Dear PH, we voted for lions, not mice
When Pakatan Harapan (PH) secured power in GE14, many voters expected the beginning of the end for the massive government-business crony complex that had long been synonymous with nepotism, collusion and pilferage.
It only took months for PH to begin hijacking the system that it so enthusiastically campaigned against in the election.
The formation of the economic affairs ministry (MEA) brought with it the appointment of Dr Mahathir Mohamad and Mohamed Azmin Ali to serve on the boards of many GLCs transferred from the finance ministry to MEA – a direct violation of the manifesto pledge that politicians would not be appointed as directors of GLCs.
In December 2018, PPBM leaders openly declared their intent to persist with the practice of selectively targeted patronage. At its first convention after securing power, when its president, Muhyiddin Yassin, declared that “PPBM should not be apologetic to champion the Bumiputera agenda”, his statement was enthusiastically supported by members, suggesting an element of opportunism, even self-interested rent-seeking, in the party.
A month later, it was revealed that Rural and Regional Development Minister Rina Harun, of Mahathir’s party PPBM, had appointed politicians from her party to the boards of directors of GLCs under her control.
Even Syed Saddiq Syed Abdul Rahman has come under fire for similar practices with the appointment of 13 PPBM Youth members as state sports development coordinators in August 2019.
These actions only came to light due to their high-profile nature on the national level. However, given the presence of similar structures at the state level through individual holding companies known as Menteri Besar Incorporated (MBI), one can’t help but wonder about the degree of crony capitalism that has occurred in the often-opaque halls of these bodies.
There is an essential myth in Malaysian politics that the Mahathir-era government almost single-handedly modernised, industrialised, and strengthened the national economy. PH certainly took this to heart and ran with it during GE14, with many voters expressing nostalgia over “better times” in the 80s and 90s.
This story is extended to his close associates as well, including Daim Zainuddin who had served under Mahathir in various capacities. Known as the “godfather of corporate Malaysia”, it is no open secret that the favour of Daim can almost certainly secure the future of any aspiring corporate climber in Malaysia’s hegemonic GLCs.
Even ministers hold him in deference, the latest being Syed Saddiq who posted on social media of him meeting Daim days before a Cabinet meeting on the long-overdue “Shared Prosperity” economic framework, alongside members of PPBM Youth (which was curiously omitted from Syed Saddiq’s official social media channels).
Formerly a lawyer, Daim was offered the chairmanship of Peremba in the 1970s, a holding company under the finance ministry-run Urban Development Authority. There, he oversaw the advancement of many Malay managers who would become strong Umno supporters in the 80s and 90s.
Daim’s wealth grew through the use of the regime’s resources to engineer buyouts, mergers and takeovers. This continued after Mahathir named him head of Fleet Holdings, an Umno holding company, and later after he became finance minister in 1984, a position that he held until his official retirement in 1991.
By the 1990s, it was clear that obtaining political patronage from an Umno figure – Mahathir, his close ally and former finance minister Daim and/or Anwar Ibrahim – was a key strategy for building a business empire.
Notable in this list are the business investments of many of these figures, in businesses specific to Malaysia such as construction (Halim Saad), air transportation (Tajudin Ramli), automobile distribution and heavy industry (Yahya Ahmad), while only a minority (e.g. the government-linked MBf Holdings) had any external capital investments. Nurtured by the regime, Daim and other entrepreneurs found that close links with the Umno machine were advantageous.
Even the Asian Financial Crisis was not a barrier.
Let’s not forget the UEM incident of 1997, either. In November 1997, UEM borrowed heavily to purchase shares of its parent company Renong, widely understood to be the main holding company for Umno’s corporate assets, at far above market value, paying RM3.24 for shares trading at RM1.90. The groups that sold the shares at inflated prices themselves had corporate ties to Halim as well, violating several investment laws.
This logic of exchange among the new Malay rich and the political establishment is clear and seems to persist today in the PH government. Party leaders reward loyalty to the party with favourable access to business opportunities, distributed through tenders, privatisation, stock offers, and party-held corporations.
Despite the massive bill footed by taxpayers, ostensibly through the EPF, these companies faced little penalty. All was forgiven when a return to increased government spending and a recovering global economy allowed the economy to ride the wave back to growth.
If Malaysia Baru is to see the light of day, PH needs to finally dismantle the culture of political patronage that has permeated the fabric of our institutions. We no longer can afford to sustain a culture of moral hazard in our business and government institutions.
Malaysians voted differently in GE14 in the hope of seeing more courage on the part of their elected representatives. This includes the courage to move beyond the systems of the past and to pave a new way forward for the country.
We voted for lions, not mice. Do remember this, PH.
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