Governance and institutional reforms, specifically within government-linked companies (GLCs) and statutory bodies, are vital for strengthening Malaysia’s economic progress and achieving long-term national goals, such as meeting the Sustainable Development Goals (SDGs) by 2030 (Mir & Nivin, 2021). In addition, reforming these institutions highlights the importance of decentralisation, transparency, and accountability.
In Malaysia, examples of GLCs are Tenaga Nasional Berhad, Telekom Malaysia Berhad, and Petroliam Nasional Berhad. Whereas, the Employees Prominent Fund (EPF), Permodalan Nasional Berhad (PNB), and Khazanah Nasional Berhad are examples of GLICs. Lastly, the Malaysian Communications and Multimedia Commission (MCMC), the Companies Commission of Malaysia (SSM), and Bank Negara Malaysia (BNM) are some examples of statutory entities.
Political appointments in Malaysia are presented to individuals with previous political experience as well as incumbent Members of Parliament (MPs), who are selected for prominent positions in government-linked entities. These appointments are usually made by the Prime Minister with the assistance of the responsible ministry. The ability to appoint is seen as a tool of political influence, allowing those in power to select and appoint trusted affiliates or exercise control over specific entities.
Malaysians, especially professionals, think tanks, and scholars, are concerned about the potential for corruption and other issues that could arise from this system, which raises questions about the government’s standards and transparency surrounding nominations. This is because Members of Parliament (MPs), ADUN, and political party leaders are still able to occupy those prominent positions in GLCs and statutory bodies without any legal barriers. As a result, administrations may exploit these posts to gain political control and support.
Concerns Over Governance and Integrity
There have been many escalating concerns about the current appointment practices. As of October 3, 2024, Prime Minister Anwar Ibrahim’s government had appointed 95 political appointments to various state-owned firms (Mah, 2024). For comparison, Dr Mahathir Mohamad appointed 86 people during his second tenure, which lasted two years and averaged 43% appointments per year. In contrast, Anwar’s government has made an average of 47.5% appointments per year. Given that his term is projected to last until the next general election, this figure could rise further. This trend not only raises concerns and questions, but also signals an alarming entrenchment of political influence within public institutions.
Board members with political connections may put party interests ahead of organisational objectives, increasing the possibility of corruption, abuse of power, and conflicts of interest. On October 22, 2024, Prime Minister Anwar Ibrahim declared that a stringent screening procedure will be applied to all nominations to important positions in GLCs. He underlined that his first priority is ensuring that the selected nominees have clean records and are capable of withstanding examination (Muhammad Yusry, 2024). However, there is no visible framework to demonstrate how the screening process takes place.
The Prime Minister’s response came following criticism of the appointment of Nooryana Najwa (daughter of former Prime Minister Najib Razak) to Malaysia External Trade Development Corporation (MATRADE) on October 15, 2024. This is because, in 2019, the Inland Revenue Board (IRB) filed a case against Nooryana to recover RM10.3 million in unpaid income taxes from 2011 to 2017. This tax recovery lawsuit raises doubts about her financial integrity and raises concerns about her qualification for a high-level position in an agency like MATRADE, which plays a vital role in promoting Malaysia’s international trade. Furthermore, Nooryana has been outspoken about her father’s innocence in the 1MDB controversy (Team, 2023). Her vocal support of Najib and claims of his innocence have added a political dimension to the controversy. Many believe that her appointment symbolises a potential return to cronyism or political patronage, which the current government had previously vowed to curb.
Fikri Fisal (2021) mentions several guidelines relevant to political appointments, including Ministry of Finance (MoF) guidelines, Green Book 2006, Securities Commission (SC) guidelines, and BNM recommendations. For instance, the MoF provides direction on accountability and performance management, the Green Book 2006 emphasises merit-based appointments, the SC promotes good governance among GLCs, and BNM issues recommendations for financial institutions, particularly concerning board composition. However, these principles are only applicable to a limited group of companies such as publicly listed GLCs (CSO, 2024). This demonstrates that there is no clear, enforceable law that specifically governs political appointments. Instead, the system is primarily reliant on government policies, cabinet discretion, and agency-specific rules, which allows for political interference.
Overall, while the Prime Minister’s guarantee to increase vetting of political appointees is a significant move, the debate surrounding recent appointments shows underlying structural difficulties. Existing frameworks, such as the Green Book 2006 as well as guidelines issued by the MoF and various regulatory organisations, provide essential principles, but lack complete coverage and legal enforceability. This lack of a uniform, open, and binding framework for political nominations to GLCs and statutory bodies perpetuates political patronage while undermining public trust.
The Way Forward: Toward Merit-Based Appointments
As data from IDEAS in 2024 shows, substantial reform based on legislation and institutional independence is required to ensure that all nominations serve the public interest rather than political convenience:
- Malaysia should minimise the number of political appointments while prioritising the appointment of more professionals and experts. This can be done by implementing clear-cut requirement guidelines and a transparent merit-based appointment process. Appointing more certified professionals will help ensure that Malaysia is able to address economic challenges with focused strategies in a way that boosts public trust in the government.
- Malaysia should build an independent framework for political appointments. By adopting a similar framework like the State-Owned Enterprises (SOEs) guidelines (a set of principles and standards developed by governments), Malaysia can ensure that state-owned enterprises operate effectively, efficiently, and with good governance. These rules often address a variety of topics, including ownership, governance, board appointments, and responsibility.
- To further reduce political influence, Malaysia could consider adopting a practice similar to New Zealand, where politicians are not allowed to serve on regulatory bodies, GLCs, and other key institutions, thereby ensuring that these entities prioritise the public interest and operate independently.
Conclusion
To summarise, real institutional reform is required to ensure that political nominations to GLCs, GLICs, and statutory bodies are conducted with transparency and integrity, particularly throughout the vetting process. Drawing inspiration from Singapore’s Public Service Commission (PSC), Malaysia should establish a Jawatankuasa Pemilihan Khas, consisting of equal representations of ruling and opposition members as well as qualified professionals. This special committee would be responsible for conducting impartial and transparent vetting of all political nominations, with its proceedings carried out at Parliamentary level to ensure public trust is maintained.
Author
Kabileshwaran Kalaiselvan
