Malaysia: The state of the nation: politics and the changing face of Corporate Malaysia – 25 Jul 2017

  • Government-linked companies (GLCs) are the key players in the economy today, with the Ministry of Finance as the super entity in the economy, according to an academic.
  • This, said Universiti Malaya’s Prof Edmund Terence Gomez, an expert on corporate Malaysia and politics, had resulted in an “unprecedented concentration of power in the executive”. By 2013, he said, 7 of the top 10 companies were GLCs, which also made half of the top 30.
  • Gomez’s research shows that just seven government-linked investment companies (GLICs), control over 68,000 companies directly and indirectly with minority interest. He said this was of concern because there was “extreme concentration of power” in Minister of Finance Inc.
  • Gomez proposed several reforms to reduce this concentration of power in the finance ministry. He said that to ensure proper checks and balances, the prime minister could not also maintain the finance portfolio.
  • Gomez called for an operational oversight body for GLICs and GLCs, instead of concentrating it in the ministry of finance. This could provide policy coherence and coordinate GLIC and GLC activities to achieve specific social and economic objectives, according to The Edge report.
  • Gomez noted that the nature of corporate control was different under the different prime ministers. From Gomez’s research, there are several defining moments that are inextricably linked to Malaysia’s politics and history.
  • The first defining moment, according to him, was in 1970 when the New Economic Policy (NEP) introduced by then prime minister Tun Abdul Razak Hussein to fight poverty and redistribute wealth more equitably. It was then that the government decided to cast away its laissez-faire policy and actively intervene in the corporate sector.
  • The next turning point came in 1981, when Tun Dr Mahathir Mohamad became prime minister and decided that the purpose of the NEP was to create bumiputera capitalists or bumiputera businessmen, not GLCs (government-linked companies). It marked the start of an era where many public enterprises were privatised in order to help create a class of bumiputera capitalists.
  • Gomez noted that another interesting development in 2013 was that foreign-controlled firms were re-emerging as important players in the economy. His research also shows that manufacturing firms are no longer a major force in the economy.

External Link : http://www.theedgemarkets.com/article/state-nation-politics-and-changing-face-corporate-malaysia

External Link : http://www.freemalaysiatoday.com/category/nation/2017/07/25/glics-control-68000-companies-and-42-of-bursa-malaysia/

25-Jul-2017


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