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Showing posts with label Government-linked companies (GLCs). Show all posts
Showing posts with label Government-linked companies (GLCs). Show all posts

Monday, August 5, 2019

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.

Tan Sri Mohd Sheriff Mohd Kassm Kuala Lumpur


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TNB blames technical glitch! Explain discrepanccies in bills, TNB told

TNB blames technical glitch! Explain discrepanccies in bills, TNB told


Negligence, Technial among TNB faults

 

TNB to re-credit those overcharged

Saturday, June 1, 2019

TNB blames technical glitch! Explain discrepanccies in bills, TNB told

https://www.thestar.com.my/news/nation/2019/06/01/tnb-blames-technical-glitch/?jwsource=cl

https://youtu.be/M-Vm6k1Xud4

TNB to investigate complaints, urges consumers to lodge reports ...



KUALA LUMPUR: Tenaga Nasional Bhd (TNB) has admitted that a recent technical glitch is among the reasons for the sudden surge in utility bills.

TNB president and chief executive officer Amir Hamzah Azizan, who held a press conference yesterday, was apologetic and promised to investigate and resolve the issue as soon as possible.

Amir said the technical glitch between May 15 and May 20 caused a slight disruption to the system but it had since been resolved.

“Between May 15 and May 20, the system has been operationalised in stages so we can ensure we can (provide) service to the customers as fast as we can.

“By May 20, everything was back in operation. Some customers may have been billed for extra days (causing a hike in the bill),” he told the media.

Amir urged consumers to lodge a report if they noticed any discre­pancies in their bills.

He vowed that TNB would investigate and address their complaints.

Amir said in April alone, the utility company received 5,621 complaints but this almost doubled to 9,028 in May.

“This brings the total number of complaints to 14,469 reports and from this, 11,331 have been re­solved.

“We would also like to repeat our stand that TNB will keep its promise to investigate the reports.

“If there is evidence that we did overcharge, we will credit the amount back to our customers’ accounts,” Amir said.

He said a special task force, led by TNB’s chief retail officer Megat Jalaluddin Megat Hassan, had been formed to oversee the complaints and resolve the issue.

Megat Jalaluddin said that it usual­ly took about two weeks to credit the amount back to consumers but it could be delayed due to the large number of complaints received.

Amir said other reasons for the sudden surge in electricity bills include old and faulty TNB meters, replacement of new meters and increased usage in the consumer’s household.

He also assured consumers of uninterrupted electricity supply, especially during Hari Raya.

“To those who have lodged reports or ongoing investigations, we assure that the disconnection notice will be postponed for two weeks.

“We would like everyone to have a peaceful Hari Raya celebration,” he said.

Amir said the operation hours of TNB offices would be extended from 8am to 6pm from Monday to Saturday, except for public holidays.

As for the TNB Careline, the hours will be extended from 7am to 11pm every day including public holidays, except for Sunday.

This is to help facilitate complaints from consumers and to help resolve their billing issues as soon as possible.

On comments by Energy, Science, Technology, Environment and Climate Change Minister Yeo Bee Yin that TNB would be fined even after it rectifies the billing problem, Amir said at the moment the utility company would focus on fixing the problem.

“My focus is to resolve this issue, we will talk about other issues later. The consumers are our priority,” he said.

During an interview on 8TV’s Global Watch programme on Thursday, Yeo said the Energy Commission had already given TNB a warning letter and an instruction notice to resolve the problem.

Source link


Explain discrepancies in bills, TNB told



KUALA LUMPUR: Tenaga Nasional Bhd (TNB) should give a concrete explanation for the sudden discre­pancies in electricity bills and take holistic steps instead of just depending on complaints from users, say consumer groups.

Consumers Association of Penang (CAP) education officer N.V. Sub­barao said TNB, as the national utility company, must take responsibility instead of depending on consumers to come forward and lodge reports.

“TNB must do the due diligence. It will be unfair to those especially in the rural areas,” he said.

Federation of Malaysian Consu­mers Associations (Fomca) chief operations officer T. Saravanan said that while TNB wanted users to lodge complaints, the utility company needed to improve its customer service and response time.

He noted that TNB should explain why there was a technical glitch in its system.

“The problem should have been communicated to the public earlier and they should not have waited for the Energy Commission or Energy, Science, Technology, Environment and Climate Change Ministry to intervene,” he said.

He also noted that the Energy Commission should investigate the issue and publish its findings.

“An independent investigation team should be formed so that the findings won’t be biased.

“The Energy Commission should play an important role in protecting consumers,” said Saravanan.

