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The previous administration had used GLCs to enrich cronies and award them contracts worth billions of ringgit.
Transport Minister Anthony Loke revealed that Malaysian Aviation Commission (Mavcom) executive chairman Gen (Rtd) Abdullah Ahmad draws a monthly salary of RM85,000, a sum four times the prime minister’s official salary.
Responding to this, MP and veteran DAP leader Lim Kit Siang requested greater transparency and public accountability with respect to the wages of the leaders of government-linked companies (GLCs).
He also urged the setting-up of a website for the public to scrutinise the details.
Lim asked a pertinent question: “Exactly how many GLCs, whether at the federal or at the state government level, are there in the country?”
So, has the government a figure?
It was during Dr Mahathir Mohamad’s first premiership that GLCs, or state-owned enterprises (SOEs), were formed.
According to Azmi Abdul Hamid, the head of the Government-Linked Company Research Centre (GLCRC), a GLC is defined as a company in which the government owns at least 20% of the issued and paid-up capital.
The process of privatisation, and later corporatisation, of government departments, undertaken in 1986, had two objectives.
Firstly, it was to create more avenues for Bumiputera businessmen to take part in economic activities, to achieve the goals of the National Economic Policy (NEP) and, secondly, to reduce the burden placed on the government to provide essential services to the public, and free up its time and resources to dedicate itself to other more important duties.
Privatisation of the government departments, which once provided the services, for example, road construction, health services, energy and power transmission, was restricted to Bumiputera companies with the right resources, skills and experience.
The more successful privatised companies, under government patronage, were later corporatised, issuing a portion of their shares on the Malaysian stock exchange.
Azmi’s research suggested that all State Economic and Development Corporations (SEDCs) and other state agencies, with at least 20% shareholding in PLCs (private limited companies), were also termed GLCs (Treasury Circular, 1993).
Government-linked investment companies (GLICs) are companies which invest in private companies on behalf of the government.
Investment holding companies, such as the Ministry of Finance Incorporated (MOF Incorporated) and Khazanah Nasional Berhad (KNB), enabled the government to own a share of many PLCs.
Trust funds such as the Employees Provident Fund (EPF), pilgrimage fund or Tabung Haji (TH), Retirement Fund Inc (KWAP) and the Armed Forces Fund (LTAT), are all managed by a supervisory board. Their decisions come under the authority and jurisdiction of the government.
Lim was right to inquire about the precise number of GLCs in Malaysia. Just how many GLCs are there?
Lim’s criticism of the Mavcom chairman’s salary was swiftly endorsed by other concerned Malaysians.
One person wondered how much the other board members, and senior staff of Mavcom, were paid. Another said that regulatory bodies like Mavcom should not have senior management drawing salaries similar to the millionaire founders of private companies.
The taxpayer had a right to question the excessive remuneration, as they funded these companies.
In the past, former prime minister Najib Razak’s government had dismissed suggestions to reduce the numbers of GLCs. He claimed that GLCs were successful and their share of the stocks listed on Bursa Malaysia had increased.
According to a report in The Edge in July 2017, by Professor Terrence Gomez, GLCs control 42% of the stock market.
Owners of private enterprises disagree. GLCs dominate the economic scene and private firms find it difficult to compete with GLCs, which have an advantage when it comes to obtaining government contracts and financing.
Najib is said to have abused the rakyat’s trust, treating taxpayers’ money like his pocket money.
As we have seen from the salaries of the “fat cats”, GLCs were used to enrich cronies, and were awarded with government contracts worth billions of ringgit. Some of these contracts lacked transparency.
The Pakatan Harapan government must ensure this will never be repeated.
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