Minister of finance incorporated ownership and control of corporate malaysia

MINISTER OF FINANCE INCORPORATED Ownership and Control of Corporate Malaysia Edmund Terence Gomez Thirshalar Padmanabhan, Norfaryanti Kamaruddin, Sunil Bhalla and Fikri Fisal with Minister of Finance Incorporated Edmund Terence Gomez with Thirshalar Padmanabhan Norfaryanti Kamaruddin • Sunil Bhalla Fikri Fisal Minister of Finance Incorporated Ownership and Control of Corporate Malaysia Edmund Terence Gomez Faculty of Economics and Administration University of Malaya Kuala Lumpur, Malaysia Thirshalar Padmanabhan Faculty of Economics and Administration University of Malaya Kuala Lumpur, Malaysia Norfaryanti Kamaruddin INTROP Universiti Putra Malaysia Serdang, Malaysia Sunil Bhalla Faculty of Economics and Administration University of Malaya Kuala Lumpur, Malaysia Fikri Fisal Faculty of Economics and Administration University of Malaya Kuala Lumpur, Malaysia The print edition is not for sale in Malaysia and Singapore Customers from Malaysia and Singapore please order the print book from: GB Gerakbudaya Enterprise Sdn Bhd [978-967-0960-80-7] ISBN 978-981-10-4896-8    ISBN 978-981-10-4897-5 (eBook) DOI 10.1007/978-981-10-4897-5 Library of Congress Control Number: 2017943817 © Institute for Democracy and Economic Affairs (IDEAS) 2018 This work is subject to copyright All rights are solely and exclusively licensed by the Publisher, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed The use of general descriptive names, registered names, trademarks, service marks, etc in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use The publisher, the authors and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication Neither the publisher nor the authors or the editors give a warranty, express or implied, with respect to the material contained herein or for any errors or omissions that may have been made The publisher remains neutral with regard to jurisdictional claims in published maps and institutional affiliations Cover illustration © MATJAZ SLANIC/gettyimages Printed on acid-free paper This Palgrave Macmillan imprint is published by Springer Nature The registered company is Springer Nature Singapore Pte Ltd The registered company address is: 152 Beach Road, #21-­01/04 Gateway East, Singapore 189721, Singapore For Eshward Foreword The New Economic Model (NEM) was an important policy document published in the early years of the premiership of Malaysian Prime Minister Najib Razak Officially released in 2010, it charts a plan to transform Malaysia into an advanced nation by 2020 Commenting on the role of government in business, the NEM says “Malaysia’s economic engine is slowing Since the Asian financial crisis of 1997… growth has been lower than other crisis-affected countries, while investment has not recovered Private investors have taken a back seat… In some industries, heavy government and government-linked company [GLC] presence have discouraged private investment.” The NEM goes on to say that one of the “old” approaches that is still prevalent is “dominant state participation in the economy” and “large direct public investment (including through GLCs) in selected economic sectors” The NEM promises to change this situation Those responsible for drafting the document explained why they felt it was time to change the old approach of extensive government intervention in the business world The NEM states that, while this old approach “may have served the country well in the past, it is unlikely to provide the dynamism needed to spur the country to developed country status.” It argues that “the government as both business owner and regulator of industries faces conflicts of interest that can… give GLCs an unfair advantage over private firms” This belief resulted in the NEM’s policy objective that the role of government in business should be reduced To spur private sector investment, the NEM says Malaysia will “divest GLCs in industries where the vii viii   FOREWORD private sector is operating effectively… Remaining GLCs will be required to ­operate on a commercial basis … without government preferential treatment.” Subsequently, in 2011, the Performance Management and Delivery Unit (Pemandu), situated in the Prime Minister’s Department, included in its economic transformation program a strategic reform initiative (SRI) called “Reducing Government’s Role in Businesses” In its 2014 Annual Report, Pemandu stated that the government was committed to shifting the government’s role in business from that of an investor to a facilitator Pemandu also claimed it would three things: clearly establish the government’s role in business, develop a clear divestment plan and establish clear governance guidelines for government and state-owned companies However, just one year later, in its 2015 Annual Report, Pemandu’s target of reducing the government’s role in business was reduced to just a footnote, on page 10 This footnote read: “divestment had been completed by the 33 companies that had committed