Sarawak Report, the whistleblower site that exposed Malaysian Prime Minister Najib Razak’s extraordinary RM2.6 billion deposit in his private accounts at the AmBank in Malaysia, said the latter’s extraordinary powers are a bane for the country.
The blog cited a paper by the researcher, Terence Gomez of the University of Malaya that explains the ongoing concentration of powers in the hands of one man.
But the blog said the problem (although it is carefully not described as such by the author, Terence Gomez) is that Malaysia’s largely resource-based economy is predominantly under government ownership.
This factual examination of the extent of the powers of the one man, who holds the two key offices of state, through the Ministry of Finance and Prime Ministership, shows just how much of the country’s economy has fallen under the control of a single decision-maker.
“The decision maker, Najib, who if so-minded, could, therefore, drive the welfare of all Malaysians and their descendants into disaster virtually unchecked,” said SR.
Furthermore, the funds that manage the pensions and savings of the population, not just government workers, are also unusually managed by the government rather than independent businesses or trusts. Furthermore, these funds now control most of the private sector businesses on top.
Two major office-holders
It gets worse. Thanks to the growing centralisation of political power that has taken place in Malaysia, as a result of 60 years of one-party rule, the control over these government managed companies and funds and private businesses have accumulated into the hands of just two major office-holders. The Prime Minister and the Finance Minister.
In Malaysia the final step towards total centralisation of economic and political power came with the astonishing merger of these two offices into the hands of a single politician, who is also the President of UMNO which is the party that has inserted its senior members into all the leading decision-making posts in government and corporate posts throughout Malaysia.
While the professor and SR forgot to mention that the merger of both portfolio’s came at the time of former PM Mahathir Mohamad after the sacking of Anwar Ibrahim in 1998, they expressed their beliefs that Malaysia is a ‘democracy’ which is run like an old-fashioned Soviet party-based economy.
Nevertheless, today Najib, through his inherited offices of state, controls the management of the key Government Investment Companies (GLICs) namely MoF Inc, Khazanah, PNB, EPF, KWAP, LTH, LTAT, FELDA, which in turn have invested in a substantial number of Malaysia’s most important private enterprises, giving him immense power over decision-making in the private sector as well.
Thirty-five of these so-called GLCs (Government Linked Companies) feature in Malaysia’s top 100 companies on the Malaysian stock exchange, according to Professor Gomez. They account for nearly half of Malaysia’s entire market capitalisation of listed companies.
Huge and supposedly independent investment funds, such as the Employee Provident Fund, PNB and Khazanah are also ultimately subject to the Minister of Finance, owing to the legislation under which they have been structured – legislation brought in or altered by a self-interested political party, which has never given up its political power.
For example, the Minister of Finance controls MoF Inc, which wholly owns Kazanah and holds a ‘Golden Share’ over the vast investment fund PNB.
The Employee Provident Fund (EPF) asserts its independence and yet the entire Board and its CEO are appointed by the Minister of Finance himself. So, little surprise that Najib felt able to promise Donald Trump last month that he would make sure the fund invested in the United States to ‘help make America great again’.
Likewise the pension fund KWAP and likewise Tabung Haji and likewise FELDA. Other major agencies also dominated by the Government, such as MARA, which reports to the Minister of Rural and Regional Development, are also ultimately controlled by Najib, in that he can hire or fire the minister concerned.
Malaysians have become used over the years to seeing these institutions relatively well run by reasonably diligent professionals. However, the increasingly centralised structure of Malaysia’s ruling UMNO party has created a dangerous weakness that many are only just beginning to wake up to. What if the man in charge goes ‘rogue’?
It happens, ask the world’s greatest democracy, America, which is now reining in their President, thanks to Congress, the Senate and independent Departments of State. You need institutional checks and balances to make sure that what the ‘man in charge’ says he will do is what he actually does.
Najib, back in 2011, announced he was going to open up Malaysia’s economy and divest the Government’s excessive involvement and control over even the private sector. At the same time he promised the liberalisation of civil society. It did not happen.
According to Professor Gomez, in terms of the economy the reverse has happened: the Government’s share of the KL Composite Index has increased from 43.7% to 47.1% – an extraordinary figure.
This is only a part of the research and analysis done by Professor Gomez.