Reform GLCs, remove bad apples, says think tank

IDEAS chief Wan Saiful Wan Jan says poor governance of GLCs is reflected in Malaysia's continuous drop in Corruption Perception Index ranking.

PETALING JAYA: Putrajaya must institute more serious reforms in the governance of government-linked companies (GLCs) to eradicate the scourge of corruption, says Institute for Democracy and Economic Affairs (IDEAS) chief executive officer Wan Saiful Wan Jan.

The think tank chief said this in response to the latest Corruption Perception Index (CPI) released by Transparency International (TI) today, which showed Malaysia had moved down by one spot to 54 out of the 176 countries evaluated.

“Although, in recent times the government, particularly the MACC had done a lot of great work in catching corrupt officials, it still does not address the deeper need for reform.

“In Malaysia’s case, our scores have been declining since 2014, from a score of 52 out of a possible 100 then to 49 today,” Wan Saiful said in a statement released by IDEAS.

He called for stricter regulations on GLCs, and a reduction in the number of GLCs altogether by only keeping those which meet the mark in terms of governance.

“It is also high time that the prime minister give up his portfolio as the finance minister,” Wan Saiful said.

The TI derives the CPI ranking for countries based on an aggregate score out of eight different surveys.

According to the report, Malaysia’s drop can be attributed to declining scores in the World Justice Project Rule of Law Index, Political Risk Services International Country Risk Guide, Political and Economic Risk Consultancy Asian Intelligence and the Bertelsmann Foundation Transformation Index – all indices which measure governance and rule of law.

“One of the main factors behind this recent slip is how the 1MDB scandal was handled.

He pointed out however, that the 1MDB issue is only part of a deeper structural issue pertaining to how GLCs are managed.

“Although GLCs have existed since independence, they took on a more expansive role during Dr Mahathir Mohammad’s tenure as prime minister. In his time, with the PM also being the finance minister, there was greater government involvement in business.

“This started an unhealthy precedent where the lines between business and government started to blur,” Wan Saiful said, explaining that a conflict of interests arose over decisions made, as the finance minister is only supposed to advise the PM so that there’s better check and balance involving the nation’s coffers.

He cited 1MDB as being just one example of what happens when the government becomes too involved in businesses, instead of playing a purely regulatory role.

“Malaysia has a dotted past with loss-making and poorly governed GLCs such as Bumiputera Malaysia Finance Limited (BMF), Pembinaan PFI Sdn Bhd, National Feedlot Corporation (NFCorp) and many others.

“The result is billions of ringgit in losses to the rakyat and debts which taxpayers still have to pay to this day,” Wan Saiful said. -FMT