Decision to appoint MPs as GLC heads may see history repeat in Malaysia

By Poovenraj Kanagaraj

In light of recent news reports, PAS secretary-general and de-facto law minister, Takiyuddin Hassan announced that all MPs who do not presently hold positions in the government will be made heads of government-linked companies (GLCs).

This was rightfully met with criticisms from both the opposition and critics in the country.

A practice that has been around for years, appointing government heads to lead GLCs has been a norm in Malaysia that has met very little objection that could lead to any critical change.

The practice in the past saw the emergence of the 1MDB scandal along with the abuse of power in the Employees Provident Fund (EPF) and the illegal dividend distributions that took place in the Lembaga Tabung Haji (TH).

In an interview with Business Today Malaysia, IDEAS research manager, Aira Azhari says such a move will give way to a greater risk of conflict of interest.

“An MP is voted in by the people into the constituency and when these MPs are given high positions in GLCs, secretariat bodies or even state-level GLCs, this gives rise to a possibility of using these positions to award contracts or projects to their political friends,” says Aira, who believes that this is a clear transgression of transparency and accountability in the government.

PKR president Anwar Ibrahim, one of the many critics towards the recent announcement called it “unprecedented and indefensible”. However, he stated that MPs with exceptional credentials being made GLC heads will not become a major issue.

Transparency International Malaysia president, Muhammad Mohan said the government should be able to appoint anyone it wants as long as the appointment goes through a screening process.

Aira on the other hand points out that what has been a norm in Malaysia for decades will continue to give rise to the risk of corruption and mismanagement, for instance in past cases where politically-linked leaders hand out projects to the lesser qualified or those who do not have the necessary knowledge and expertise to deliver public project.

As a result, this could lead to incidents of roofs collapsing or bridges being run down, posing a real risk to the public.

On a national level perspective, Aira says putting a MP in a chief executive officer’s position will undermine confidence among investors. “When you have individuals who are too close to politics or who are influenced by politics rather than decisions that are good for the Malaysian economy, investors would be hesitant,” she says

“This would go on to affect the economy on a bigger scale,”

The very norm of the practice has led to no existence of a comprehensive framework or a guideline on how the appointments should be made, according to Aira. This in return allows the Prime Minister to handpick anyone to head government linked bodies.

“It points to a lack of strong governance, weak institution framework and weak check and balance practice,” she says. “Whether it’s a crisis or not, nobody sits down and thinks through and that’s why we see it happen quite blatantly during these moments,” Aira tells Business Today.

More clarity needed

The GLC ecosystem in Malaysia according to Aira is a complicated universe as it serves as an all encompassing term for various entities.

“There are ones that are publicly listed, there are GLCs that are statutory bodies and there are GLCs that actually manage our public resources,” says Aira.

Due to the nature of GLCs that serves many different objectives, Aira says it’s difficult to pinpoint the exact role and the government would first have to clarify on the exact purpose a certain GLC would serve in the country.

The think-tank research manager points out that more clarity is needed on the nature of GLCs in the country.

Setting much needed reforms

The former government led by Tun Mahathir had mentioned before the GE14 that GLCs had overstepped their boundaries and failed to serve their original purpose. However, the very same government that aimed to reform GLC appointments failed to abide by its manifesto promise when similar appointments were made during its ruling days.

The failure to set reforms in place had allowed for the norm to continue into the era of a new ruling party in the country.

“Pakatan Harapan had missed to implement meaningful reform when it comes to GLCs as there wasn’t any movement on that front,” says Aira.

However, Aira opines that reforms can still be put in place and one such reform would be setting up a Parliamentary Select Committee made up of MPs from both the opposition and ruling party which allow them to question CEOs of GLCs.

“The creation of a committee puts in place an important check and balance tool. But I think on the longer term, there needs to be serious planning on GLCs management and governance and these plans must be entrenched in the law,” Aira tells Business Today.

She believes that having the right laws in place will then ensure GLCs are bound to the law and held accountable to the public.

Similar mechanism proving effective have been observed in countries such as South Korea where since December 2005, public enterprises including state-owned enterprises are subject to disclose the transparency of their management.

“If these kind of opaque decision making keeps continuing, we will have thee GLCs who are not fulfilling their goals and their objectives for the betterment of the Malaysian people. Patronage and corruption will continue,”

In the Corruption Perception Index 2019, Malaysia rose 10 places to 51 and the positive jump was attributed to the fast decision of addressing the scandals that had taken place.

However, not implementing further changes to curb any possibilities of corruption could risk the changes made so far.

“Continuing such a practice will signal to Malaysians and the international community that we are not serious about governance and the last thing we need is a massive global scale corruption scandal,” says Aira.

 

 

 

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