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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Malaysia economic outlook looking better on firmer ties with China, says Manulife

KUALA LUMPUR (Aug 1): The economic outlook in Malaysia is looking to be better as the strengthening relationship with China is expected to pave way for rising investment flows from China to Malaysia, according to Manulife Asset Management Services Bhd.

In its mid-year market outlook report today, Manulife Asset Management Services head of total solutions and equities investments Tock Chin Hui said the revival of major infrastructure projects is expected to pump-prime the economy for the second half of the year.

"Malaysia corporates and consumers are expected to spend more due to the progressive disbursements of tax refunds and the resumption of infrastructure projects, which will eventually drive domestic consumption, and investor sentiment is expected to improve as the government continues to embark on structural changes to overhaul the economy and future-proof it.

"Looking ahead, Malaysian equities offer attractive dividend yield and significant defensiveness amid uncertainty caused by trade tension. The Malaysian market is expected to show resilience and could outperform regional peers given its defensive trait and year-to-date laggard performance," said Tock.

Commenting on the region, Manulife said Asian assets could offer opportunities given their resilience to market volatility in the first half of 2019.

It said Asian equities have held up strongly despite the negative impact of escalating Sino-US trade tensions, and the US Federal Reserve's increasingly dovish stance has allowed Asian bonds to remain in a good position.

Manulife Investment Management chief economist and head of macroeconomic strategy Frances Donald said central banks have entered a global easing cycle in response to the deteriorating global growth activity and heightened uncertainty surrounding international trade policy.

"This uncertainty has created a confidence shock that is slowing global hiring and business investment along with global trade.

"We expect the Federal Reserve will cut rates at least twice in 2019 as insurance against deteriorating growth in the face of heightened uncertainty but also to stoke inflationary pressures which have been absent.

"Should trade tensions re-escalate in the second half of the year, we would expect the Federal Reserve to respond with more than two rate cuts," said Donald.

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Planned ‘inclusive education’ endangers our children

I NOTICE the phrase “inclusive education” has become very fashionable these days. From parents to politicians and a fair few of us in the field of early childhood education, everyone seems to be smitten with the idea of achieving equity in education through the supposed magic pill that is mainstreaming “special needs” children.

Let me first state that education is a fundamental human right. The United Nations has codified it as such in its charter, and anyone with an ounce of intellect cannot dispute the starring role of education in raising the quality of life for individuals and society.

Yet I fear that in our missionary zeal to pursue inclusive education, Malaysians specifically and Asians in general risk distorting what constitutes equity and diversity, and grossly underestimate the groundwork and, indeed, sheer grit needed to implement it.

Instead of reducing the discrimination special needs children face at school, such a plan in its present shape and form may in fact backfire and intensify it.

Before I explain why, let us first establish what inclusive education is, since there seems to be much confusion over the definition.

Unesco (UN Educational, Scientific and Cultural Organisation) describes inclusive education systems as those “removing the barriers limiting the participation and achievement of all learners, respect diverse needs, abilities and characteristics and that eliminate all forms of discrimination in the learning environment”.

The Malaysia Education Blueprint 2013-2025 meanwhile narrows the definition of special needs to students with “visual impairment, hearing impairment, speech difficulties, physical disabilities, multiple disabilities and learning disabilities such as autism, Down’s syndrome, ADHD (attention deficit hyperactivity disorder), and dyslexia”.

There are two glaring problems here. First, lumping the above variety of physical and mental challenges under one umbrella is in itself discriminatory, as it equalises the learning ability of all within. 

This is ludicrous.

A child with a physical handicap could be on par with his so-called “normal” peers in keeping up with coursework, something that may be impossible for those with ADHD, autism and especially dyslexia.

How will a blanket policy for special needs children address their highly diverse needs? If the popular notions of inclusive education are made real, will there be multiple streams to the “mainstream”? And if learning methodology, timelines and schedules are stratified for those within the special needs domain, then what is “inclusive” about the system?

Second, I am of the opinion that we have a naïve understanding of inclusivity in the educational context, driven perhaps by our feverish desire to mimic the West. What we perceive as “inclusive” is integrative at best, something writ large in the education blueprint that maps out the closure of special needs facilities and merges their students with general bodies.

