The changing face of corporate Malaysia

Source: The Star Online

Permodalan Nasional Berhad - one of Malaysia's GLIC. Pic by Tan Kim Bock

Permodalan Nasional Berhad – one of Malaysia’s GLIC. Pic by Tan Kim Bock

EVER wondered who dominate corporate Malaysia?

While Malaysia has its fair share of tycoons who have built their empires over the years, most of the country’s largest corporations are actually controlled by a select group of government-linked investment companies or GLICs who own major stakes in many large listed corporations in Malaysia dubbed government linked companies or GLCs.

For example, GLCs make up eight out of the 10 largest listed companies in Malaysia by market capitalisation and these eight have a combined market cap of a staggering RM452bil. There are a whole host of other GLCs in Malaysia, listed and unlisted.

And these GLICs in turn are under the control of the Finance Ministry, Universiti Malaya economics professor Dr Edmund Terence Gomez points out. (See graphic)

While similar structures exist in countries such as Singapore, Gomez, who presented a paper on the ownership and control of GLICs this week, is of the view that this is an inefficient ownership structure for corporate Malaysia.

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Who Owns Corporate Malaysia Now?

IDEAS_WhoOwnsCorpMsiaNow

PUBLIC LECTURE
Who Owns Corporate Malaysia Now?:
Ownership and Control of Government-Linked Investment Companies — Prof. Edmund Terence Gomez

This lecture reviews the evolving nature of state-business relations through a historical analysis of Malaysia’s seven government-linked investment companies (GLICs), including Khazanah Nasional and the Employees Provident Fund, that are key actors in all sectors of the economy.

These GLICs, which serve as sovereign wealth funds and savings-based institutions that vary significantly in terms of their size and objectives, own and control a large number of private and publicly-listed companies through complex pyramid-type organizational structures. The government, under different Prime Ministers, has employed these GLICs in the economy and in the corporate sector in different ways. Abdul Razak initiated their active involvement in the economy through his interventionist New Economic Policy.

Mahathir Mohamad stressed privatization that entailed the divestment of the GLICs’ corporate assets to businesspeople through a system of selective patronage to create corporate captains. A number of these companies were re-nationalized after the 1997 Asian currency crisis.

Abdullah Ahmad Badawi introduced a transformation plan in 2005 to improve efficiency within GLICs that had become owners of Malaysia’s leading publicly-listed companies. Najib Razak actively uses the GLICs to drive economic growth while also encouraging them to invest in the economies of developing countries.

A network mapping of the GLICs’ ownership and control of Malaysia’s top 100 publicly-listed companies will be provided to show the extent of their presence in the corporate sector. The political implications of the GLICs’ significant presence in the corporate sector will be assessed.

This lecture is jointly hosted by the University of Malaya’s Faculty of Economics & Administration and IDEAS, the Institute for Democracy & Economic Affairs.

Date: Thursday, 21 July 2016
Time: 10.00AM
Venue: Lecture Theatre 3, Faculty of Economics & Administration, University of Malaya

Edmund Terence Gomez is Professor of Political Economy at the Faculty of Economics & Administration, University of Malaya. Recently, he was appointed as the Senior Fellow at IDEAS. He specializes in state-market relations and the linkages between politics, policies and business development. His international publications include Malaysia’s Political Economy: Politics, Patronage and Profits (Cambridge University Press, 1997), Political Business in East Asia (Routledge, 2002),The Politics of Resource Extraction: Indigenous Peoples, Multinational Corporations and the State (Palgrave-Macmillan, 2012) and Government-Linked Companies and Sustainable, Equitable Development (Routledge, 2015). He is also Senior Fellow at IDEAS.

 

Post event news coverage:  The changing face of corporate Malaysia [23 Jul 2016]

Roundup on Budget 2016 – Centre to Combat Corruption and Cronyism (C4)

Source: The Malaysian Insider

 

Anti-graft group gives Budget 2016 low marks for transparency, best practices

Malaysia gets low marks in budget transparency, the Centre to Combat Corruption and Cronyism (C4) said in an analysis of Budget 2016, saying Putrajaya failed to produce three out of eight accompanying documents recommended by international standards.

The documents were a pre-budget statement, a citizens’ budget and a mid-year review report, C4 said.

C4’s analysis also found a lack of mechanisms to enable public and civil society participation in the budget setting process and monitoring of its implementation. Read more