This article first appeared in The Edge Malaysia Weekly on November 4, 2019 - November 10, 2019

ANYONE looking to strengthen and reform Malaysia’s key institutions and government-linked companies (GLCs) must first understand the ties that bind the country’s political economy.

That is why political economist Edmund Terence Gomez and his colleagues spent countless hours connecting the dots and mapping out the web of GLCs, agencies and departments controlled and overseen by the various government ministries and related institutions.

That the prime minister cannot also be the minister of finance was one key point Gomez and his team at University Malaya proved in 2017, when sharing findings on decades of political involvement in the corporate sector in the book Minister of Finance Incorporated: Ownership and Control of Corporate Malaysia. Last year, an update on the government’s intervention in the economy — Malaysia GLC Monitor 2018 - Government in Business: Diverse Forms of Intervention — was published by the Institute for Democracy and Economic Affairs (IDEAS).

That Prime Minister Tun Dr Mahathir Mohamad is no longer finance minister was acknowledged in the IDEAS brief released last Tuesday titled “GLC Monitor 2018: State of Play since GE14”. Yet the battle is far from won. Mahathir, Gomez says, is still the “de facto” finance minister, despite relinquishing the portfolio to Lim Guan Eng from the Democratic Action Party (DAP).

His argument: Mahathir moved Khazanah Nasional Bhd and Permodalan Nasional Bhd (PNB) from the Ministry of Finance (MoF) to the Prime Minister’s Department (PMD), retaining control of the largest pool of companies here.

Malaysia’s long-standing government-business nexus is being reconfigured “in a manner that suggests a concentration of corporate [economic] power in his party, Parti Pribumi Bersatu Malaysia (Bersatu)”, say Gomez and co-authors Lau Zheng Zhou and Yash Shewandas in the 14-page brief, which noted changes in the ministerial reporting lines for multiple GLCs in five key ministries, the PMD, MoF, Ministry of Rural Development (MRD), Ministry of Entrepreneur Development (MED) and the newly-formed Ministry of Economic Affairs (MEA). (See Bersatu’s new Big Four? infographic on page 76.)

Of the five, four are key economic-based ministries, what they call “The Big Four”. “GLCs within these four ministries have also been shifted between them, though it appears to serve the purpose of ensuring each minister has enormous influence over a core mode of enterprise, large publicly-listed firms, statutory bodies, bumiputera GLCs and small and medium enterprises. These companies cover the entire spectrum of Malaysia’s corporate sector,” they note.

“This reconfiguration of control of GLCs probably serves as a mechanism to help Mahathir achieve his long-standing goal of creating a huge pool of bumiputera entrepreneurs. However, the reconfiguration also suggests a revised form of structural power that could allow Pakatan Harapan to use GLCs to serve its political interests in three ways: first, to channel government-generated concessions to key constituencies to garner electoral support; second, to channel government assets into private (well-connected) hands leading to a concentration of corporate wealth; and third, to allow for the appointment of politicians to the boards of GLCs to sustain the support of party members,” the authors surmise in the report.

Not everyone agrees. “Don’t forget that everything under the MoF was effectively under the prime minister before. Budget planning, tax, customs, Bank Negara Malaysia, the Securities Commission Malaysia, the Employees Provident Fund and Kumpulan Wang Persaraan are all still under the MoF,” an observer says.

The Pakatan Harapan Secretarial Council, which consists of the secretaries-general of the five PH component parties, also refutes the IDEAS report, pointing out in a Nov 1 statement that FELDA had been shifted out of PMD to the MEA to reduce the size of PMD as well as ring-fence many economic and financial functions away from the office of the prime minister to ensure no repeat of past abuses.

They also noted how the PMD’s budget allocation had more than halved from its peak in Budget 2018 and 2019 under PH. The number of ministers and deputy ministers in the prime minister’s department has also been reduced to six from 13 under the previous administration.

Cost is also saved as duplication is removed and roles consolidated from 92 agencies to 59 currently. The 59 include new agencies like The Governance Investigation, Income and Government Finance Committee (JKSTUPKK), headed by former auditor-general Tan Sri Ambrin Buang, which raised doubts over some land swaps as well as Lembaga Tabung Angkatan Tentera’s takeover of the Automated Enforcement System (AES) project at an above-market price of RM555 million under the previous administration.

Another notable difference, they say, is the newly formed National Centre for Governance, Integrity and Corruption (GIACC), which is preparing an Ombudsman Bill that would transform the Public Complaints Bureau into an avenue for people to lodge complaints and provide effective checks and balance on public agencies.

Still, there is the question of the independence of these agencies that were set up to prevent the abuse of power. The reporting line, Gomez says, needs to be an effective Parliament Select Committee headed by the opposition.

“I never said government should not be in business. Government should determine how it should be in business, how it can be part of a system that benefits the country, not a small group of people and business elites. PLUS, for example, I do not mind paying toll if the government [and EPF] owns it … that is why we need to get the institutional reforms right, have checks and balance in the system and clear guidelines as to what the government can do, the sectors it should be in,” Gomez tells The Edge.

“[We need to] put mechanisms in place for transparent and diligent reporting. [The government needs to explain] why it does certain things, allow effective media oversight, encourage public discussions, including with non-governmental organisations and allow effective independent monitoring and questioning of the way it operates,” he says, adding that time is of essence when it comes to instituting the necessary checks and balances for Malaysia to avoid slippage from the momentum of change.

There is a reason Lord Acton’s words continue to ring true: “Power tends to corrupt, and absolute power corrupts absolutely. Great men are almost always bad men, even when they exercise influence and not authority; still more when you superadd the tendency of the certainty of corruption by authority. There is no worse heresy than that the office sanctifies the holder of it.”

That the latest GLC update is visibly shorter than previous releases is a conscious decision to raise public awareness on the significance of the findings and the grave need to push for real change. At least two more (GLC briefs) updates are in the works.

“Otherwise, nobody will understand,” laments Gomez, who is dean of the Faculty of Economics and Administration at the University of Malaya, apart from being a senior fellow at IDEAS.

“I don’t think even the people [in government] know how many GLCs [and related entities] there are in total,” he says, noting how the confusion benefits “the old guard” who naturally want to continue using all resources available to them to cement their political standing.

Unless the rules are changed, the old guard or even newbies can legitimately use the convoluted GLC system for patronage to their benefit. “Why would they draw light to it? It is precisely because [the system] is covert that it can be used to consolidate political power and create economic wealth concentration,” Gomez says.

If Malaysia cannot count on a nonagenarian to put God and country above all, what hope does the country have in getting the institutional change it needs?

“The people need to shine the light,” Gomez says.

As the narrative goes, Malaysia needs to make institutions independent and  strengthen them to be the backbone of the nation so bad politicians will never have a chance to plunder the nation’s coffers, steal from the people, sap the country’s growth potential and dim our children’s future.

To do this, Malaysia needs to draw up regulations that require all public institutions and agencies to make timely and detailed reports of where money comes from and where it is spent. The government also needs to be transparent about appointments to institutions and agencies and shed lighr on remuneration packages to stem patronage.

For effective checks and balance, the people need to play their part and actually care about the information, or the lack of it.

“Whatever you think of politicians or the current government, GE14 proves that people power should not be underestimated. At the very least, there is the need to keep up appearances, the narrative of a clean, efficient and effective government and shared prosperity … Yes, we need to keep up the momentum [for change]. There is the realisation that a lot can be forgiven if things actually work for the majority of people and not just the few, don’t you agree?” the observer adds.

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