Malaysian Islamic Consumer Association secretary-general Datuk Dr Ma’mor Osman said TNB’s explanation that the sudden increase in electricity bill was due to a technical glitch could not be accepted.

“The public cannot accept this as TNB has all the technology to check silly mistakes.

“TNB makes very high profits and they have monopolised the sector.

“If they do not give a satisfactory explanation, consumers will as­sume that they just want to make more money.

“If they know there is a glitch in the system, they need to inform all consumers.

“There is no point in blaming others for their wrongdoing,” he said.

Source link


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https://youtu.be/PDdFdvklQN0 https://youtu.be/PDdFdvklQN0https://youtu.be/PDdFdvklQN0 Minister: Technical and billing issues also ..




Unhappy lot: Some of the consumers making a report over their inaccurate electricity bill at the TNB counters.  MELAKA: Tenaga Na.



Yeo said the high electricity bills problem was in most cases due to TNB’s technical problem in billing the customers. — Picture by Saw S...

Friday, May 31, 2019

TNB will still be fined, even after remedying high electricity charges

Yeo said the high electricity bills problem was in most cases due to TNB’s technical problem in billing the customers. — Picture by Saw Siow Feng

https://youtu.be/Ap6DWFAg_gc

KUALA LUMPUR, May 31 — Energy supplier Tenaga Nasional Berhad (TNB) will still be fined even after it rectifies the billing problem which led to a sudden spike in electricity bills for consumers, minister Yeo Bee Yin has said.

Speaking in an interview during 8TV’s Global Watch programme yesterday, Yeo said the high electricity bills problem was in most cases due to TNB’s technical problem in billing the customers.

“The Energy Commission has already given them (TNB) a warning letter, and instruction notice, they must resolve the problem within 30 days and all who complained must have fair treatment,” the minister of energy, science, technology, environment and climate change said in an excerpt of the interview that was made available on Global Watch’s official Facebook page.

Yeo said TNB had already violated the Energy Commission’s standard for service levels, and that the energy company would still be penalised even if they corrected their wrong.

“Even if you corrected your wrong, you did wrong, you will be fined,” she stressed in the interview conducted in Mandarin.

Yeo said the Energy Commission is currently doing an investigation to determine which provisions of the Electricity Supply Act to fine TNB under.

“Next week or the following week, we will announce the provisions for the fine and teach them a lesson,” she said.

She noted TNB’s status as being the sole company providing electricity here.

“Because TNB is actually the sole company, you want to buy electricity, if you are unhappy, you must still buy from it.

“So I told the Energy Commission, you must grow fangs, you must regulate, so although they will correct the wrong, but there will certainly be a fine,” she added.- Malay Mail

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TNB customers seek explanation on higher-than-normal bill charges ...



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Negligence, Technial among TNB faults

TNB to re-credit those overcharged

Unhappy lot: Some of the consumers making a report over their inaccurate electricity bill at the TNB counters. 

MELAKA: Tenaga Nasional Bhd (TNB) has promised to re-credit the excess amount into the bills if consumers have been overcharged.

In a statement, the company said it viewed seriously the concerns of consumers over the drastic increase in their bills and was committed to resolving the issue.

It said it would ensure every complaint was investigated and follow-up action taken.

“This includes returning the excess amount if indeed they have been overcharged. It will be re-credited into the customers’ bills,” it said, adding that it would continue to cooperate with the Energy Commission.

TNB said a comprehensive effort was being carried out to thoroughly resolve the issue.

“This includes helping customers with high bills to personally address their grouses at the nearest TNB outlet or contact the TNB CareLine at 1-300-88-5454.

“We appreciate all the grouses, complaints and feedback and are focusing on finding ways to resolve these,” it said as it apologised to customers.

Meanwhile, yesterday, more than 300 people lodged complaints over their electricity bills in the first three hours of the TNB counters being opened at its headquarters in Jalan Banda Kaba here.

Some 30 counters were set up to take complaints from consumers, who lined up before the office opened.

On Tuesday, the counters, which were opened for 11 hours, took in 560 complaints.

The counters will remain open until tomorrow.

On Tuesday, Energy, Science, Technology, Environment and Climate Change Minister Yeo Bee Yin said negligence and technical fault as well as billing for electricity usage for over 30 days, instead of the standard 30 days, had caused electricity bills to spike for certain consumers.

She also said the complaints were from nationwide and not just in Melaka, where it is among the pioneer states to adopt TNB’s smart meter project.

In another statement, TNB denied a viral message on social media that its board of directors had received a government directive to increase electricity tariffs by 30%.

It said it did not have among its staff the name of the person who had purportedly written the message.

It said electricity tariffs were decided by the commission.

