Source: https://static.businessinsider.my/sites/3/2018/06/Malaysia-Prime-Minister-Dr-Mahathir-Mohamad-Putrjaya-Reuters.jpg

New heads of Malaysian GLCs should not expect big salaries, says Dr Mahathir

Under the new Pakatan Harapan government, those who have been appointed to spearhead Malaysian government linked-companies (GLCs) should no longer expect to receive big salaries.

Speaking to Malaysian media at the end of his two-day visit to Jakarta on an ASEAN tour on 30 June, Malaysian Prime Minister, Tun Dr Mahathir Mohamad said that while their salaries will not be big, there is a possibility of granting heads of GLCs big bonuses in the event that they perform well.

He said that in the previous government, “we found [that] those appointed were chosen not because of their abilities in business or management, but due to being party supporters.”

“They were inefficient, but were paid high salaries. We found projects under them had failed or were not profitable,” he added.

He declined to name the GLCs as there are too many of them.

Dr Mahathir said that the new government will hire professionals who have had previous experience in running companies to run the GLCs, and will ensure that said professionals are not politically-linked.

“At any time (they are involved), action will be taken,” he added.

It is understood that among the government-linked companies (GLCs), Lembaga Tabung Haji (LTH) and Lembaga Tabung Angkatan Tentera (LTAT) are expected to see changes in the nearest future, after the retirement of Tan Sri Abdul Wahid Omar as chairman of Permodalan Nasional Bhd (PNB), according to a report by The Star Online.

LTH is headed by its group Managing Director and Chief Executive Officer, Datuk Seri Johan Abdullah, while LTAT’s chieftain is Tan Sri Lodin Wok Kamaruddin, who is also Boustead Holdings Bhd’s Deputy Chairman and group Managing Director.

In 2015, LTH purchased a 1.55-acre parcel in the Tun Razak Exchange (TRX) project from scandal-ridden 1Malaysia Development Bhd (1MDB), which gave rise to speculations that the deal was made for the purpose of bailing out 1MDB.

Lodin, meanwhile, was appointed LTAT’s CEO in 1982. He joined Boustead in 1984 and became the company’s Managing Director about seven years later.

He was appointed Chairman of 1MDB, but had stepped down in 2016 after the Public Accounts Committee’s tabling of its audit report in the Dewan Rakyat.

On Jun 29, PNB announced that former Bank Negara Malaysia Governor, Tan Sri Dr Zeti Akhtar Aziz will replace Wahid as PNB’s chairman, which took effect on July 1.

Commenting on Zeti’s appointment, Wahid said that he believes that Zeti and members of the board “will be able to continue leading PNB to a higher level of success”.

Wahid’s resignation was one of the changes that took place in the upper levels of some of the more prominent GLCs. This is in line with the aims of reformation under the Pakatan Harapan government.

According to The Star Online, “the heads started rolling” on May 14 when Tan Sri Shahrir Abdul Samad resigned from his position as Chairman of the politically-linked Federal Land Development Authority (FELDA).

On the same day, Tan Sri Irwan Serigar Abdullah’s contract as Treasury Secretary-General was axed. He was subsequently transferred to the Public Service Department. Irwan has since stepped down from board positions of companies under the Ministry of Finance.

The following week saw LTH’s Datuk Seri Abdul Aziz Abdul Rahim step down as Chairman.

The resignation of Bank Negara’s governor Tan Sri Muhammad Ibrahim soon followed. His resignation took place only weeks after queries were made regarding the central bank’s purchase of land to bail out 1MDB.

Other significant resignations related to GLCs in recent times included that of Telekom Malaysia Bhd’s group, CEO Datuk Seri Mohammed Shazalli Ramly, and Malaysian Resources Corp Bhd (MRCB)’s Tan Sri Mohamad Salim Fateh Din, the developer of KL Sentral.

Additionally, Petroliam Nasional Bhd (Petronas) independent non-executive director Datuk Mohd Omar Mustapha had also tendered his resignation on June 1.

Earlier this week, it was reported that Tan Sri Mohd Sidek Hassan had stepped down from his position as the chairman of Petronas, while Bursa Malaysia CEO Datuk Seri Tajuddin Atan could also be replaced before his term ends in March next year.

Professor of Political Economy at Faculty of Economics & Administration at the University of Malaya, Edmund Terence Gomez wrote in a letter to The Star Online that “institutional reforms can be formulated to ensure accountable and transparent governance of the companies”.

He also mentioned that “power has to be devolved to key oversight institutions such as Bank Negara, the Securities Commission and opposition-led parliamentary committees”.

He also highlighted the role of reviewing legislation on “how statutory bodies, holding companies and foundations function”.

Gomez’s key message in his letter appears to be that above all, the government has to have significant control over the workings of a GLC in order to avoid any form of inappropriate concentration of power or wealth by select individuals or stakeholders:

“[…] the government would need to retain ownership of GLCs in utilities, banking, oil and gas, defence, plantations, airport services and ports.

The transfer of ownership of huge firms in these sectors to private investors may not serve the nation’s interest.“

He concluded his letter by highlighting the potentially beneficial role of GLCs in Malaysia’s economy:

“[…] it must be considered that GLCs have played an important developmental role, creating a vibrant domestic privately-owned enterprise base, promoting mechanisms to encourage private firms to venture into new economic sectors, and enhancing the development of rural- and niche-based enterprises. GLCs must still play this role.”