This article first appeared in Forum, The Edge Malaysia Weekly on November 30, 2020 - December 6, 2020

The US presidential election is baffling and comical. It boggles the mind that someone like Donald Trump can garner close to half of the votes cast but it goes to show that Trump is not an aberration, and represents a sizeable part of the American population.

The comical part of the elections is that more than two weeks after polling, there is still no official result yet as that is an elaborate process that takes months. In the meantime, instead of conceding the election which has been the convention, Trump is behaving in ways that undermine the whole election process, with apparent support from the leadership of his own party. It makes the US look like some fledgling Third World country experimenting with democracy.

Trump’s behaviour illustrates what is already known of many systems of governance, be they in firms, statutory bodies or governments — that the head can transgress boundaries and that the checks and balances in place can be wielded to accommodate instead of constrain such behaviour.

The US experience is the result of deep divisions in its society that have resulted in this toxic partisanship in the body politic. That one man from one side of the divide can so undermine the whole system seems secondary to the partisan sentiment that “our side is the right side”. It is this very partisanship that created the opportunity for a Trump to emerge and for him to behave the way he did.

In Malaysia too, political patronage and partisanship has resulted in the over-concentration of powers in the executive branch of government and the development of a political as well as an administrative culture that accommodates transgressions.

As in the US, this is mainly due to increased divisions in society and the resultant fractured politics. Excessive partisanship removes the lenses that see the common good, and that common good in politics is in the national interest. There seems to be only partisan interests and that is pursued in ways that typically destroy the very safeguards of the common interest.

This is of course made worse by a legislative branch of government that is effectively dysfunctional, whose existence seems to just fulfil the façade of separation of powers. Our legislation and legislative process reflect the dominance of the executive branch, right from Merdeka, and that has not changed much. Despite its standing in the constitution, parliament is largely still ceremonial and subservient to the executive.

Recent developments involving parliament illustrate this. Confronted with members who wanted their motion of confidence on the government to be debated and decided, the Speaker of the Dewan Rakyat startlingly opined that it is the minister who decides on the content and priority of the proceedings in the Dewan, including on the fundamental question: does the government enjoy majority support?

The Speaker sees himself bound by the Standing Orders of the Dewan, its own creation, which always prioritise government business over members’ motions, a position that puts the Dewan squarely under executive control, a position of subservience.

Throughout our legislative history, which is an extension of colonial practice — the British “legislated” via their appointed legislative council — the executive has always enjoyed wide powers. While Merdeka saw the election of members to the legislature, members largely still function like the appointed members of the past — their votes are required as a matter of procedure but they do not do much in shaping the laws or in overseeing the statutory entities they create. They enjoy ceremonial prominence without much substance.

Malaysian laws are also drafted in a manner that seemingly gives the minister in charge powers beyond the words in the acts, which is akin to parliament delegating generous discretionary powers to the executive. And if the oversight function of parliament is also weak, the executive reigns supreme. Ministers can decide and gazette their decisions and it will have the force of law.

It is proper that the government of the day via the respective ministers in charge appoint members of the board of statutory bodies, for example, and it is equally proper that those on the boards resign with changes in government, but the powers of ministers should stop there. The boards should then be guided by the respective acts to perform its duties.

For example, the Employees Provident Fund (EPF) is a statutory body created by parliament as a social security organisation that provides retirement benefits to employees in the private sector. Its main task is to ensure proper management of the fund in order to fulfil its objectives. The EPF reflects the government’s foresight back then to protect employees’ welfare and in the process, contribute towards the deepening of Malaysia’s capital market.

It has been well-managed, with its board having representatives from the various stakeholders as stipulated by its act. It is now almost a RM1 trillion fund, which also makes it the largest player in both the debt and equity markets.

But the fund has enormous challenges in fulfilling its objectives. The most crucial among them is the fact that the majority of its members will retire with inadequate funds to finance their retirement. The fund is also grappling with its increasing presence in the domestic capital market, which calls for greater diversification and more complex risk management. In the last 10 years or so, however, the EPF has become a fiscal policy tool as well; a decision by the government to use the fund to achieve its objectives instead of the fund’s objectives.

The government decided to reduce the percentage of the employer’s contribution to “help firms’ cash flow” during the economic slowdown, which was at the expense of employees. And one of the proposals to ease the effects of the Covid-19 pandemic is to allow employees to withdraw from their own retirement funds. Again, this will be to the detriment of employees who generally will not have enough retirement funds even if they had not withdrawn any money.

A sudden withdrawal, some RM50 billion, according to some estimates, will also have implications on the overall financial model of the EPF and impact the markets too as the EPF adjusts its portfolio. These are decisions taken by the executive branch, which the EPF board is supposed to implement. These are decisions that should not have been made.

Education fund, the Perbadanan Tabung Pendidikan Tinggi Nasional (PTPTN), which is supposed to grow and be financially sustainable, also saw its financial model destroyed because of executive directives and decisions — from reducing the interest rates charged on the loans to broadening the use of the loans and decisions to offer discounts on repayments.

These decisions so altered the financial model of PTPTN that, more than 20 years after establishment, it is still dependent on government support today. It is sitting on some RM40 billion of government-guaranteed debt, which very likely exceeds the value of the loans disbursed using those funds. It is almost certain that the EPF is one of the lenders and repayment looks fairly uncertain without government guarantees being called.

In 1988, the government formed the National Trust Fund (Kumpulan Wang Amanah Negara) as a statutory entity; a fund for tomorrow with contributions intended to come from income derived from the nation’s natural resources. After 30 years, the fund has only accumulated RM16 billion, with contributions coming only from Petronas.

For perspective, the total amount of dividends paid by Petronas to the government in 2019 alone was RM54 billion, monies going to government coffers and spent. The National Trust Fund could have been so much larger and contributed in various ways to strengthening not just government finances but also public investments in future technologies and industries for future generations globally. Instead, we have a rather minuscule national trust fund and a total government debt of RM1 trillion.

Of course, 1Malaysia Development Bhd is the ultimate example of how checks and balances in the system can break down at multiple junctions when the executive wields its power. A stronger parliamentary oversight on government finances, on the issuance of government guarantees for example, may have contained the abuse and made them public sooner.

The legislation regarding statutory bodies is outmoded and should be seriously looked into and parliamentary oversight of its own creatures should be made more prominent to balance against executive prerogative. Statutory bodies, whether they are funds or regulators, should be sufficiently independent of the executive and be professionally run within the ambit of their respective acts. Parliamentary select committees should be formed to monitor their performances and make them accountable. That is what members of parliament should be doing, not sitting on the boards of these bodies.

After de-mythifying incumbency rule in 2018, it will be a while before a new stable political equilibrium is obtained. In the meantime, it is in everyone’s interest, partisanship notwithstanding, that political power is more dispersed instead of being concentrated in the executive, for incumbency is no longer a sure thing.

Dr Nungsari A Radhi is an economist and former member of parliament for Balik Pulau

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