Source link


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Wednesday, May 29, 2019

Negligence, Technial among TNB faults


https://youtu.be/PDdFdvklQN0

https://youtu.be/PDdFdvklQN0https://youtu.be/PDdFdvklQN0


Minister: Technical and billing issues also to blame for price spike


PUTRAJAYA: Negligence and technical fault on the part of Tenaga Nasional Bhd were two among three reasons why electricity bills spiked for certain consumers but the government is having none of it.

Energy, Science, Technology, Environment and Climate Change Minister Yeo Bee Yin, who disclosed this, said TNB must be made accountable for what happened or risk facing legal action from consumers.

“They are not just going to get a slap on the wrist but must be accountable for this and resolve the matter with consumers. Fail to do so and they will face legal action,” she told a press conference at her ministry yesterday.

Also present was Energy Commission chairman Datuk Ahmad Fauzi Hasan.

The Commission had met TNB earlier yesterday over the uproar among consumers in Melaka, and other parts of the country who complained of higher than usual power bills.

Besides the two reasons, Yeo said the other given was that consumers were billed for electricity usage for over 30 days when the standard procedure required the utility firm to issue bills for 30 days.

Yeo said the complaints on surge in power charges was from consumers nationwide and not just Melaka households involved in the smart meter pilot project by TNB.

Many consumers had vented their frustration on social media.

In May alone, more than 300 complaints were lodged with the Commission. This was 10 times more than the complaints in the same month last year.

Yeo said the Commission would play its part by investigating the complaints and submit its findings.

Asked whether the affected consumers should settle their dues first, the minister said she would discuss the issue with TNB and believed the problem could be resolved before the payment deadline.

On the smart meter issue, Yeo said the Commission was also investigating to find out what had gone wrong.

Melaka is among the pioneer states to introduce the smart meter and to date, over 300,000 households have already been fitted with it.

Chief Minister Adly Zahari was quoted as saying that he wanted TNB to ensure the system was implemented properly and to resolve several problems, including that the reading shown on myTNB was not the same as that on the meter.

A TNB spokesman said grievances from consumers would be addressed on a case-by-case basis, adding: “Our role is to listen, understand and serve our customers while upholding the law.”

TNB also inviteed consumers in Melaka with grouses to attend its Customers Day at its office in Jalan Banda Kaba which will be held until Friday (8.30am to 4pm daily).

It said each case would be investigated based on the electricity use pattern over the last six months. The firm said it will also, upon investigation, credit any surcharge to the consumer’s account, in the event of overcharging or when excess reading had occurred.

Alternatively, customers can contact the TNB Careline at 1300-88-5454 or visit any TNB office in Alor Gajah, Bandar Jasin, Merlimau and Urban Transformation Centre (UTC) at Jalan Hang Tuah.

Meanwhile, Domestic Trade and Consumer Affairs Minister Datuk Seri Saifuddin Nasution Ismail said the Cabinet was the best avenue to discuss the issue of irregular electricity billing and the solution to it.

He believed Yeo would most likely be asked to explain the matter in today’s Cabinet meeting.

“I have received a lot of Whatsapp messages on this matter. The reaction we have received was nationwide,” Saifuddin said after chairing his ministry’s monthly assembly here yesterday.- The Star

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Tuesday, August 28, 2018

The real Malay dilemma: race, religion & politics messed up!

Old politics: If the leadership keeps to the racialist, feudalist and religious-centric tactics and policies of the past, thinking this is what they need to do to keep the votes, it will just be the repeat of past mistakes of the Umno era.

The issue is whether any of the Malay leadership  would be willing to change its society from a religious-centric one to one that is progressive and modern in character


A HIGH-level panel has been announced to review the administration of Islamic Institutions at the Federal level. Commendably, all views from the general public is welcomed. The Keeper of the Rulers’ Seal is also quoted as saying, in the announcement of this Panel, that it was appropriate that the related institutions undergo improvement so as to protect the religion of Islam, as well as promote its universal values in the country.

So here is a short opinion - Islam does not need protection, nor does it need to be institutionalised.

As a Muslim, I believe in God Almighty. His religion does not need anyone’s help, least of all from fallible human beings. Islam and God has no need for anything, but human beings do. No one represents Islam. Everyone represents their version of Islam that suits their wants and needs. These include those in political parties that say it represents Islam but simply do not. They merely represent their personal human interest for power and authority.

We need our Government to protect us from people who want to wield powers upon others by using religion as their weapon. That is what we Malaysians, Muslims and non-Muslims need. I want to ask the political leaders of Malaysia, elected and unelected: What do you intend to do to protect us from those in power whose interest is to wield their religion over others?