to so at the launch of the SRIs in 2011” There was no mention of the three original targets it had stated the previous year It appeared that the government was claiming that by 2015 it had succeeded in achieving its SRI of reducing its role in businesses Curious about the real extent to which the government had succeeded, I researched what had happened in the market I found that the data did not support the claim that the government’s role had been reduced to any appreciable extent In fact, the opposite had happened From 2011 to 2015, the government’s share in the Kuala Lumpur Composite Index (KLCI) increased from 43.7% to 47.1%, indicating that the government had greater ownership of the equity of the largest companies in Malaysia in 2015, in contrast to the position in 2011 when the NEM was issued The government had also increased its investments in private companies, whereas the number of disposals had not increased The total value of GLC acquisitions was RM51.7 billion, and this dwarfed the total disposals of RM29.5 billion A full analysis of these findings was published by the Institute for Democracy and Economic Affairs (IDEAS), for which I am currently CEO, in a paper entitled “Lesser Government in Business: An unfulfilled promise?” (April 2016) Prior to that study, I was also involved in the Organisation for Economic Co-operation and Development (OECD) Network on Corporate Governance of State-Owned Enterprises IDEAS attends the meetings organized by this global network, and since 2015 we have been      FOREWORD ix the sole participant from Malaysia The meetings of this network fascinate me, especially in terms of how much we still need to in order to catch up with the rest of the world Many countries that have a sizeable number of state-owned enterprises (SOEs) have a well-structured mechanism to monitor the governance and performance of these enterprises, usually in the form of a central government agency tasked with monitoring and evaluation But, in Malaysia, there is no such effective body to undertake this task Yes, we have a division within the Ministry of Finance looking after government investment companies, but there is scant information on the scope of this division’s powers To give a simple example: I have been trying to determine the exact number of SOEs in Malaysia, but no one, not even senior officials at the Treasury, knows the answer There is even uncertainty about the categorization of companies, whether certain companies should be classified as an SOE or not If we not even know how many SOEs exist in this country, can we really expect these companies to be well governed? Within this context, we recently saw the national embarrassment that is 1Malaysia Development Bhd (1MDB) It baffles me how the chairmanship of the Advisory Board, a body that has no legal and fiduciary powers, can be given to the Prime Minister of Malaysia, the most powerful person in the country How can anyone expect the company to be governed properly when the Board of Directors, the body that is supposed to hold all the legal and fiduciary responsibilities is, effectively, subservient to the Chairman of the Advisory Board? Does anyone really expect 1MDB Board members to say no to the Prime Minister? My bigger fear is that we not know if the bad governance exemplified by 1MDB is more widespread and affects more than that one company That is why I have been very keen to see more open and honest studies on the governance of Malaysia’s SOEs For this reason, I was delighted that Professor Edmund Terence Gomez of the University of Malaya agreed to conduct this study When we commissioned Professor Gomez to undertake the study I was not expecting a book Our original intention was to have just a short paper outlining the state of governance of our GLCs I still remember saying to Professor Gomez that I would be happy to get 5,000 words from the project But the amount of data unearthed by Professor Gomez was so vast, particularly on the significance of Minister of Finance Incorporated (MoF Inc.), that we decided it would be inane to ignore the discovery Hence, we now have this book that considers the wider political economy behind the governance of Malaysian GLCs, by focusing on the extensive reach of x   FOREWORD MoF Inc and therefore the Finance Minister This is just the first output, as we are continuing with more work on this topic I believe that the government should act mainly as regulator and facilitator for the private sector If there is a need for the government to be in business, then that need must be clearly specified so that we can judge when the necessity no longer exists Where and when GLCs exist, their governance must be properly conducted and any weaknesses must be improved But to design an effective improvement plan, we must first understand the current landscape Professor Gomez and his team have done a sterling job in documenting a segment of the current landscape in this volume There is, of course, a lot more that needs to be done But, for now, I hope