The Malaysian Insight

GOVERNMENT-LINKED investment companies (GLIC) and government-linked companies (GLC) are well managed but there is a need to remove the finance minister’s portfolio from the prime minister to curb the concentration of power, said a professor of political economy.

“The prime minister cannot be heading MOF. There is too much political and economic power in the office of the prime minister via MOF. However, there is no political will to reform,” said Edmund Terence Gomez said at the launch of his latest book, Minister of Finance Incorporated Ownership and Control of Corporate Malaysia.

The Ministry of Finance (MOF) owns seven GICs – MOF Inc, Employees’ Provident Fund (EPF), Lembaga Tabung Aangkatan Tentera (LTAT), Retirement Fund Inc (KWAP), Khazanah Nasional Bhd, Permodalan Nasional Bhd (PNB) and Lembaga Tabung Haji (LTH) which collectively owns RM1 trillion in investments.

“The seven GLICs control important companies in the economy. They have majority ownership of 35 public-listed companies and in terms of market capitalisation, they control about 42% of the entire Bursa Malaysia,” said Gomez, reiterating that the findings showed the concentration of power in MOF Inc.

According to Gomez, the author of several books and publications on the Malaysian economy and politics, his research has shown that the GLICs and GLCs are well managed and there has been a shift in the composition of the management with more professionals and fewer politicians.

Notable names in the GLICs and GLCs are Azman Mokhtar, Shahril Ridza, Abdul Wahid Omar and Wan Kamaruzaman Wan Ahmad, who have all steered the GLICs well.

Data from 2013 showed only seven Umno politicians held positions in GLICs and GLCs as compared with previously. The chairman posts, however, are still dominated by politicians and bureaucrats and former bureaucrats.

Another interesting finding was that the GLICs and GLCs control many sectors from banking to plantations, construction and oil and gas.

However, all roads from GLICs and GLCs point to MOF Inc which, in turn, lead to the offices of the finance minister and prime minister.

Gomez proposed a reduction in the concentration of power and also proper checks and balances, such as an operational oversight body for the GLICs and GLCs instead of MOF.

Gomez’s book also looked at state intervention in the economy which politics also came into play.

The economy is driven by the prime minister of the day from the New Economic Policy introduced by Abdul Razak Hussein, the rise of Bumiputera businessmen during Dr Mahathir Mohamad’s era to the reforms instituted by Abdullah Ahamad Badawi and Najib Razak.

Gomez shared his latest findings, including the steady decline of Chinese ownership in equity to 34.9% in 2008 from 45.5% in 1990 and the rise of foreign-owned equities to 37.9% in 2008 from 25.4% in 1990.

Bumiputera ownership rose to 21.9% in 2008 as compared with 19.2% in 1990. – August 10, 2017.