In Malaysia today, we are obsessed with religion. Politicians and Ministers talk about religion and upholding religion. We have dedicated channels and programmes on religion on mainstream TV. Teachers force their religion and religious interpretations on children. Even the technical department, JKR (Public Works Department) for example, has set up sign boards espousing religious thoughts. Ever go to civil service offices? Observe just how many religious seminar banners and thoughts are plastered all over these places. Sometimes I wonder whether these are public services departments or religious propaganda functionaries.

Why this parade of religion in the public sphere? Is it because our people obsess on religion, as they personally have got nothing else of substance to promote that would enhance their work and the lives of the people they serve? Or that they have to cling to religion as that is their one and only part of their lives that provide them any sense of self-worth?

Today, our Malay society has become a society so religiously judgemental that the sight of a woman without head-cover is practically blasphemous.

Think about this, after all the hue and cry of the 41 year old with 2 wives, from Kelantan who groomed his third, 11 year old child bride from the poor family in Thailand, the state religious authority penalised him for an unregistered marriage and then, instead of voiding it, basically approves the marriage. A significant portion of our Malay- Muslim society rejoiced!

Can a Malay society, more insular and superstitious in thought, that is now funding thousands of religious schools and Tahfiz centres/boarding houses than ever before in its history, create a population that is competitive to succeed in the 21st century?

Can it even compete on a fair footing with the rest of the Malaysian non-Muslim population? Malays have been given preferential places in universities, GLCs and the civil service for more than 40 years now, what have we got to show for it? Uncompetitive universities, a significant pool of unemployable Malay graduates and with most being employed by the civil service and the failed GLCs, and such corrupt administrations that a 93- year-old man has to come back to be the Prime Minister, that’s what. Would more religion help? Or would it make the population less competitive? Let us all be honest.

This has been the unintended consequence of the assimilation of Islamic values in governance (“penerapan nilai-nilai Islam”) instituted in 1985. The road to hell, they say, is always paved with good intentions. If nothing is done this nightmare is just beginning for the Malay society and Malaysian in general will suffer for it.

If we want to see where our nation is headed with this type of ideology and cultural religious mind-set besetting 60% of our population, we don’t have to look far to Saudi Arabia or Iran or even Aceh, we just need to see the state of governance and life in Kelantan. Democracy is only as good as an informed and intellectually challenging population. The Nazis in Germany and the Mullahs in Iran were all elected by the majority. Today, the Iranians are rebelling against their repressive theocratic Government but the Mullahs are not going to let go of power that easily. Thousands are in jail. But our Malays don’t seem to see or learn the lesson. Erdogan is taking Turkey on that road to already disastrous consequences and many of our Malays applaud.

The only reason the majority of the Malays today are satisfied with their lives to carry on being religiously obsessed, thinking non-stop of the afterlife and judging others, while the non-Malays are focused on bettering themselves in this life, is that the Malays, by and large, has been able to live off the teats of the Government in one way or another. It has been a fulfilled entitlement that will end sooner rather than later.

This gravy train has stopped. Mahathir and Robert Kuok, two 90-year-old plus statesmen, had to go to China almost in tribute with offerings, to extricate us from the mess our Malay leaders have created.

Unfortunately, Malays are oblivious to this fact. In fact, even most non-Malays are oblivious to the fact that if we do nothing, 30 to 40% of the population cannot sustain 100% of us. You need the remaining, at least, majority of that 60% to be able to truly contribute economically and not be consumers of tax from the minorities. And religion is not an economic contributor. It is an unproductive consumer of epic proportions with no returns.

Mahathir came to lead the Government in 1981 and transform an agricultural hamlet into an industrial one with liberal economic policies powered by an industrious non-Malay population and the liberal segment of the Malay society.

This was the population that made the country progress. Mahathir was not popular as a result of Islamisation. Mahathir was and is popular because he brought progress, prosperity and in-turn unity and pride in the country to everyone as Malaysians. He brought revolutionary change to real life. For all intents and purposes, he was a liberal progressive leader.

A progressive leadership will only be elected by a progressive society. The only reason the Pakatan Harapan government was elected was because the progressive societies of the non-Malays and the liberal Malay voted for it. We saved the nation, again. Unfortunately, that liberal segment is now forgotten and vilified. Malay liberals who are capable and focused on a productive life are labelled blasphemous and extremists, and shunned by the leadership in power, no matter who are in power.

The religious conservatives, on the other hand, are courted and coddled as if they will be the ever-lasting vote bank that must be assuaged. Think again on this paradigm. Malay swing votes are persuadable but only if the leadership shows the way.

