The Malaysian Insight

APPOINTMENTS of board members of government-linked companies (GLC), including politicians, are made based on the candidate’s qualification, expertise and experience, Finance Minister Tengku Zafrul Tengku Abdul Aziz told Dewan Rakyat today. 

The senator said such appointments are made in line with the Malaysian Code of Corporate Governance 2017. 

“Besides that, political appointments will have to undergo several rounds of vetting including by Bursa Malaysia, the Securities Commission, Bank Negara Malaysia, Malaysian Anti-Corruption Commission, Royal Malaysian Police and others,” he said.

“I would like to emphasise that the government is committed towards upholding the practice of good governance,” he added.

Zafrul was responding to a question by Lim Guan Eng (Bagan-PH) on the measures taken to improve Malaysia’s sovereign credit rating, which was recently downgraded by Fitch Ratings. 

Lim also said while Budget 2021 aimed to maintain Malaysia’s credit rating through fiscal consolidation, it failed to address issues such as political instability, poor governance and transparency, including replacement of GLC board members with political appointments. This has contributed to the downgrade of Malaysia’s credit rating.

On December 4, Fitch Ratings downgraded Malaysia’s long-term foreign currency issuer default rating (IDR) to “BBB+” from “A-” on the back of lingering political uncertainty and substantial impact of Covid-19 on the economy.

Responding to the move by Fitch, Tengku Zafrul said international rating agencies have downgraded the sovereign credit ratings of more than 100 countries.

Although this is in line with global standards, Putrajaya is of the view that the ratings agency did not take into account the effectiveness of the economic stimulus packages, he said.

This is evident through the smaller quarterly contraction of the gross domestic product (GDP) of 2.7% in the third quarter of 2020, compared with 17.1% in the second quarter.

He also noted that although several quarters have said that the government is optimistic with its GDP growth projection of 6.5-7.5% for 2021, the forecast is in line with Fitch’s own expectation of 6.7%.

“Other institutions, such as the IMF (International Monetary Fund), have projected a growth of up to 7.8%, which is higher than the government’s projection. This generally shows the restored confidence on the country’s economic recovery.”

Tengku Zafrul added that the stock market and ringgit have also been stable while there was a good appetite for government bonds. – December 15, 2020.