Kuala Lumpur, 30 June 2020 – The Institute for Democracy and Economic Affairs (IDEAS) published a report today entitled “Making sense of complexity in statutory body governance: A case study of MARA”, co-authored by IDEAS researchers, Lau Zheng Zhou and Nur Zulaikha Azmi. Using Majlis Amanah Rakyat (MARA) as a case study, the report highlighted structural gaps in the governance of statutory bodies which could lead to mismanagement and poor socio-economic developmental outcomes.
This concern is heightened following the recent surge in the number of political appointments to statutory bodies and also the GLCs. In response, it is necessary to focus in particular on the political appointments to statutory bodies where the report counted 22 of such instances at the time of writing.
First, the lack of clarity in the mandates and roles of the Board of statutory bodies could result in arbitrary policy interpretations and decision-making. Statutory body mandates are often loosely anchored on the promotion of socio-economic wellbeing of Bumiputera and the rural communities. In addition, the line Ministers are given direct and broad powers to decide on the roles of the Boards, including for the purposes of political outreach. Consequently, as seen in MARA’s case, it has over the years led to a greater focus on commercialization through the creation of various subsidiary GLCs, and thus deviated from achieving its original mandate.
Second, there is a lack of an independent vetting process and inclusive representation in Board nomination and appointment. Compared to publicly-listed GLCs, the nomination and appointment processes of leadership positions in statutory bodies are less understood, not least the fact that the Minister has broad powers to make those appointments. This calls for the creation of a Parliamentary Select Committee on Statutory Bodies with the power to vet leadership appointments and also to conduct public hearings. There is also a need to promote inclusivity in stakeholder representation in the Board appointments which can better align the interests of the Board and that of the general public.
Third, there is a lack of quality evaluation process of the Board of statutory bodies. There is no formal requirement for Board evaluations to be carried out too. The degree of adherence by statutory bodies to the submissions of audited accounts as legally stipulated is also questionable as it is not uncommon for annual reports to lapse or not made publicly available in a timely manner. Furthermore, the lack of capacity for key institutions such as the National Audit Department and the Members of Parliaments to play the role of checks and balances effectively also needs to be addressed immediately.
IDEAS Research Manager, Lau Zheng Zhou, commented that “it is worrying that the Parliament and the MPs, in general, are not monitoring with much effectiveness what the statutory bodies are doing today given the unprecedented scale of political appointments to these institutions.” Lau thinks there is great urgency to address the gaps in the existing governance structure of the statutory bodies. This entails making the process of Board appointments more transparent, empowering the Boards in decision-making, as well as strengthening institutional capacity to ensure proper checks and balance.
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The monitor can be downloaded here.