If the leadership keeps to the racialist, feudalist, and religious-centric policies of the past, thinking this is what they need to do to keep the votes, they will just be repeating past mistakes of the Umno era. More of the Malay population will move to the right of centre towards the Mullahs. It is an inevitable outcome of such a policy. Islamisation was a counter to PAS, it only made Umno the old PAS, and PAS the new Taliban and a stronger party every year from that time onwards.

Religion by its very nature will always veer towards conservatism and fundamentalism, no matter how one wants to spin those words. Because institutionalised religion is about following. The attractiveness of institutionalised religion is the abdication of thinking to religious leaders with easy answers one shall not question. More so, when the population is uncompetitive against the outside world. In Malaysia, we have one of the most sophisticated array of institutionalised Islam in the world today.

So, without a change from the religious-centric environment the Malay society is currently in, and an education system that indoctrinates rather than enhance critical thinking, Malay society will continually drift towards the insularity of religious conservatism and away from progressive capabilities to succeed in the modern world. And population demographic will ensure that a progressive Government will eventually lose out.

Therein lies the real Malay dilemma.

Would any of the Malay leadership be willing to change its society from a religious centric one to one that is progressive and modern in character?

Do you want our Malay society to continue to regress and be uncompetitive? Do you want it to drag the rest of us down the road of conservatism and economic ruin?

As Malay leaders, do you placate or do you lead for change?

How do you lead that change?

Credit to Siti Kasim -
The views expressed are those of the author and do not necessarily reflect those of The Star.

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Monday, July 2, 2018

Govt Linked Companies (GLCs) - Monsters in the house?

Politicians should not be appointed to run government-linked companies (GLCs) to keep graft in check, said Malaysian Anti-Corruption Commission Advisory Board Chairman Tunku Abdul Aziz Tunku Ibrahim.He said politicians holding GLC positions might face conflicts of interest, leading to abuse of power and responsibility.



 ABOUT a month before Malaysia’s parliamentary election in May, then-opposition leader Tun Dr Mahathir Mohamad raised concerns over the role that government-linked companies (GLCs) were playing in the economy, being “huge and rich” enough to be considered “monsters”.

Data support his description – GLCs account for about half of the benchmark Kuala Lumpur Composite Index, and they constitute seven out of the top-10 listed firms in 2018. They are present in almost every sector, sometimes in a towering way. Globally, Malaysia ranks fifth-highest in terms of GLC influence on the economy.

Calls to do something about GLCs have increased since the election following the release of more damning information, although most of it relates to the GLCs’ investment arm: government-linked investment companies (GLICs).

Some experts have proposed the formation of an independent body with operational oversight for GLICs, after institutional autonomy is established and internal managerial reforms are introduced. Unlike most GLCs, GLICs are not publicly listed and face little scrutiny. The same applies to the various funds at the constituent state level, which need to be looked at too.

For GLCs, the answer is less straightforward. PM Tun Mahathir claims that GLCs have lost track of their original function. Before the Malaysian government decides on what to do, it needs to examine the role GLCs should play – as opposed to the role they currently play – and to examine their impact on the economy.

In Malaysia, GLCs were uniquely tasked to assist in the government’s affirmative action program to improve the absolute and relative position of bumiputras. The intention was to help create a new class of bumiputra entrepreneurs – first through the GLCs themselves, and then through a process of divestment.

Given the amounts of money involved and the cost of the distortions introduced, the benefits to bumiputra were unjustifiably small and unequally distributed. The approach of using GLCs as instruments of affirmative action failed because it led to a rise in state dependence, widespread complacency and even corruption, as Tun Mahathir himself recognised in his memoirs, A Doctor in the House, and again more recently. There is also empirical evidence that GLCs have been crowding out private investment, a concern raised in the New Economic Model as early as 2011.

Additionally, the new government has correctly highlighted the need to include certain off-balance-sheet items and contingent liabilities, such as government guarantees and public-private partnership lease payments, in any complete assessment of debt outstanding. The use of offshoot companies and special purpose vehicles (SPVs) in the deliberate reconfiguration of certain obligations mean that traditional debt calculations underestimate Malaysia’s actual debt.

All these factors combine to place new impetus on reconsidering the extent of government involvement in business. Divestment will not solve Malaysia’s debt problem, but it can help if there are good reasons to pursue it. So how should the government proceed?

It is important to recognise at the outset, that there is a legitimate role for government in business – providing public goods, addressing market failures or promoting social advancement. And like in most other countries, there are good and bad GLCs in Malaysia. If a GLC is not crowding out private enterprise, operates efficiently and performs a social function effectively, then there is no reason to consider divestment. But a GLC that crowds out private investment in a sector with no public or social function, or one that is inefficiently run, should be a candidate for divestment. In this regard, one has to carefully study why GLCs should be present in retail, construction or property development, for instance.