readers enjoy this book as much as I enjoyed reviewing and discussing the drafts with Professor Gomez Chief Executive Institute for Democracy & Economic Affairs (IDEAS) Wan Saiful Wan Jan Preface and Acknowledgements This is a study of Malaysia’s new political economy It offers insights into corporate ownership patterns of the country’s leading enterprises in 2013, controlled ultimately by the state of Malaysia through what have been classified as government-linked investment companies (GLICs) This book is the first in a series of studies to be published about the huge range of publicly listed and unquoted enterprises owned by these GLICs, commonly known as government-linked companies (GLCs) The reason for this publication at a time when research is still under way about the GLCs is that the authors and the institution responsible for this study, the Institute for Democracy and Economic Affairs (IDEAS), felt the pressing need to inform readers, particularly Malaysians, about the important role the GLICs play in the economy and in the corporate sector While undertaking the research, we were extremely surprised to learn that very few Malaysians, even well-informed academics and analysts of the economy, the political system and corporate governance, were aware of the existence of the GLICs and their extensive ownership and control of the corporate sector This book serves to introduce the GLICs to the reader, outlining in the process why they were established and how they have come to secure their significant presence in the corporate sector To stress why these government enterprises are such important actors in the Malaysian economy, this study also provides an overview of the GLICs’ ownership and control of the leading publicly listed enterprises quoted on the domestic bourse, the Bursa Malaysia Our focus is on the majority ownership that the GLICs have of the GLCs quoted among Bursa Malaysia’s top 100 companies, as it stood in 2013 xi 242   BIBLIOGRAPHY Rodan, Simon 2011 Choosing the ‘Β’ Parameter When Using the Bonacich Power Measure Journal of Social Structure 12: 1–23 Rugayah Mohamed 1995 Public Enterprise In Jomo K.S (ed.), Privatizing Malaysia: Rents, Rhetoric, Realities Boulder: Westview Press Sabidussi, Gert 1966 The Centrality Index of a Graph Psychometrika 31 (4): 581–603 Salleh, I.M and S.D. Meyanathan 1993 Malaysia: Growth, Equity, and Structural Transformation Washington, DC: The World Bank Sallehuddin Mohamed 1995 MIM Forum with the Employees Provident Fund: The Employees Provident Fund & You Malaysian Management Review 30(3): 19–27 Saravanamuttu, Johan 2016 Power Sharing in a Divided Nation: Mediated Communalism and New Politics in Six Decades of Malaysia’s Elections Singapore: Institute of Southeast Asian Studies Schneider, Ben Ross 2009 A Comparative Political Economy of Diversified Business Groups, or How States Organize Big Business Review of International Political Economy 16 (2): 178–201 Scott, John 1985 Corporations, Classes and Capitalism London: Hutchinson Searle, Peter 1999 The Riddle of Malaysian Capitalism: Rent-Seekers or Real Capitalists St Leonards/Honolulu: Allen & Unwin/University of Hawaii Press Shirley, Mary M and John Nellis 1991 Public Enterprise Reform: The Lessons of Experience Washington, DC: The World Bank Sieh-Lee Mei Leng 1982 Ownership and Control of Malaysian Manufacturing Corporations Kuala Lumpur: UMCB Publications Sloane, Patricia 1999 Islam, Modernity and Entrepreneurship Among the Malays Basingstoke: Macmillan Shamsul A.B 1988 The Battle Royal: The UMNO Elections of 1987 Southeast Asian Affairs Singapore: Institute of Southeast Asian Studies Sinar Project 2017 Wakil Rakyat: Ahmad Husni Hanadzlah Retrieved from Sinar Project https://mymp.sinarproject.org/ms/wakil-rakyat/ ahmad-husni-hanadzlah Snodgrass, Donald R 1980 Inequality and Economic Development in Malaysia Kuala Lumpur: Oxford University Press Tan Tat Wai 1982 Income Distribution and Determination in West Malaysia Kuala Lumpur: Oxford University Press Tolos, Habibah, Peijie Wang, Miao Zhang and Rory Shand 2014 Retirement Systems and Pension Reform: A Malaysian Perspective International Labour Review 153 (3): 489–502 Useem, Michael 1984 The Inner Circle: Large Corporations and the Rise of Business Political Activity in the U.S and U.K New York: Oxford University Press Vermeulen, Erik P.M 2012 Beneficial Ownership and Control: A Comparative Study – Disclosure, Information and Enforcement OECD Russia Corporate Governance Roundtable March 2012 Technical Seminar OECD  BIBLIOGRAPHY     243 Vighneswaran Vithiatharan and Edmund Terence Gomez 2014 Politics, Economic Crises and Corporate Governance Reforms: Regulatory Capture in Malaysia Journal of Contemporary Asia 44 (4): 599–615 Vitali, Stefania, James B. Glattfelder and Stefano Battiston 2011 The Network of Global Corporate Control PloS One (10): 1–6 Wain, Barry 2009 Malaysian Maverick: Mahathir Mohamad in Turbulent Times Basingstoke: Palgrave-Macmillan Weiss, Meredith L (ed.) 2013 Electoral Dynamics in Malaysia: