What we stand for

G25 is committed to pursue a just, democratic, peaceful, tolerant, harmonious, moderate and progressive multi-racial, multi cultural, multi religious Malaysia through Islamic principles of Wassatiyah (moderation) and Maqasid Syariah (well-being of the people) that affirms justice, compassion, mercy, equity.

Malaysia is to be led by rule of law, good governance, respect for human rights and upholding the institution of the country.

We aim to ensure, raise awareness, promote that Syariah laws and civil laws should work in harmony and that the Syariah laws are used within its legal jurisdiction and limits as provided for by the federal and state division of powers.

There should be rational dialogues to inform people on how Islam is used for public law and policy that effects the multi ethnic and multi religious Malaysia and within the confines of the Federal Constitution, the supreme law of the nation.

We work in a consultative committee of experts to advise the government and facilitate amendments to the state Syariah laws, to align to the Federal Constitution and the spirit of Rukun Negara.

It is imperative to achieve a politically stable, economically progressive Malaysia and to be able to enjoy the harmony, tolerance, understanding and cooperation in this multi diverse country.

State of GLCs a matter for concern

 

A MAJOR topic at the inaugural Malaysian Economic Symposium held on July 26 at the Parliament Complex was government-linked companies (GLCs). The big issues about GLCs are not only their large presence in the economy but also their governance.

As mentioned in the symposium, which was jointly organised by the Office of the Speaker of the Dewan Rakyat, the Backbenchers Council and the Parliamentary Caucus on Reform and Governance to get a deeper understanding of the challenges facing the economy, there are so many GLCs that nobody knows what the total number is. The other concern is their lack of transparency and accountability.



About 15 years ago, the then prime minister launched the GLC Transformation Programme to raise the standards of corporate governance in government-linked companies following the guidelines issued by the Securities Commission and Bank Negara Malaysia, as part of the reforms to make the economy more resilient to external shocks.



The New Economic Model report to the National Economic Action Council also stressed the need to reform GLCs so that they do not affect adversely the efficiency and competitiveness of the economy and become an obstacle towards making Malaysia a fully developed high income country.



Khazanah Nasional, Employees Provident Fund (EPF) and Permodalan Nasional Berhad (PNB) adopted these guidelines to strengthen their internal checks and balance and make their major GLCs more attractive to local and foreign investors. Good governance in the companies owned by these three national institutions is important as their shareholdings in the corporate sector account for a big share of the market capitalisation.



Further, as the country’s national wealth fund, Khazanah realised its responsibility as an MoF (Ministry of Finance) Inc corporation to set the tone for good governance.



EPF and PNB are responsible for paying good dividends to millions of their subscribers. Like Khazanah, they too insist on their investee companies to adopt good governance practices so that when they do well in the market place, the benefits will go to their subscribers.



One of the important guidelines in good corporate governance is that the board of directors should be evaluated on the “fit and proper“ criteria before they are appointed. One major requirement in the criteria is that the nominee for board appointment should not be politically connected or linked so as to protect the independence of the board from outside interference.



A good board should have the committees on audit, nomination, renumeration and risk management actively checking the management and also providing it with professional advice and recommendations.



The presentation by the university professor at the symposium highlighted the political links of GLCs, with many ministries involved in overseeing them. Thus, the ministries dealing with rural and land development, technology and research, tourism, sports, youth and culture are among the ministries which have GLCs to implement their policies and projects.



Ministerial influence on the GLCs is not always good. The federal GLCs are MoF Inc in ownership but administratively, they answer to the ministers. Often, the GLCs have bumiputra partners who are linked to the top circles or their own relatives in forming joint venture business to provide the privatised services to the ministry. With the political connections, the contract prices that the ministry pays to the GLCs for supplying the work orders or purchases may well be above the market price. The GLCs are thus operating at the expense of taxpayers.

 

Some politicians use GLCs and trustee foundations under religious authorities to promote their political activities under the guise of CSR (corporate social responsibility), like sending pilgrims to Mekah, sponsoring religious events, building surau or paying for goodwill golf trips overseas, including their wives’ travel costs.

 

States also have their GLCs established as Mentri Besar Inc companies or as subsidiaries of statutory bodies like state economic development corporations (SEDC) and state agricultural development corporations. Many of these GLCs have joint ventures with bumiputra partners who are politically linked. Malay property developers have raised issues over the SEDCs which build shop lots and commercial buildings at lower cost because they get priority access to state land and often at lower than market price, thus undercutting the genuine Malay private sector.

 

The Pakatan Harapan government has pledged that the appointments to GLCs will be non-political in the sense that politically active persons will not be appointed as directors of the companies. The government wants to bring professionals to serve on the GLC boards to improve their performance.

 

 

The definition “non- political“ should include persons holding any kind of party positions because those at the lower levels can be just as ambitious in using the GLCs for gaining influence among the top leaders.



Some professionals have left active politics but remain advisers to a political party or are business associates with high-ranking politicians or are married into powerful political families. It's not clear whether such professionals can be considered as independent or free from politics.



A good board should respect the views of its committees on nomination, remuneration, audit and risk management. These committees are mandatory for listed companies and banks as the Securities Commission and Bank Negara are very strict about good corporate governance to provide the internal checks and balance to prevent the board from making wrong decisions or from being influenced by the chairman’s personal or political interests.



The government should make it compulsory for all GLCs to be similarly regulated, especially those under the control of state governments and statutory bodies as they are highly politicised.



Business associations have always complained in every dialogue with the government that the GLC sector is too large and is crowding out the private sector. As growth is fundamental so that more wealth can be created in the economy to generate the resources for the government to spend on the poor, it should consider reducing the size of the GLC sector so as to strengthen the investment climate and provide more room for the private sector to expand locally. Those GLCs that are a financial burden to taxpayers should be closed down or sold off before they cause a financial crisis to the country.


The Star

 

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