In assessing performance, one needs to separate results that arise from true efficiency, versus preferential treatment that generates artificial rent for the GLC. The latter is a drain on public resources and a tax on consumers. Divestment in this case, will likely provide more than a one-off financial injection to government coffers – it will provide ongoing benefits through fiscal savings or better allocation of public resources.

The divestment process should be carefully managed to ensure that public assets are disposed at fair market value, and does not concentrate market power or wealth in the hands of a few. This has allegedly happened with privatisation efforts in the past.

The new government has committed itself to addressing corruption and improving the management of public resources. As part of this process, one must re-examine just how much government is involved in business. This is one of the many tasks that the Council of Eminent Persons is undertaking in the first 100 days of the new government.

To be done correctly, would require a careful study of GLCs and their impacts. This could then rejuvenate the private sector while enabling good GLCs to thrive, and fortify Malaysia’s fiscal position in the process. This is what Malaysians should expect – and indeed demand – of the “New Malaysia”.

Jayant Menon is Lead Economist in the Economic Research and Regional Cooperation Department at the Asian Development Bank. This is an abridged version of an item that first appeared on the East Asia Forum. Related articles

Jayant Menon The Sundaily

Monday, June 25, 2018

Govt-linked companies (GLCs) shake-up as they sing a different tune

EPF Building in Kuala Lumpur.- Art Chen / The Star..
On the rise: A man walks past the Employees Provident Fund headquarters in Kuala Lumpur. Remuneration of GLC chiefs, senior management and directors have been on the uptrend following a transformation initiative to make them more competitive commercially. 


Overpaid CEOs and social duties of GLCs set for review


The new government has clearly said that there is a need to review the role of GLCs and the remuneration paid out to their top executives

A GLANCE at one of the annual reports of the country’s government-linked companies (GLCs) reveals that its chief human resource officer earned close to a million ringgit or about RM80,000 per month, last year.

Other senior personnel were also compensated with generous remuneration, with its chief executive taking home over one and the half million ringgit in financial year 2017.

More importantly, this was at a company that had courted much controversy in recent times over allegations of mismanagement and under-performance.

Such a scenario, however, is not uncommon at GLCs, where remuneration of key executives tend to run in the millions but performances sometimes leave much to be desired.

By definition, GLCs are companies where the government has a direct majority stake via their entities such as Khazanah Nasional, Employees Provident Fund, Permodalan Nasional Bhd (PNB), the Armed Forces Fund (Lembaga Tabung Angkatan Tentera) and the Pilgrims Fund (Lembaga Tabung Haji).

In recent years, remuneration of GLC chiefs, senior management and its directors have been on the uptrend following a transformation initiative to make them more competitive commercially.

The thinking behind this is that in order to attract talent – subjective as the definition of that may be – top dollar should be paid.

Some, however, argue that GLCs should in fact prioritise national service a little more.

Universiti Malaya’s Faculty of Economics and Administration professor of political economy Edmund Terence Gomez says GLCs have social obligations.

“What this essentially means is that GLCs cannot operate in a purely commercial manner as they also have to look at the social dimension,” he says. “The GLC professionals have many times articulated that they are doing national service. Going on that alone, one can argue that they shouldn’t be paid private sector salaries,” Terence adds.

And so it is now, there is a disquiet building up among GLCs following the change in government.

The new government has clearly said that there is a need to review the role of GLCs and the remuneration paid out to their top executives and senior management.

In this regard, the Pakatan Harapan government is understood to be mulling over making drastic changes in the appointment and remuneration of key directors at GLCs which include government agencies.

It was reported recently that the Council of Eminent Persons, headed by Tun Daim Zainuddin, who was Finance Minister in the 1980s, has requested details of the salaries of some of the top executives at GLCs as part of the review.

Already, there have been a couple of GLC chief executives who have left and more of this is expected to materialise over the coming weeks.

“It appears to be a purge of Tan Sri Nor Mohamed Yakcop’s boys,” quips an industry observer, referring to the veteran politician who was instrumental in the revamp and transformation of Khazanah which started in 2005 and subsequently, driving the GLC transformation initiative.

UM’s Terence says if the new government is to appoint new individuals, it must ensure that the process is transparent.

“If you are removing these people, who are you replacing them with? More importantly how are you selecting these people?

He adds there needs to be a transparent mechanism in the appointment of this new breed of professionals that will be brought in and what must also be looked into is the kind of check and balances being put in place to ensure governance.

“There should be a debate on these things,” he says.