Findings from the Grassroots SIRD: Petaling Jaya Welsh, Bridget and James U.H Chin (eds.) 2013 Awakening: The Abdullah Badawi Years in Malaysia Petaling Jaya: SIRD Welsh, Bridget (ed.) 2016 The End of UMNO: Essays on Malaysia’s Dominant Party Petaling Jaya: SIRD Witt, Michael A and Gordon Redding (eds.) 2014 The Oxford Handbook of Asian Business Systems Oxford: Oxford University Press Wong Sulong 2011 Notes to the Prime Minister Petaling Jaya: MPH Group Publishing Wong Sulong 2016 Being Abdullah Ahmad Badawi: The Authorised Biography Petaling Jaya: Pelanduk Publications Yan, Erjia and Ying Ding 2009 Applying Centrality Measures to Impact Analysis: A Co-authorship Network Analysis Journal of the American Society for Information Science and Technology 60 (10): 2107–2118 Young, Kevin, Willem C.F. Bussink and Parvez Hassan 1980 Malaysia: Growth and Equity in a Multi-racial Society Baltimore: Johns Hopkins University Press Yoshihara, Kunio 1988 The Rise of Ersatz Capitalism in Southeast Asia Kuala Lumpur: Oxford University Press Zainal Aznam Yusof 1991 Distributional Policies and Programme: The Malaysian Experience In Lee Kiong Hock and Shyamala Nagaraj (eds.), The Malaysian Economy Beyond 1990 Kuala Lumpur: Persatuan Ekonomi Malaysia Zakaria Haji Ahmad 1989 Malaysia: Quasi-Democracy in a Divided Society In Larry Diamond, Juan J. Linz and Seymour Martin Lipset (eds.), Democracy in Developing Countries, Volume Three: Asia Boulder, CO: Lynne Rienner Newspapers and Magazines Agenda Daily Aliran Monthly Asia Asset Management Asia Times Online Astro Awani Bernama Bloomberg 244   BIBLIOGRAPHY Borneo Post Business Times Business Times (Singapore) Enterprising Investor Finance Asia Financial Times Focus Malaysia Forbes Asia Free Malaysia Today KiniBiz Malay Mail Malay Mail Online Malaysiakini Malaysian Management Review mStar Online New Straits Times Pensions & Investments Reuters Straits Times (Singapore) The Australian The Borneo Post The Economist The Edge The Star The Sun The Wall Street Journal Utusan Online Index1 A Abdul Farid Alias, 163, 165, 214n8 Abdul Ghani Othman, 190, 192 Abdul Kadir Jasin, 41–3, 52, 119 Abdul Manaf Hashim, 192, 193 Abdul Mulok Damit, 186, 189 Abdul Rahman Ahmad, 120, 121, 199, 201, 225 Abdul Rahman Maidin, 119, 121 Abdul Rahman, Tunku, 4, 5, 20, 146n34 Abdullah Ahmad Badawi, 4–6, 54–8, 78, 91n56, 92n68, 93n78, 198, 199, 220, 218, 231, 232n2 Abdul Razak, Tun, 4, Abdul Wahid Omar, 92n67, 199, 201, 202 Abrar Corporation, 53 Affin Holdings, 31, 42, 50–1, 72, 92n63, 97, 111, 112, 123, 124, 173, 182, 183, 196, 210, 211 affirmative action, 4, 6, 34, 37, 58–62, 92n71, 93n75, 150, 220, 223, 226, 228–30, 233n12 Agrobank See Bank Pertanian Ahmad Husni Hanadzlah, 190, 191, 193, 212 Ahmad Nazri Abdullah, 41–3, 52, 119 Ahmad Sarji, 160, 164, 197, 204, 205, 212 Ahmad Sebi Abu Bakar, 40, 44, 53, 184, 189 Ahmad Zahid Hamidi, 188 Alliance Bank, 110 Amanah Capital Partners, 115 Amanah Raya, 23, 57, 76, 92n66, 95, 97, 98, 120, 121, 142, 144n10, 161 Amanah Saham Nasional (ASN), 34–6, 89n26, 213n5  Note: Page numbers followed by “n” refer to notes © Institute for Democracy and Economic Affairs (IDEAS) 2018 E.T Gomez et al., Minister of Finance Incorporated, DOI 10.1007/978-981-10-4897-5 245 246   INDEX Amanah Saham Nasional Bhd (ASNB), 34–6, 89n26, 97, 100–3, 105, 106, 111, 112, 113, 120, 123, 126, 127, 128, 129, 130, 131, 133, 134, 135, 136, 137, 158, 160, 163, 167, 179, 180, 183, 195, 205 AmBank, 110, 163 Amin Shah Omar Shah, 40, 50, 187, 189 Ananda Krishnan, T., 40, 42, 48–50, 91n50, 106 Anwar Ibrahim, 40, 145n13, 189 Asmat Kamaluddin, 204, 205, 212 Association of Development Financial Institutions of Malaysia (ADFIM), 115, 116, 147n41 Astro (M) Holdings, 48, 49, 145n22, 170 Audit Act 1957, 158 Auditor General, 82, 158, 213n2 Automatic Enforcement System (AES), 84 Awan Megah & Astacanggih, 84 Axiata, 49, 56, 61, 67, 92n63, 97, 128–30, 140, 161, 162, 167, 170, 194, 195, 200, 201, 209, 211 Azeez Rahim, 191, 193, 197, 212 Azlan Hashim, 161, 163, 164, 194, 195, 200, 202, 212 Azman Hashim, 40, 41, 43, 45, 49, 51, 109, 110, 188, 189 Azman Mokhtar, 45, 55, 159, 164, 194, 195, 197, 199, 200, 202, 212 Azman Yahya, 199, 200, 202, 212 B Badruddin Amiruldin, 191, 193, 212 bailout, 4, 66, 78, 116, 138, 145n26, 218, 219, 231 1997 crisis, 47, 214n12, 220 Bakke Salleh, 33, 198, 199, 201, 202 Bakun Dam, 79, 82 Bandar Malaysia, 1, 14–15n1, 62 Bank Bumiputra, 21, 98, 107, 145n26 Bank Industri & Teknologi Malaysia, 91n58, 114, 115 Banking and Financial Institutions Act 1989, 114 Bank Kerjasama Rakyat Malaysia, 115 Bank Kerjasama Rakyat Malaysia Berhad Act 1978, 117 Bank Negara, 29, 34, 46, 79, 85, 106, 108, 114, 115, 116, 147n41, 147n45, 155, 161, 163, 191, 193 198, 199, 206, 213, 215n25 Bank of Commerce (BCB), 48, 98, 107, 108 Bank Pembangunan & Infrastruktur Malaysia, 114 Bank Pembangunan Bhd, 35 Bank Pertanian, 21 Bank Simpanan Nasional (BSN), 115–17, 147n44, 161 Barisan Nasional (BN, or National Front), 2, 6, 8, 15n11, 57, 59–60, 78, 93n73, 107, 125, 146n28, 233n7 Berita