Who Owns Corporate Malaysia Now? Politics, Money and Control of Government-Linked Investment Companies

• In Event: 231. Democracy and Development at Risk: The Monetization of Politics in Malaysia. Sponsored by the Malaysia-Singapore-Brunei Studies Group

Abstract

This study reviews the evolving nature of political-business ties through a historical analysis of Malaysia’s seven government-linked investment companies (GLICs), such as Khazanah Nasional and the Employees Provident Fund, which have significant ownership of companies in key sectors of the economy. These GLICs serve as sovereign wealth funds and savings-based institutions controlled by the Prime Minister through complex pyramid-type organizational structures. Different premiers have employed these GLICS in politics and in the corporate sector in different ways. Abdul Razak initiated their active involvement in the economy through his interventionist and affirmative action-based New Economic Policy, an ethnic-based patronage program that UMNO (United Malays National Organization) effectively used to secure Malay electoral support. Mahathir Mohamad stressed privatization that entailed the divestment of the GLICs’ corporate assets to well-connected businesspeople, a system of selective patronage that allowed politicians to emerge as corporate captains who channeled funds into UMNO and deeply monetized party elections. A number of these highly-geared companies were re-nationalized after the 1997 Asian currency crisis, with the GLICs emerging as owners of Malaysia’s leading publicly-listed companies. Najib Razak actively used quoted and private companies owned by GLICs to transfer assets between them in a manner that has led to serious allegations of kleptocracy, money laundering and the extensive monetization of federal and state elections. An assessment of the GLICs’ ownership of Malaysia’s top 100 publicly-listed companies in 2013 reveals the reduced involvement of UMNO members but with the prime minister still in significant control over the corporate sector.

Author

• Edmund Terence Gomez, University of Malaya