Economist Yeah Kim Leng believes that a review is timely and appropriate as part of a deeper institutional and structural reform.

“The broad aims are firstly, to reduce excessive payoffs which don’t commensurate with performance and secondly, to address the widening wage and benefits gap between the top and bottom rungs of the organisation,” he says.

Such rationalisation will result in a more equitable salary structure as well as raise the generally depressed wages of middle management and support staff which form the largest number of most organisations, Yeah adds.

Unfair advantage

The role of a head honcho, be it at a GLC or non-GLC, is seldom a walk in the park.

CEOs make critical operational decisions that affect everything from future business directions to the health of a company’s balance sheet and employee morale.

The job generally entails long hours and tremendous pressure to meet expectations of shareholders and stakeholders.

But again, while local GLCs have been key drivers of the economy, one key feature is that they are ultimately owned by the government.

This, some argue, give GLCs unfair advantages such as access to cheap funding and political patronage over their private counterparts.

So, is running a GLC more of a stewardship role as opposed to an entrepreneurship role?

Therein lies the issue that in turn will have a bearing on the remuneration levels of GLC heads.

Minority Shareholders Watch Group (MSWG) chief executive office Devanesan Evanson puts it this way.

“Entrepreneurs have their skin in the game in that there are often the major or substantial shareholder in a company.

“It is in their direct interest to perform as this will be translated into share price appreciation which will impact the value of their shareholdings – this is motivation to grow the entrepreneurial spirit,” he says.

On the other hand, GLC heads do not have their skin in the game save for their limited shareholding through ESOS or share grant schemes.

“If a GLC loses money, the impact on them is limited. They may be prepared to take perverse risks as the eventual loser is the government-linked investment companies or GLICs (and the minority shareholders of the GLC), which eventually are the people who are the members or subscribers of the GLICs.

“In that way, we are not comparing apple to apple and yet, we need talent to run GLCs.

“So we can conclude that, we need to pay for talent at GLCs but it should not be as much compared to what one would pay the CEO of a firm which he started,” Devanesan says, noting that remuneration of some of the GLC heads have risen too fast in recent years.

Rising remuneration is a given, others say, as the government had recruited top talent from the private sector to helm these companies.

A case in point is  Axiata Group Bhd , which has done relatively well with the infusion of the “entrepreneurial spirit” under the helm of president and group CEO Tan Sri Jamaludin Ibrahim, who has helmed the Khazanah-owned telco since 2008, they point out.

Prior to that, Jamaludin was with rival Maxis Communications Bhd, a private company controlled by tycoon Ananda Krishnan.

Other GLCs which have performed consistently over recent years include banks like Malayan Banking Bhd and CIMB Group Holdings Bhd which have expanded their operations out of Malaysia, carving a brand name for themselves regionally.

Under a 10-year transformation programme for GLCs initiated in 2005, companies were given quantitative and qualitative targets to meet as measured by key performance indicators.

Now, the 20 biggest GLCs currently make up about 40% of the local stock market’s market capitalisation.

One of the principles under the programme was also the national development agenda, which emphasised the principle of equal growth and development of the bumiputra community with the non-bumiputras.

Asian Strategy and Leadership Institute (ASLI) Centre of Public Policy Studies chairperson Tan Sri Ramon Navaratnam says the purpose of establishing GLCs to encourage bumiputras to participate in business has largely been fulfilled.

“Now that the bumiputras are on a strong footing in the corporate sector with able leaders who have wide experience, it (GLCs) could be seen as an erosion to the welfare and progress of the smaller and medium-sized industries, particularly those where other bumiputras are involved,” Ramon says.

Having said that, he says although many GLCs are doing well, they have performed well “mainly because of protective policies and monopolistic practices”.

“The time has come in this new Malaysian era for more competition and less protection.”

Benchmarking

Still, if simplistic comparisons are to be made, the CEOs of the country’s two largest GLC banks, Maybank and CIMB for instance, took home less than the CEO of the country’s third largest bank, the non-GLC Public Bank Bhd last year.

In 2017, Public Bank’s managing director Tan Sri Tay Ah Lek took home some RM27.8mil in total remuneration while Maybank’s Datuk Abdul Farid Alias earned RM10.11mil and CIMB’s Tengku Zafrul Abdul Aziz made RM9.86mil.

Across the causeway, a survey of CEO remuneration of Singapore-listed companies by one financial portal shows that Singaporean GLC CEOs earned 31% more than their non-GLC counterparts in 2017.