Harian, 119, 120, 220 Berjaya, 40, 45 Bernas, 26 Bian Chiang Bank, 98 BIMB, 50, 52, 72, 92n63, 97, 111–13, 117, 141, 144n11, 173, 196, 201, 203, 205, 210, 215n31 Bintulu Port Holdings, 22, 51, 52, 76, 98, 136, 139, 142, 143, 192, 210 block-holdings, 13 block shareholding, 12, 122, 130, 165, 218, 224 board appointments, 12 Bonacich’s power, 178–9  INDEX     Boustead Holdings, 31, 50, 72, 83, 84, 112, 123, 173 British, 2, 19, 21 capital, 20 firms, 19, 21, 37, 170 Bumi Armada, 48, 50, 167 Bumiputera, xivn1, 6, 20, 34–6, 39, 61, 66, 183, 220, 226 capitalists, 228 small and medium-scale enterprises (SMEs), 54, 59, 233n12 Bumiputera Commercial and Industrial Community (BCIC), 37–8, 40, 54, 150, 223, 226, 228 Bumiputera Economic Congress, 20 Bumiputera Economic Empowerment (BEE), 6, 40, 60, 150, 223 Bumiputera Malaysia Finance (BMF) affair, 107, 145n26 Bursa Malaysia Bhd, 139 business groups, 6, 9–12, 17n28, 38, 40, 45, 47, 53, 66, 95–9, 144n2, 150, 165–83, 207, 209, 211 C CapitaLand Ltd., 63, 167 Chang Ming Thien, 90n47, 107 Che Khalib Mohamad Noh, 199, 202 Cheras-Kajang Highway, 30, 88n15 Chia Yee Soh, 132 China, 46, 56, 62, 101, 104, 173, 230 China Railway Group, 62 Chinese banks, 106 business groups, 34, 40, 45, 95, 142n2 control, 108 enterprises, 19, 40, 45, 90n36, 90n48, 144n2 equity, 228 privately-owned companies, 31 Companies Act, 3, 45, 149 247 control, 7–14, 16n26, 41, 52–3, 66, 97, 108–9, 117–21, 149–213, 217–25, 231 control mechanism, 14, 144, 149–51, 208 holding companies and business groups, 165–83 legislation and governance structure, 150–65 Corporate Debt Restructuring Committee (CDRC), 199 corporate ownership, 6–7, 40, 95–148 corporate professionals, 194–8 corruption, 107, 127 Credit Guarantee Corporation (CGC), 64, 115, 116, 147n43 cross-holdings, 165 D Daim Zainuddin, 38, 40, 53, 55, 91n55, 107–10, 119, 146n29, 146n30, 146n32, 146n52, 184, 186, 189, 199, 208, 220, 221 and 233 Damansara Ulu Kelang Expressway (DUKE), 30 Danaharta, 199 Danamodal, 199 Datuk Keramat Holdings Bhd, 107 Dawn-Raid, 37 Desa Pachi, 160 Development Financial Institutions (DFIs), 26, 114–18, 219 Development Financial Institutions Act 2002 directorships, 114, 115 distributional coalitions, 37 E Eastern & Oriental Bhd (E&O), 122, 123 Economic Planning Unit (EPU), 46, 193, 199 248   INDEX economic power, 218, 219, 229, 231 Economic Transformation Programme (ETP), 58 EcoWorld Development Bhd, 101, 102 Education Blueprint 2011–2015, 58 Eleena Azlan Shah, 100, 144n9, 145n16 Employees Provident Fund (EPF) history, 29–31, 56, 57, 88n15, 88n16 ownership structure, 170 Employees Provident Fund Ordinance 1951, 29 equity cross-holdings, 11 Eric Chia, 132 Export-Import (EXIM) Bank, 26, 115, 116 F farmers, 21, 32 F&B Nutrition Sdn Bhd Acquisition, 86 Fauziah Yaacob, 163, 164, 204, 206, 207, 213 Federal Agriculture Marketing Authority (FAMA), 21 Federal Commissioner of Lands, 98 Federal Land Consolidation and Rehabilitation Authority (FELCRA), 21 Federal Land Development Authority (FELDA), 20, 124–7, 143, 183 Felda Asset Holdings Company, 70, 75, 124–6 Felda Global Ventures Sugar Sdn Bhd, 22, 49, 61, 70, 75, 83, 85, 86, 97, 122, 126, 140, 143 FELDA Investment Corporation (FIC), 124, 127 Felda Regulatory Unit, 125 financial institutions, 35, 97, 98, 106–14, 144n11 consolidation, 108–9, 117 financial power, 53, 155 Fleet Holdings Sdn Bhd, 98, 188 foreign-owned firms, 21, 35, 170, 173 G Gabungan Kesturi Sdn Bhd, 97, 120, 121, 142, 208, 225 Gamuda, 43, 49, 50, 71, 97, 99–101, 105, 139, 140, 167, 209, 229 Ghazali Ali, 196, 213 Ghazali Seth, 163 Genting, 45 GLC Transformation Programme divestment, 105 management, 55, 199 merger, 57, 122, 182 Gleneagles, 138 Golden Hope, 42, 49, 57, 92n67, 122 golden share, 7, 9, 12, 21, 28, 97, 130, 132, 138, 139, 143, 149, 167, 183 MoF Inc companies (see (MoF Inc.)) governance structure, 150–65, 218, 231 government intervention, 19, 34, 40 Government Investment Companies Division (GIC), 21 government-linked companies (GLCs), 54–8, 99–139 definition, 6–9 government-linked investment companies (GLICs) definition, 6–9 Investment Panels, 158–65 list of, 3, 63 privatization, 37–63 Government Transformation Programme (GTP), 58, 59 “groom and place,” 208, 221 guardianship, 226–9 Guthrie Corp, 35, 37, 122  INDEX     H Halim Saad, 40–2, 45, 47, 49–51, 86, 108, 184, 189, 233n8 Hamad Kama Piah, 160, 164, 194, 195, 197, 212 Harun Idris, 116, 117 Hashim Ismail, 192 Hassan Marican, 59, 93n72 Heavy Industries Corporation of Malaysia Bhd (HICOM), 22, 39, 41, 46, 50, 64, 89n35, 185 holding company, 9–12, 98, 133, 139, 165–83 Hong Leong, 31, 40, 42, 44, 49, 51–3, 107, 109, 110, 144n2, 162 Hussein Onn, Tun, 4, 5, 34 I Idris Jala, 59, 92n67, 92n70 IGB, 102–3, 145n17 IHH Healthcare, 56, 68, 97, 133, 134, 138, 139, 170, 194, 195, 200, 209 IJM Corp, 44, 50, 62, 72, 74, 77, 102–4, 139, 140, 144n8, 165, 167, 173, 210, 211, 215n30 IJM Plantations, 52, 77, 98, 102–4, 121, 122, 139, 140, 173, 210, 211, 215n30 industrialization, 39, 58, 59, 61, 150 inner circle, 13, 225 inter-governmental