks like a serious multi-million dollar business and definitely the cream of the crop should be helming them.

But that does not seem to be the case in Malaysia with many political appointments being made.

Although political appointments to regulatory bodies are acceptable, appointments to GLCs is something that many Malaysians still do not understand.   

Regulatory bodies were created to advise the government and also to carry out policies while GLCs are primarily focused at making profits.

Today, we see that many of those sitting in the board of directors of GLCs are there purely by virtue of being politicians.

Some GLCs are involved in billion-ringgit businesses, so what are politicians doing there? 

Are they going to ramp up the profits or giving some business tips that the professionals don’t already know?

Certain exemptions can be made when a politician can really give added value to the GLC. 

It’s no secret that appointments to the boards are prized by political parties as its leaders often dangle it to their advantage within their parties.  

Many of the political appointees merely attend the meetings and enjoy the very generous perks of being a director. 

It is sometimes even seen as a retirement gift for those being pushed out of positions in the parties and GLCs positions makes it a soft landing.

This was common when Barisan Nasional was in power but it seems that such political patronage has continued.  

This is one of the conclusions reached in a study conducted by a team led by University Malaya political economics professor, Terence Gomez.

The study mapped out and explained the extensive influence politics have over the Malaysian economy.

It was released last year in a report entitled “Government in Business: Diverse Forms of Intervention”.

It indicated that Selangor and Penang, had placed a large number of senior party leaders as board members in all strategic state GLCs and its subsidiaries.

While the practice is deemed common in Malaysia and is seen as a key intervention strategy to carry out the social and developmental agenda of the political party in power, it was also prone to abuse and encouraged political patronage.

The report said that a key factor contributing to corrupt practices within GLCs was that although the members of these boards were public trustees, they do not act as such.

“One consequence of this practice, also a form of political patronage, is that it undermines public ownership of corporate enterprises and contributes to the idea that this form of government intervention is not viable or sustainable,” the report added.

Gomez said the unlimited power accorded to a chief minister or mentri besar to appoint political directorship, and the extent of corporate control by a state’s chief investment arm, typically the Chief Minister Incorporated (CMI) or Menteri Besar Incorporated (MBI), are factors that allowed for patronage.

The report said that in Selangor, then MB Datuk Seri Azmin Ali through Menteri Besar Incorporated (MBI) Selangor wielded virtually monopolistic control over businesses and social enterprises through political directorships at key state GLCs.

Selangor MBI’s extensive corporate control via equity holdings also meant they had indirect control of key agencies like the state media, education and welfare institutions.

In Penang, the study noted that then CM Lim Guan Eng had directorships in several GLCs and five subsidiaries or associate companies of Penang Development Corporation and State Secretary, Penang Incorporated (SSI), which owns Invest-in-Penang, Georgetown World Heritage Inc and public-listed PBA Holdings.

It was a similar situation in Kelantan with many such appointments. 

While It is noted that such appointments do not necessarily imply irregularities, but political directorships have shown to create both positive development and rent-seeking simultaneously.