Thursday 28 Mar 2024
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This article first appeared in The Edge Malaysia Weekly on November 28, 2022 - December 4, 2022

A spate of new appointments can be expected at some government-linked companies (GLCs), government-linked investment companies (GLICs) and key institutions in the months ahead, as is usually the case when there is a change in the country’s leadership.

Nevertheless, analysts and market observers whom The Edge spoke to are hopeful that the new Pakatan Harapan-led unity government — the first of its kind in Malaysia’s history — will break from tradition and avoid making unnecessary CEO or boardroom changes.

“In particular, we need to rid ourselves of [this practice of] having political appointees in some of the boardrooms to ensure political subservience. Boards and management should be made up of professionals, technocrats … they should be [allowed to run the companies] free from political interference,” says Alexander Chia, head of regional equity research at RHB Investment Bank.

“I think if this new PH-led government is to live by its word of wanting to be transparent and having strong governance standards, then clearly, those who are currently seen as political appointees stand the greatest risk of being shipped out,” he adds.

Chia also notes that times have changed and investors do not view political appointments favourably.

“These days, you have ESG (environmental, social and governance) issues to consider. The governance aspect is a very big thing right now. If there were to be any political appointees, you would risk the markets marking them down in their ESG scoring,” he says.

The new government should “refrain from committing excessive political appointments to GLCs or federal statutory bodies as a way to reward political support”, Tricia Yeoh, the CEO of think tank The Institute for Democracy and Economic Affairs, pointed out in a Nov 24 media statement.

Gerald Ambrose, CEO of asset management firm abrdn Islamic Malaysia Sdn Bhd, says a unity government should bode well for GLCs and GLICs.

“I think the overall view is, the unity government is the best outcome in that [no one political party] is going to be able to attempt anything that’s going to upset the others. So, this is the perfect situation in which the Malaysian economy can run on its own without interference from politicians,” he tells The Edge.

The unity government, led by Prime Minister Datuk Seri Anwar Ibrahim who took his oath of office only last Thursday, comprises PH, Barisan Nasional, Gabungan Parti Sarawak, Gabungan Rakyat Sabah, Warisan, Muda,  Parti Bangsa Malaysia, Parti Kesejahteraan Demokratik Masyarakat and two independents. Perikatan Nasional has opted not to participate in the unity government and instead take on the role of Opposition to provide checks and balances in the 15th parliament.

Companies to watch

Among the public-listed GLCs that analysts and fund managers say will be closely watched for potential CEO or boardroom changes are Tenaga Nasional Bhd, Telekom Malaysia Bhd, Axiata Group Bhd, Malayan Banking Bhd and CIMB Group Holdings Bhd.

“We expect that any changes are more likely to be at the chairman and board level, rather than CEO and C-suite level,” says one of the analysts.

As for GLICs, the main ones expected to come under the spotlight are the Employees Provident Fund (EPF), Permodalan Nasional Bhd (PNB), Kumpulan Wang Persaraan (Diperbadankan) (KWAP), Khazanah Nasional Bhd and Lembaga Tabung Haji.

Key institutions in relation to business and the economy such as Bank Negara Malaysia, the Securities Commission Malaysia (SC) and even stock exchange operator Bursa Malaysia Bhd are also likely to be scrutinised for potential people changes.

Notably, all eyes will be on Bank Negara governor Tan Sri Nor Shamsiah Mohd Yunus, whose five-year term comes to an end on June 30 next year. She was appointed to the role on July 1, 2018, on the recommendation of then prime minister Tun Dr Mahathir Mohamed and upon royal consent. Her predecessor Tan Sri Zeti Akhtar Aziz served for 16 years.

Nevertheless, RHB Research’s Chia points out that it may be too early to speculate on which companies or institutions could undergo changes at the top as some of these would depend on the cabinet line-up.

“Frankly, I doubt anyone will be removed unless his or her term ends,” says one market observer.

In some instances, changes at the top are inevitable. For example, the chairman role at Khazanah has always been held by the prime minister of the day. The current chairman is Datuk Seri Ismail Sabri Yaacob, but it is understood that the role will eventually go to Anwar.

Interestingly, among Khazanah’s current board members is politician Datuk Seri Mohamed Azmin Ali. He was appointed as a board member on July 30, 2018. Former finance minister Datuk Seri Tengku Zafrul Abdul Aziz stepped down as a board member just before the 15th general election.

This year, among the more recent and controversial appointments was that of Datuk Awang Adek Hussin as the SC’s executive chairman, on June 1. Although he is no longer active in politics, critics were unhappy that he was put in that role.

 

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