business China, 62 Singapore, 63 interlocking stock ownership, 12, 34, 40, 102, 124, 173, 207, 214n16 internationalization, 30, 32 International Medical University Malaysia (IMU), 138 intra-elite feuds, 229 249 investment holding companies, 10, 88n18, 98, 133, 165 investment panels, 28, 29, 33, 158–65 Irwan Serigar Abdullah, 163, 164, 197, 203, 204, 206, 212, 213 Isa Abdul Samad, 125, 148n54, 190, 192, 193 Ishak Ismail, 40, 44, 52, 186, 189 Iskandar Investment, 47, 200 Iskandar Malaysia, 47, 57 Islamic financial institution, 32 Ismee Ismail, 196, 197, 201, 212, 214n7 J Japan, 46, 56 Jeffrey Cheah Fook Ling, 40 Johor, 37, 127, 230 Johor Corp, 73, 74, 98, 116, 127, 133, 140, 141, 143, 148n55, 161, 183, 192 Johor State Economic Development Corporation, 127 joint-ventures foreign companies, 39, 170 heavy industries, 39 with private firms, 39, 138 K Kamaruddin Jaffar, 187, 189 Kamaruddin Mohamad Nor, 187, 189 Kedah, 21, 132 Khalid Ahmad, 41–3, 52, 119, 186 Khazanah Nasional Bhd history, 37–63 ownership structure, 169 Khoo Kay Peng, 43, 51, 107 Khoo Teck Puat, 106, 145n24 250   INDEX KLCCP Holdings, 50, 71, 97, 99, 105, 139, 143, 209, 210 KL Sentral, 121, 195 Koon Yew Yin, 100 Koperasi Permodalan FELDA, 125, 126 Koperasi Usaha Bersatu (KUB), 26, 28, 87n5, 146n27, 167, 202, 221, 222 Krishnan Tan Boon Seng, 104 Kuala Lumpur City Center, 106 Kuala Lumpur International Airport, 106, 176 Kuala Lumpur Kepong (KLK), 40, 41, 49, 122, 144n2 Kuala Lumpur Stock Exchange (KLSE), 38, 139, 159 Kulim Malaysia, 73, 127 Kumpulan Europlus Bhd, 104, 145n20 Kumpulan Perubatan Johor (KPJ), 51, 74, 98, 99, 133, 134, 141, 143, 210 Kumpulan Wang Persaraan Diperbadankan (KWAP, or Retirement Fund Incorporated) Act 2007, 29 history, 28–30 ownership structure, 172 Kuok, Robert, 42, 49–51, 98, 107, 124, 138, 170 L Land Development Ordinance, 20 Lebuhraya Damansara Puchong highway, 100 legislation appointment, 156–7 ministers control, 152–4 Lembaga Tabung Angkatan Tentera (LTAT, or Armed Forces Fund Board) history, 31, 88n19 ownership structure, 174 Lembaga Tabung Haji (LTH, or Pilgrims Fund Board) Act 1995, 32 controversy, 111–12 history, 31–3 ownership structure, 175 restructuring, 33 Liew Kee Sin, 51, 101 Lim Kang Hoo, 62 Lingkaran Trans Kota Holdings Bhd (LITRAK), 51, 100 Lin Yun Ling, 40, 43, 100 Lodin Wok Kamaruddin, 83, 111, 194, 196–8, 213, 214n7, 222, 225 London Tin, 21 M Mahathir Mohamad, Tun, 4, 5, 33–40, 45–8, 52–4, 57, 59, 63, 66, 78, 89n29, 89n30, 89n32, 90n37, 90n40, 90n42, 90n51, 90n52, 90n55, 92n71, 93n79, 106–9, 119, 121, 128, 138, 146n29, 146n32, 148n67, 185, 187–9, 191, 198–200, 215n26, 215n27, 218–21, 229, 231, 233n8, 233n14, 234n14 Majlis Amanah Rakyat (MARA, or Council of Trust for Indigenous People), 20, 87n2 Malakoff Bhd, 52 Malay bank, 106, 107 businesses, 20 capital, 106–7 entrepreneurs, 20, 37, 61, 98, 138, 226 poverty, 19, 54 property, 21, 30, 98  INDEX     Malayan Banking Bhd, 35, 111 Malay Mail, 2, 119, 121, 127, 198 Malay National Banking Corporation, 106 Malaysia Airlines (MAS), 47, 50, 51, 73, 79, 81, 86, 91n62, 92n63, 92n67, 92n68, 92n70, 97, 98, 135, 138, 139, 144n8, 148n65, 159, 161, 170, 184, 194, 195, 196, 200, 202, 203, 206, 207, 214n12 Malaysia-China Kuantan Industrial Park (MCKIP), 62 Malaysia Export Credit Insurance (MECIB), 114, 115, 147n44 Malaysia Marine & Heavy Engineering Holdings (MMHE), 50, 73, 136, 139, 142, 210 Malaysian Agrifood Corporation Bhd (MAFC), 47, 65, 81 Malaysian Airline System, 22, 41, 135, 138, 142, 148n65, 210 Malaysian Airports Holdings Bhd (MAHB), 97, 98, 135, 138, 139 Malaysian Building Society Bhd (MBSB), 92n63, 97, 114, 117, 139, 141, 144n11, 146n36, 170, 194, 195, 200, 213n1 Malaysian Chinese Association (MCA), 44, 50, 93n73, 107, 119, 146n29, 233n7 Malaysian French Bank, 107, 146n29 Malaysian Industrial Development Finance (MIDF), 43, 115–17, 147n42 Malaysian International Shipping Corp Bhd (MISC), 22, 36, 41, 48, 49, 69, 73, 98, 136, 138, 139, 142, 148n67, 167, 209, 210 Malaysian Resources Corporation Bhd (MRCB), 41, 42, 49, 51–3, 91n52, 91n53, 92n63, 119–21, 251 144n7, 147n47, 170, 186, 196, 200, 201, 202, 215n27 market capitalization, 7, 11, 16n26, 39, 53, 54, 56, 97, 100, 122, 124, 130, 147n51, 173, 210, 211 Marshall, Augustus Ralph, 106 Mat Noor Nawi, 203–5, 212, 213 Maxis, 48, 49, 145n22, 167 Md Nor Md Yusof, 194–6, 212 Menara Warisan, 80 Minister of Defence, 111, 151, 155, 190 Ministry of Finance, 1, 3, 7, 8, 12, 13, 15n9, 16n20, 21, 26, 28, 46, 89n23, 114, 115, 117, 140, 155, 156, 161, 163, 164, 192, 197, 199, 203, 205, 206 Minister of Finance Incorporated (MoF Inc.) Act 1957, 21 control over media sector, 119–21 golden share, 9, 21, 26, 28, 97, 124, 138, 139, 143, 183 history, 19–28 list of companies, 26 ownership structure, 112, 143, 166 Ministry of Trade & Industry, 20, 35, 54 Mirzan Mahathir, 40, 42, 48, 138, 148n67, 188, 189 Mohamad Aziz, 192, 193, 212 Mohamed Noor Yusof, 107 Mohamed Sarit Yusoh, 186, 189 Mohd Noor Mutalib, 41–3, 52, 119 Mokhzani Mahathir, 4, 40, 188, 189 Morshidi Abdul Ghani, 203, 204, 206, 