On 10th August 2017, IDEAS organised a book launch at Lecture Theatre 3, Faculty of Economics and Administration, University of Malaya entitled, “Minister of Finance Incorporated: Ownership and Control of Corporate Malaysia.”
The event started with opening remarks from the Chief Executive of IDEAS, Wan Saiful Wan Jan. He began by acknowledging the funders of the book. The book’s topic is of great interest to Malaysia as there has not been much studies done on the Ministry of Finance, state-owned enterprises and the extent of government control over these companies. Wan mentioned that IDEAS’ position as an independent think tank means that it is open to collaborate with Prof. Gomez despite ideological differences.
IDEAS CEO, Wan Saiful Wan Jan
Next, Prof. Gomez started his lecture by thanking the audience, his contributing authors, Prof Jean Marc Roda, Vishal Daryanomel from Palgrave Macmillan publishers, Gerakbudaya, international and local reviewers, his family as well as IDEAS for their support to the book.
Prof. Gomez started his lecture by stating the reasons behind the study. He emphasized on the importance of understanding the state’s intervention and the nature of Malaysia’s new political economy. Malaysia’s GLICs control an estimated RM 1 trillion in investments and 35 GLCs in the top 100 companies listed in Bursa Malaysia (42% Market Capitalization). By understanding the GLIC’s ownership and control, we will understand the historical evolution of corporates in Malaysia.
Prof. Edmund Terence Gomez
Next, Prof. Gomez elaborated on the seven GLICs namely Minister of Finance Incorporated (MoF Inc), Perbadanan Nasional Berhad (PNB), Khazanah Nasional, Employees Provident Fund (EPF), Kumpulan Wang Amanah Pekerja (KWAP), Lembaga Tabung Angkatan Tentera (LTAT) and Lembaga Tabung Haji (LTH). MoF Inc is the government investment special purpose vehicle and it is the super entity of all GLICs in Malaysia. Five GLICs are under direct control of the Minister of Finance. The Minister of Finance also has power over LTH and LTAT. The structure shows control by MoF derives from legislation, majority ownership (Khazanah) and golden shares.
After that, he mentioned about the ownership and control of the seven GLICs according to sector namely property development and construction, financial institutions (including Maybank, Bank Islam and CIMB), media (Media Prima), plantation sector (including Sime Darby and FGV), utilities (TNB, Axiata, Telekom), oil and gas sector (largely Petronas), healthcare and services (including Malaysia Airline and Bursa).
Prof. Gomez also revealed the presence of UMNO directors in GLICs and top 100 listed companies in Bursa for 2013. Khazanah and LTH are the only GLICs that have UMNO members. Khazanah’s UMNO directors have professional credentials and appointed by virtue of their government posts. Meanwhile, LTH’s UMNO directors have no professional credentials. He also mentioned about the young professionals in GLICs and GLCs that have proved their capabilities during 1997/1998 Crisis. They are now the elite team managing the GLICs and major GLCs.
Prof. Gomez also presented few positive dimensions and repercussions of GLIC Ownership & Control. Before he ended his presentation, Prof. Gomez gave a few suggestions on how to reform the GLICs and GLCs. With dominance of the Minister of Finance over corporates in Malaysia, he stated that Prime Minister cannot be the MoF. To overcome problem of government that both regulates and owns GLICs/GLCs, institutional autonomy is required for oversight bodies such as the Securities Commission, MACC and Bank Negara.
Prof. Gomez also suggested the creation of a government body with operational oversight of GLICs/GLCs for the purpose of providing policy coherence and coordinate GLIC/GLC activities to achieve social & economic objectives. This goes on while the MoF remains responsible for financial aspects. There is also a dire need for internal managerial reforms of GLICs/GLCs, such as giving the autonomy to professional managers, but also need to select parliamentary committees led by opposition members. Lastly, we must review affirmative action in business by recognizing and enforcing the rights of property that will also curb political patronage.
The event ended at 12.30 pm.