The recent surge in politicians appointed to head government-linked entities has attracted broad criticism. These appointments are widely seen as political maneuverings by Prime Minister Muhyiddin Yassin to solidify his command of support of Dewan Rakyat members, thus ensuring the survival of the Perikatan Nasional (PN) government which he currently heads. What could the implications of these appointments be to the governance of public entities, especially in the case of statutory bodies?

This Monitor briefly discusses the recent political appointments in statutory bodies from a governance perspective. It then considers changes in the policy orientation of Majlis Amanah Rakyat (MARA) in three separate administrations.

• Government-linked investment companies (GLICs) have higher presence in policy-driven industries such as Telecommunication and Media, Transport and Logistics, as well as Utilities. High equity ownership in the Finance industry is also particularly concerning as most GLICs have controlling stakes in at least one bank.
• High degree of GLIC footprint in these industries poses concentration risk to depositors since their savings through these institutions have investment exposure to the same choice of companies. For example, in Telecommunications and Media, the GLICs are majority shareholders in Axiata, Telekom Malaysia and Time Dotcom who are competitors.
• GLICs’ relatively strong presence in the Finance industry, particularly in banks, raises questions on the allocative efficiency and competitiveness of the financial market. High level of GLIC ownerships may also create “home field advantage” for Malaysian banks over foreign-owned entrants, but it is unclear whether this same advantage could also be reversed when the same banks compete abroad.
• The concentration risk facing the GLICs may necessitate an increase in investment exposure abroad. But, given the market stabilization factor of GLICs, it is possible that a portfolio reallocation towards global markets may increase volatility in the local capital market and the economy in general.
• One important debate to have moving forward is the need for a clear separation between ownership and regulation of GLICs. There is also a growing economic price to pay for GLCs to continue serving as a vehicle to pursue socio-economic policies as companies become more competitive through specialisation in the context of global and regional supply chains.

IDEAS welcomes progress in combatting COVID-19 and encourages the government to develop an exit strategy for the eventual end to the Movement Control Order (MCO). In our latest paper written by IDEAS Senior Fellow, Carmelo Ferlito and and Gaetano Perone, Research Fellow at the Department of Management, Economics and Quantitative Methods of the University of Bergamo in Bergamo, Italy, we’ve proposed several steps.

In the short run, we must bring the economy back on-line as quickly as possible, prioritising networked industries. Specific recommendations include:

1. To include logistics as among the essential services
2. Provide rapid feedback from MITI for the industry-related firms.

In the medium-run develop protocols for lower restrictions under strict sanitary conditions. Specific recommendations include a gradual relaxation of MCO under strict sanitary conditions (including mass testing), as recently proposed by Dato’ Seri Azmin Ali.

In the medium and long-run the government should accelerate adaptation by firms, to cope with prolonged disruptions. Specific recommendations include fiscal incentives to automation, to reduce dependence on a large labour force.

There are 1.5 billion students from over 165 countries who are out of school due to the COVID-19 pandemic as announced by UNESCO on 26 March 2020. Malaysia is one of the 165 countries which has closed schools due to the pandemic. School holiday in Malaysia has been extended by 3 weeks after the school holidays in March. At the time of writing, there is still a possibility of the extension of the Movement Control Order (MCO) beyond 14 April 2020.

There are many scenarios that might play out after 14 April 2020. First, we might resume back to business as usual, where businesses and schools will be reopened. Second, the MCO might be extended. Third, we might resume businesses and schools but would go back to MCO if there is another surge in the number of infections. In these circumstances, what would happen to our children’s education? What would happen to their learning?