Kuala Lumpur, 28 August 2018- The Institute for Democracy and Economic Affairs (IDEAS) launched its first Malaysia GLC Monitor 2018, Government in Business: Diverse Forms of Intervention (the “Report”) at University of Malaya today. The Report is authored by Professor Edmund Terence Gomez, IDEAS Senior Fellow and Professor of Political Economy at UM and his team of students, Thirshalar Padmanabhan, Fikri Fisal and Juwairiah Tajuddin.
This Report is a follow-up study to the book Minister of Finance Incorporated: Ownership and Control of Corporate Malaysia, published in 2017. The focus of this Report is on the diverse forms in which government intervenes in the economy, using publicly-listed GLCs, GLCs owned by Ministries and GLCs under state governments as examples.
During the launch, Prof. Terence began by presenting a historical timeline of how GLCs in Malaysia came into being. He emphasised the social dimension of GLCs, noting the strong link between GLCs and the overall affirmative action policy for Bumiputeras in Malaysia. There was a clear intention to create a Malay capitalist class to drive Malaysia’s economy forward. Prof. Terence then linked affirmative action to selective patronage and rent-seeking practices. Reforms are needed in this area, and he hopes that these questions will be raised in the upcoming Bumiputera Congress. Prof. Terence commented that in a post-racial Malaysia, the government should be organising a congress for the poor instead of focusing on a single race.
Regarding GLCs in the states, the main finding from the Report is the establishment of the Chief Minister Incorporated (CMI), which transfers power of state development from the State Economic Development Corporations (SEDCs) to the Chief Minister of the state. Prof. Terence questions this, asking if politicians should be directors of companies in the first place. He cautioned against the consolidation of economic power, which the opens doors to unchecked political power. CMIs in general are less accountable than SEDCs, and some of them do not have a board of directors.
On the New Economic Policy (NEP), Prof. Terence noted that its original method of affirmative action was through education for the Bumiputera poor. These education policies produced the Malay middle class who then grew to become leaders in their fields. Prof. Terence further commented that affirmative action should not be implemented in business.
IDEAS CEO Ali Salman comments “This report is an important addition to the current literature on the relationship between government and the economy in Malaysia. Prof. Terence’s work raises important questions about the purpose of GLCs, the rationality of affirmative action policies, how GLCs can be privatised, accountability and transparency in governance and the overall role of the government in the economy. IDEAS is hopeful that this Report will be utilised by the government in their efforts to shape Malaysia’s economy. We are also hopeful that this Report will probe future study into the GLC universe in the country.”
The Malaysia GLC Monitor 2018, Government in Business: Diverse Forms of Intervention will be uploaded on the IDEAS website by tomorrow morning (29 August 2018).