Singapore’s Temasek Holdings-owned DBS Bank, which is Singapore’s largest bank, paid out S$10.3mil (RM30.36mil) to its head honcho, while in the telecommunication sector, SingTel’s remuneration to its top executive was some S$6.56mil (RM19.34mil) for the most recently concluded financial year.

By definition, Singapore GLCs are those which are 15% or more owned by the city-state’s investment arm Temasek Holdings.

UM’s Terence does not think Singapore should be a benchmark for Malaysian companies.

“Singapore is a much smaller country and the manner in which they operate in is also different ... their GLCs are deeply conditioned by their holding company, which is the Minister of Finance Incorporated,” he says.

MSWG’s Devanesan notes that determining remuneration is “not exactly science” as there are many parameters to be considered.

Some of the factors to note include whether the companies are in a monopolistic or near monopolistic position and the performance of the GLC heads over the years.

“Based on these parameters, we can instinctively know if a GLC head is over-remunerated,” he says. Over in China, state-owned Industrial and Commercial Bank of China (ICBC), the country’s largest lender by assets, paid out about 63.43 yuan or about RM39mil in total remuneration before tax for the year 2017 to its top executive.

Notably, the Beijing-based ICBC’s net profit’s was at a whopping US$45.6bil (RM182bil) in 2017.

Sources: Gurmeet Kaur and Yvonne Tan The Star

GLC singers sing a different tune

Some officials singing 'Hebat Negaraku'.

 Swan song for some after 'Hebat Negaraku' post-GE14 - CEO think video to showcase musical talents

 Several heads of government-linked companies (GLCs) have come together in a heartwarming music video titled "Hebat Negaraku" (my country is great). 

 GLC chiefs show off musical talent in 'Hebat Negaraku' music video ...

https://youtu.be/hfK_wfD17qk

The heads of government linked companies (GLC) who sang a song that later became the theme song for the Barisan Nasional’s election campaign have distanced themselves from the controversial music video.

Those who sang and played musical instruments in the music video titled “Hebat Negaraku” (my country is great) said they did not know the video or the song was going to be a political theme song.

There have been repercussions on the CEOs who appeared in the music video. They have come under scrutiny for making a song that was used as propaganda by Barisan in the last general election.

Three of the GLC bosses in the video have either retired or resigned since the new government took over.

Several more have been speculated to leave in the coming weeks or months but nothing is cast in stone. Sources said this is because most of the CEOs are not known to have campaigned openly for either Barisan or Pakatan Harapan.

“None of the CEOs had a clue it would become a political song. Do you really think the CEOs would have done it if they knew it would become political?” asked one of the CEOs who appeared in the video but declined to be named.

“We have said no to so many things, and we could have easily have said no to this if it was political.’’

Another CEO said he was approached and felt it was “more of a patriotic song and nothing more.”

“At that point in time, we did not think much (of the repercussions). Hebat Negaraku was announced as Barisan’s campaign theme long after the recording was made. We did not know that.’’

Another CEO added: “We thought it was a casual thing when we were approached as some of the CEOs have their own band.’’

It all started when several CEOs were called to be part of a music video and they thought it was to showcase the musical talents of 14 GLCs heads, plus staff members of the 20 key GLCs.

The song is about the greatness, advancement and inspiration of Malaysia. It was released on YouTube on March 22 but has since been taken down.

But fingers have been pointed at the GLCs bosses who made the music video because it became a political video.

Datuk Seri Shazalli Ramly has been said to be the main orchestrator for the group in terms of making the music video. He was also said to be the branding chief for Barisan’s elections campaign.

Barisan lost the elections held on May 9 to Pakatan, which has since formed a new government and is scrutinising all the performance, processes, remuneration and procurement of the government and GLCs.

Shazalli quit his job as group CEO of  Telekom Malaysia Bhd (TM) on June 6. Malaysian Resources Corp Bhd (MRCB) group managing director Tan Sri Mohamad Salim Fateh Din has retired as group MD last week and it was something he had planned to do.  Malaysia Airports Holdings Bhd Datuk Badlisham Ghazali did not get his contract renewed. All three were in the music video.

There is a GLC secretariat that now comes under the purview of TM, which was earlier parked under Khazanah Nasional Bhd. The secretariat organised the making of the music video, according to sources. The CEOs were called to attend a session and within a few hours it was all done with no prior rehearsals.

“When you are called, it could be difficult not to comply since it is the secretariat that called you. We have to oblige but we really did not know it was going to be a campaign slogan. This is really unfortunate that it has turned out like this.

“We were surprised when we found out it was a party slogan but it had already been done and what can we do, we are in the picture,’’ said another CEO.

Not all CEOs who were invited took part in the video. Prior engagements were the reason used for declining to appear. - By b.k. Sidhu The Star

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