Besides bringing everyone under one roof, as the “combined classrooms” envision, there will plainly be separate clusters of students that are physically together yet galaxies apart in terms of academic and support requirements.

Nevertheless, there are positives to inclusive education as an ideal that makes it worth fighting for. I recently read a well-argued piece by Dr York Chow Yat-ngok in the South China Morning Post where he wrote that teething pains aside, combined classrooms will promote empathy and acceptance among all children and additionally raise the self-esteem of those with special needs.

While Dr Yat-ngok and similar-minded experts hold admirable positions on inclusive education, their arguments could go both ways. If we agree that young children absorb information like sponges and are in the process of building personalities, there remains the risk that even one distressing episode with a special needs child, say an autistic one, could internalise in them negative stereotypes about that group for life.

As humans, our concept of “normal” is often far removed from the scientific benchmarks that policymakers use to establish educational guidelines. And young children, especially, judge normality through adequate participation in social rituals as minor as sharing toys during playtime or napping together peacefully.

Also, when comparing Malaysia’s preschool system with developed nations, we must keep two very important things in mind: numbers and attitude.

First, the current teacher-to student ratio in Malaysian preschools is very taxing on educators. Here we have one teacher for 15 to 20 children whereas the ratio is six to eight in the West, excluding support staff like medics and mental health professionals.

And given young children can have wildly diverging personalities, it requires an enormous amount of patience and physical energy simply to teach the “normal” ones.

Therefore, before attempting to consolidate special needs and mainstream preschools, the government must first bridge this gap in terms of teacher numbers and skill-sets or risk pandemonium and even class-action lawsuits by parents if the new school environment endangers their children.

Next, the graver problem of attitude: The majority of Malaysian early childhood educators never wanted to enter the profession. I hear this every day at universities and in the field.

Because of the quota system in public universities, many settled on a major that was not even their second or third choice simply to attend a prestigious institution. And as working professionals, many regrettably do not care.

The greater irony here is how the pecking order of public education programmes cheapens early childhood education. Don’t have the grades to become a doctor, engineer or lawyer? Just go teach preschoolers.

The bottom line is the roadmap to inclusive education in preschools must be put away until both state and civil society awaken to their responsibilities. We cannot keep gambling with our children’s future, nor frustrating the few teachers who actually care about them.

** Jerrica Fatima Ann is a Malaysian early childhood educator and editor of www.imageofachild.com.

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Taking a stand for inclusive education

IN my heart of hearts, I believe that we are all special. No individual is the same as another, not even twins.

We all have little quirks that make us unique, whether it is an obsession with having everything in order, a habit of reading out loud or the urge to sanitise one’s hands after touching any little thing.

In spite of our quirks, we all want to be accepted for who we are, and we are lucky when our family, friends and colleagues do so.

If society can accept “normal” people and their eccentricities, why can’t it extend the same courtesy to those with special needs? I believe the answer lies in our education.

Society is a reflection of our education system. If we learn from young to perceive those who are different from us in an unfavourable light, it is natural that we pass this same mindset on to the next generation. Sadly, this creates a nation that lacks values like tolerance, understanding, compassion and kindness.

Taking a stand for inclusion and diversity is more than a special needs agenda; it is about fighting for a better world where everyone is accepted for who he or she is. And it has to start with education.

As an educator, I believe that we need to make a constant and conscious effort to push for inclusion and diversity. This is why we should continue to emphasise the importance of the special needs programmes.

It saddens me when schools turn down special needs children because they can’t handle them. To me, special needs children are just like any other kids, except that they need time and help with learning.

There are countless studies that advocate inclusive classrooms for both normal and special needs children. In an inclusive classroom, children with special needs are known to learn faster by observing their normal peers and being motivated to keep up.

Normal children, on the other hand, learn important values like tolerance, kindness and compassion through interacting with them.

What can be better than this? After all, we want our children to grow up ready for the real world.

The question is what kind of world do we want? I, for one, want a better world for our children, and that starts with embracing diversity and practising inclusion.

PUA CHEE LING, Chief executive, Dika College Puchong, Selangor

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