212 Mount Elizabeth, 138 MSM Malaysia Holdings Bhd, 97, 124, 126 Muhyiddin Yassin, 229, 233n2 MUI Bank, 107 252   INDEX Mukhriz Mahathir, 188, 189, 233n14 Multimedia Super Corridor, 106 Multi-Purpose Holdings, 53 Multi-Purpose Holdings Bhd (MPHB), 42, 107, 146n29 N Najib Razak, 1, 2, 4, 6, 8, 15n12, 58–63, 78, 86, 92n72, 93n74, 105, 111, 164, 190, 191, 193, 196–9, 202, 203, 209, 212, 214n7, 218–20, 225, 228–31, 232n2 National Development Policy (NDP), 40 National Electricity Board (NEB), 128 National Feedlot Corporation, 22, 26, 28, 93n73 National Key Results Areas (NKRAs), 59 National Vision Policy (2001–2010), 40 Nazir Razak, 92n67, 161, 165, 214n8 network topology GLICs and top 100 companies, 176–8, 181 New Economic Model, 58 New Economic Policy (NEP), 4, 34, 150, 218 New North Klang Straits Bypassway, 30, 31, 88n15 New Straits Times Press Bhd (NSTP), 42, 52, 53, 91n53, 91n54, 119–21, 186 9th Malaysia Plan, 2006–2010, 54 Noor Ehsanuddin Mohd Harun Narrashid, 192, 193 Nor Mohamed Yakcop, 33, 54, 55, 88n22, 89n24, 91n60, 119, 121, 147n47, 147n49, 190, 191, 193, 198–200, 208, 214n19, 215n19, 215n26, 215n27, 215n28, 220, 221 Nusajaya, 63 O 1Malaysia Development Bhd (1MDB), 1, 2, 4, 15n3, 15n4, 15n8, 23, 26–8, 62, 63, 79, 84–6, 93n74, 191, 196, 197, 200, 201, 214n7, 222, 229, 230 Omar Salim, 125 Organisation for Economic Cooperation and Development (OECD), 7, ownership definition, 9–10 GLICs during Mahathir, 39, 40, 45, 53, 59 network map of GLICs, 14, 95 ownership and control, 9–14, 19, 40, 48, 63, 66, 78, 110, 124, 209 during privatization, 39, 40 top 100 companies in 1971 and 1997, 34, 40, 41, 52 ownership of GLCs financial institutions, 106–18 healthcare and services, 133–9 media, 119–21 oil & gas, 130–3 of plantations, 121–8 propert development & construction, 99–106 utilities, 128–30 ownership patterns types, 139 P Pantai, 138 Parkway, 133, 138 patronage, 4, 40, 48, 58, 59, 66, 78, 92n68, 217, 218, 223, 226, 231, 233n2 Pejabat Urusan Hal Ehwal Haji (Pilgrimage Affairs Management), 32 Pembinaan PFI, 83  INDEX     Penang, 32, 98, 132, 199, 232n1 pension, 28, 29, 87n8, 87n9 pension fund, 3, 4, 29–31, 33, 231 Pensions Trust Fund, 28, 29 Pensions Trust Fund Act 1991, 28 Perbadanan Hal Ehwal Bekas Angkatan Tentera (PERHEBAT), 88n19 Perbadanan Nasional (Pernas, or National Corporation), 20, 21, 23, 26, 27, 35, 64, 80, 89n25, 107, 116, 138 Perbadanan Perwira Harta Malaysia (PPHM), 84, 88n19 Perbadanan Perwira Niaga Malaysia (PERNAMA), 88n19 Perbadanan Ushawan Nasional Bhd (PUNB), 35, 65, 89n24 Perbadanan Wang Simpanan Bakal-­ Bakal Haji (Prospective Pilgrims Fund Corporation), 32 Performance Management and Delivery Unit (Pemandu), 59, 92n70, 195 Perlis, 21, 121 Permodalan Nasional Bhd (PNB), 3, 4, 7, 26, 27, 34–7, 39, 56, 57, 62, 64–77, 80, 89n25, 89n26, 91n51, 95, 97, 100, 101–7, 110–14, 117, 120, 122, 123, 125–37, 140, 141, 145n26, 150, 151, 154, 158–60, 163–5, 167, 173, 179, 180, 182, 183, 189, 194, 195, 197, 201–5, 212, 222, 224, 225, 230 history, 34 nationalization, ownership structure, 168 Persatuan Pribumi Perkasa (Perkasa), 59, 92n71, 109 Pertubuhan Kebajikan Islam Malaysia (PERKIM), 111, 146n34 Perwaja Steel, 39, 79, 82 253 Petronas Dagangan, 43, 49, 50, 69, 98, 130–2, 139, 141, 209 Petronas Gas, 41, 48, 49, 68, 130–2, 139, 141 Petronas Twin Towers, 105, 106, 140 Pharmaniaga, 31, 88n18, 112, 124, 141, 173, 223 Phileo Allied, 53, 144n13, 146n31 Pinewood Iskandar Malaysia, 47, 56, 170 policies, 14, 20, 27, 37, 38, 47, 59, 149, 150, 219, 223, 225, 226, 228, 229, 232 political feuding, 53, 66, 218 political power, 8, 110, 233n13 Pos Malaysia, 22, 26, 27, 56, 81, 87n4, 202 Prime Minister, 1, 2, 4, 6, 8, 20, 29, 33–5, 37, 40, 46, 47, 53, 54, 57, 58, 60, 105, 106, 110, 149, 151, 158, 190, 193, 198, 199, 203, 208, 218–21, 225, 229, 230, 232 Prime Minister’s Department, 46, 124, 151, 155, 193 privatization role of GLICs, 38–40, 47, 48, 218, 220, 223 privatize, 6, 38–40, 45, 47, 58, 60, 66, 78, 128, 150, 229 professional elite, 13, 197–203, 207, 221, 224, 232 ProfituneBhd, 121 ProjekLebuhraya Utara Selatan (PLUS), 30, 202 Proton, 39, 47, 56, 79, 81, 90n46 PSC-Naval Dockyard SdnBhd, 83 PTPTN (Higher Education Loan), 82 Public Bank, 41, 48, 49, 90n49, 108–10 public enterprises, 20, 21, 34, 219 list of major, 64–5 Public-Listed Companies owned by GLICs, 67 254   INDEX public policies, 14, 59, 150, 219, 223, 226, 232 Pulau Indah Ventures, 47 Pulau Memutik Ventures Sdn Bhd, 68, 97, 133, 134, 139 Putrajaya Committee on GLC High-Performance, 55 pyramiding, 10–12, 176, 211, 219 Q Quek Leng Chan, 31, 42–4, 49–52, 107, 109, 110 R Raja Arshad Tun Uda, 46 Rashid Hussain, 40, 41, 45, 46, 48, 49, 53, 107, 109, 186, 189 Realmild Sdn Bhd, 41, 43, 52, 91n52, 119–21 Renong, 41, 42, 47, 49–51, 108, 215n27 rents, 38, 40, 45, 66, 92n68, 219, 223 Retirement Fund Act 2007, 29, 156 RHB Bank, 48, 83, 87n5, 107–11, 117, 146n30, 162, 213n1, 223 Rosni Sohar, 192, 193, 212 Rubber Industry Smallholders Development Authority (RISDA), 21, 64 Rural and Industrial Development Authority (RIDA), 20, 