freemalaysiatoday.com

IDEAS: State-owned enterprises deserve further scrutiny

FMT Reporters

PETALING JAYA: The Institute for Democracy and Economic Affairs (IDEAS) has launched a book titled “Minister of Finance Incorporated: Ownership and Control of Corporate Malaysia”, which offers a deep analysis of government-linked investment companies (GLICs) and their ownership and control of Bursa Malaysia’s top 100 publicly-listed enterprises.
At the event to launch the book yesterday, author Professor Edmund Terence Gomez described the pyramid structure controlling corporate Malaysia.
Gomez, who is an IDEAS senior fellow and political economy lecturer at Universiti Malaya, said his research found that most of the country’s largest corporations are controlled by seven GLICs.
“All these GLICs in turn fall under the jurisdiction of the Ministry of Finance.
“The extent of the GLICs involvement in the economy can be seen from their ownership of 35 public-listed companies that constituted an estimated 42% of the total market capitalisation of all listed companies in 2013,” IDEAS said in a statement today.
IDEAS also revealed that the research by Gomez showed that through these 35 public-listed companies, the seven GLICs are ultimately linked with about 68,300 companies.
IDEAS chief executive Wan Saiful Wan Jan said the research also revealed the extensive reach of the finance minister.
“There is a remarkable concentration of political and economic power in the office of Prime Minister Najib Razak, by virtue of him also being the finance minister.
“Through the Minister of Finance Incorporated (MoF Inc) and six other GLICs, his economic reach is phenomenal,” Wan Saiful said.
He also expressed his concern that the fact that the finance minister is also responsible for the appointment and removal of GLIC directors could “undermine the trusted system of checks and balances and lead to abuse of power”.
“It is a huge incentive for any prime minister to continue appointing himself as the finance minister.
If we continue with this system, the two roles will never be separated because the prime minister will always fear losing such a huge control of the economy,” Wan Saiful said, adding that the real issue with corporate governance of our state-owned enterprises is that too much power is concentrated in one hand.
Calling for the “system” to be improved, Wan Saiful said there was no need to reinvent the wheel, but to instead look to the many international standards that the country’s administration could follow.
“I strongly urge the government to look into the OECD Guidelines on the Governance of State-Owned Enterprises which I think provides a good enough framework for us to start with,” he said.