87n2 S Sabah, 98, 104, 124, 203 Sabbaruddin Chik, 98, 144n10 Samsudin Osman, 161, 164, 197, 203–5, 212 Sarawak, 37, 98, 132, 139 Scomi Energy Services Bhd, 104 Scomi Engineering Bhd, 104, 105 Scomi Group, 92n68, 104 Scorpene deal, 83 sectors agriculture, 32, 54 banking, 38, 106, 107, 117, 118, 146n31 communications, 61 financial, 3, 97, 114, 117, 124, 143, 165, 208, 211, 218, 219 healthcare, 98, 133–9 housing, 32, 83 logistics, 26 manufacturing, 32, 59, 61, 115, 132 media, 119–21 oil& gas, 130–3 palm oil, 124 plantation, 121–7 property development, 99–106 strategic, 114, 167 utilities, 128–30 Shah Alam Expressway, 100 Shahril Ridza Ridzuan, 120, 121, 161, 164, 194, 195, 197, 199, 200, 202, 212, 225 Shamsuddin Abdul Kadir, 40, 187 Sime Bank, 87n5, 107, 146n27 Sime Darby Bhd, 21, 31, 33, 35, 41, 45, 48–50, 57, 61, 63, 68, 92n63, 92n67, 97, 107, 118, 121–4, 128, 139, 140, 159, 167, 176, 182, 183, 187, 192–5, 203, 205, 209 Siow Kim Lun, 196, 197, 213 Sistem Televisyen Malaysia (STM), 119, 120 Small Medium Enterprise Development Bank (SME Bank), 25, 26, 54, 91n58, 115–17, 147n44 SMEs, 38, 54, 59, 109, 114, 116, 219, 228, 229 SOCSO, 16n20, 179, 180, 233n4  INDEX     Southern Bank, 44, 50, 108, 109 sovereign wealth fund, 3, 4, 45, 63, 167, 193, 222 special purpose fund, 3, special purpose vehicles (SPVs), 27, 63, 125 Sports Toto, 45, 90n38 SPRINT highway, 100 SP Setia, 31, 50–1, 57, 62, 72, 80, 97, 99, 101, 102, 105, 139, 140, 167, 210, 229 SRC International SdnBhd, 2, 24, 86 STAR LRT, 82 State Economic Development Corporations (SEDCs), 21, 35, 37 State Financial Secretary of Sarawak, 69, 70, 73, 76, 98, 131, 135, 136, 142, 143 state-owned enterprises (SOEs), 16n26, 62, 90n43, 230 statutory bodies, 3, 20, 21, 29, 35, 93n72, 99, 115, 133, 151, 158, 182, 233n4 Statutory Bodies (Accounts and Annual Reports) Act 1980, 155, 158, 213n2 Statutory Bodies (Discipline and Surcharge) Act, 158 strongly-connected component (SCC), 181, 182 Sukarti Wakiman, 203, 204, 206, 212 Syarikat Telekom (M) Bhd, 130 Syed Anwar Jamalullail, 33, 88n22, 121, 147n47 T Tabung Haji (TH) See Lembaga Tabung Haji (LTH, or Pilgrims Fund Board) Tabung Haji Act 1995, 32, 153, 157 Taib Mahmud, 51, 83, 108, 223 255 Tajudin Ramli, 40–2, 45, 47, 48, 50, 86, 184, 189, 233n8 Talam Transform Bhd, 145n21 Tan Chin Nam, 44, 50, 102 Tanjong Pagar, 63 Teh Hong Piow, 41, 48, 49, 51, 109, 110 Telecommunications Department of Malaya, 130 Telekom, 23, 26, 27, 41, 45, 48, 49, 61, 69, 92n63, 92n67, 97, 128, 129, 130, 140, 148n59, 167, 170, 201–3, 205–7, 209 Temasek, 45, 63, 110, 170 Tenaga, 23, 26, 27, 41, 45, 48, 49, 57, 61, 67, 92n63, 92n67, 97, 128–30, 140, 167, 170, 192, 195, 202, 209, 211 Tenth Malaysia Plan, 2010–2015, 58, 59 Terry Tham Ka Hon, 122 TH Heavy Engineering (THHE), 85, 162, 173 Time Engineering, 42, 51, 82, 86, 184, 202 Ting Pek Khiing, 40, 42, 79, 90n37 Tong Kooi Ong, 44, 53, 99, 144n13, 146n31 Toyota, 132 trust fund manager, Tsao, Frank, 138 Tun Razak Exchange (TRX), 1, 2, 86 TV3, 52, 53, 119, 121, 186, 220 U UEM Land, 47, 63 UEM Land Bhd, 63 UEM Sunrise, 50, 71, 97, 99, 100, 139, 140, 143, 170, 209 UMW See United Motor Works Bhd (UMW) 256   INDEX UMW Holdings, 42, 49, 50, 70, 71, 132, 133, 139, 141, 167, 196, 197, 209, 210 UMW Oil & Gas Corp, 71, 132, 139, 141, 163, 205, 210 Ungku Aziz, 32 United Asian Bank Bhd (UAB), 108, 146n28 United Malayan Banking Corporation (UMBC), 44, 90n47, 107, 146n29, 187 United Malays National Organization (UMNO), 8, 16n17, 28, 38, 47, 48, 53, 57, 59, 60, 84, 91n51, 91n52, 98, 99, 108, 109, 117, 119, 125, 145n26, 145n27, 148n54, 165, 167, 183–94, 197, 199, 202, 203, 207, 208, 212, 215n23, 217, 218, 220–2, 225, 226, 229, 232–3n2, 233n8, 233n14 United Motor Works Bhd (UMW), 36, 42, 44, 49, 50, 70, 71, 92n63, 97, 132, 133, 139, 141, 144n5, 167, 196, 197, 209, 210 Urban Development Authority (UDA), 21, 24, 26, 35, 64, 87n3, 196 Utama Merchant Bank, 115 Utusan Malaysia, 119, 221 V vendor development programmes, 38, 60, 61, 150 Vincent Tan CheeYioun, 40–3, 49, 50–2, 90n37 Voon Tin Yow, 101 voting rights, 12, 183, 222 W Wan Abdul Aziz Wan Abdullah, 160, 164, 203–5, 212 Wan Azmi Wan Hamzah, 40, 122, 147n52, 184, 189 Wan Kamaruzaman Wan Ahmad, 163, 164, 197, 213 Waqaf An-Nur Corporation, 127 Y Yahya Ahmad, 40, 41, 45, 185, 189 Yayasan Pelaburan Bumiputera (YPB, or Bumiputera Investment Foundation), 34, 35, 150 Yeoh, Francis, 40, 90n37 Z Zauyah Desa, 161, 163, 164 Zulkifeli Zin, 163, 164, 204, 213 .. .Minister of Finance Incorporated Edmund Terence Gomez with Thirshalar Padmanabhan Norfaryanti Kamaruddin • Sunil Bhalla Fikri Fisal Minister of Finance Incorporated Ownership and Control of Corporate. .. political and business implications of the government’s significant control of the corporate sector, particularly through its most important GLIC, the Minister of Finance Incorporated (MoF Inc.)... and GLCs   6 Key Themes: Ownership and Control    9 Methodology  13 Notes  14 2 History of GLICs  19 The Minister of Finance Incorporated (MoF Inc.)  19 The Pension and Savings Funds  28