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Political appointments to government-linked bodies have long been associated with patronage politics in Malaysia. Who should sit on the boards of Malaysia’s public institutions and how should they be chosen? IDEAS’ latest report, ‘Who Sits at the Table? From Political to Public Appointees in Malaysia’s Federal Statutory Bodies’, examines 135 FSBs under its Pantau Kuasa initiative. On this episode of #ConsiderThis Melisa Idris speaks with Aira Azhari, CEO of IDEAS Malaysia, and Pushpan Murugiah, CEO of The Center to Combat Corruption and Cronyism (C4 Center).
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00:00Music
00:10Hello and good evening, I'm Melissa Idris. Welcome to Consider This.
00:14This is the show where we want you to consider and then reconsider what you know of the news of
00:18the day.
00:19Political appointments to government-linked bodies have long been associated with political patronage.
00:25So who should sit on the boards of Malaysia's public institutions and how should they be chosen?
00:33That is precisely the topic of Ideas' latest report, Ideas the Think Tank that is.
00:39The report is titled Who Sits at the Table from Political to Public Appointees in Malaysia's Federal Statutory Bodies,
00:46which examines 135 federal statutory bodies under its Pantau Kuasa Initiative.
00:53Joining me on the show to discuss his father is Aira Azhari, who is the CEO of the Think Tank
00:59Ideas Malaysia,
01:00as well as Pushpan Murugaya, who is the CEO of the Centre to Combat Corruption and Kronism, better known as
01:06the C4 Centre.
01:07Welcome to the show, guys. Thank you so much for being here with me today.
01:11So let's start with the report, Aira, if I may begin with you. You've got a copy of the report.
01:15It's quite fascinating, but it's a topic that we've long discussed.
01:20I kind of want to zoom out or at least get back to basics because when we talk about political
01:26appointments to federal statutory bodies,
01:28what exactly are we referring to and why is it important that we look at it?
01:33We assess it, who governs, FSBs.
01:39Yeah, maybe I start with just a short explainer of what is an FSB?
01:44Why are they so important and why is it so important that we assess these appointments, right?
01:50So federal statutory bodies are public institutions that are established by the law,
01:56so by an act of parliament and the most obvious or the most famous examples are like Mara and Velda,
02:05for example.
02:06Yeah, so there is a law that establishes these public institutions and the law also specifies how the board members
02:15to these institutions are appointed,
02:17who appoints them and also the law lays out the mandate, what they're supposed to do.
02:23So this is the law that they always say the punca kuasa, right?
02:26Yes, so it's an akta, so basically in Malay, we say it's badan berkanun, right?
02:30Badan berkanun persekutuan.
02:32So these FSBs play various different roles in Malaysia.
02:38If you look at bodies like Velda and Mara, then they carry out important roles for the development of Bumi
02:44Putra,
02:44education, entrepreneurship, agriculture, land reforms.
02:48So then when we understand what NFSB is, what did they do, then it becomes obvious why it is so
02:56important to hold them to high standards of governance,
02:59of transparency and accountability because they have a public mandate.
03:03Yeah, so they are not like any other like private limited company out there that exists for the sole purpose
03:14of making profits for their shareholders.
03:17No, these are public bodies and there is a, there should be a great sense of accountability.
03:23So what our report shows, so our report actually analyzes the board appointments in 135 federal statutory bodies.
03:32It's not exhaustive because there, I'm sure there are more.
03:36And also in Malaysia, the structure is very multilayered.
03:39So at the state level, also we have these kinds of bodies, right?
03:43But our report tracks in 135 FSBs and it is part of our Pantau Kuasa initiative.
03:50So Pantau Kuasa is a website actually that you can, where you can, there's like all these nice visualizations of
03:57the appointees from,
03:59so we track the appointments from the administration of Najib Razza all the way to Anwar, Anwar's administration now.
04:09So yeah, so that's why we need to care about these appointments.
04:12I love the name Pantau Kuasa, by the way.
04:14It just really holds power to account.
04:18Pushpan, I mentioned in my introduction that this isn't something new, it's a long-standing issue.
04:23But just how long-standing is it and how, give us a sense of the scale of how common political
04:31appointees are across federal or government-linked bodies.
04:36I mean, how bad is the situation?
04:39I think if, I mean the report has got some figures there.
04:42But on the context of overall ecosystem of the GLCs, I think it's important to look at the different layers.
04:50And if you look at the appointment process of the various kind of GLCs, the number is quite significant.
04:57And also there's one portion where we don't even know whether, how many they are because of the opaqueness of
05:04the layering.
05:05For example, you have a surgery body, then you have a company, GLC, that has subsidiaries as well.
05:11So whether they are politically appointed is also another issue, which we cannot have access to information whether they actually
05:17are there.
05:17Because it probably means that.
05:18So again, that ecosystem, how many are there politically appointments, it's very difficult to identify.
05:25Okay, I think I've made an assumption here that political appointees or political appointments are a bad thing.
05:31So let's interrogate that assumption because there are those who say, well, you know, having a politically connected individual to
05:40be on the boards of these types of government-linked bodies
05:44will help align those agencies with government policies.
05:48It's almost like a liaison person.
05:50How legitimate is that rationale, Pushman?
05:54Okay, let me just give you a quick example.
05:57You look at Felda, Mara and also Tabang Haji.
06:01They are all political appointees, all strongly associated with politicians.
06:06What has happened to them?
06:07There were so many scandals that plagued these very, very important institutions.
06:11So in that context, I concur with your assumption.
06:16I do feel that politicians should not play a role in JLCs.
06:20And if you look at the development of JLCs over the years, it was initially after our independence was actually
06:26parked at bureaucratic level,
06:28where they actually managed the national assets.
06:31But over the years, it's traveled and evolved into a situation where now all those assets are parked in JLCs,
06:36where politicians control, hence has led to so many scandals and drama and corruption,
06:44where the governance structure is not complete.
06:47There's no act to regulate those sectors.
06:50The process are all wrong.
06:51So again, that comes back to the assumption that politically inclined individuals in those situations are quite bad in the
06:59long run.
07:00Yeah, I mean, look, of course there is a case to make from what you mentioned,
07:06which is like that if you have a politically involved individual in these FSBs,
07:12then there's this alignment of objectives and all of that, right?
07:15But let's be frank, that's not the reason why this system has been so pervasive
07:23and has gone on for decades in Malaysia is not for alignment of objectives.
07:29Because if you want to dissect political appointments into FSBs even deeper,
07:35we have to make the connection to other issues like political financing, for example, in Malaysia.
07:41So we know that we don't have a political financing act.
07:45And we also know that politics in Malaysia is very expensive.
07:49So if you are an MP, you're a YB, there are multiple expectations from you.
07:57So going to parliament and engaging with policy debates is one very important role.
08:02But in Malaysia, many of our MPs are also expected to, at the constituency level,
08:08expected to, I guess, like commit to the demands that comes from their constituents, right?
08:17And that's what makes our politics very expensive.
08:20So many of these positions in boards are given out because, precisely because of this reason.
08:28Because if you are on these boards, then there is remuneration
08:32and you get a source of funding to build up your political capital in that sense.
08:41So this is pervasive, right?
08:45So it's all linked together.
08:48So if you look at it from a broader perspective,
08:51this is another reason why we say that disappointments need to stop
08:55because there is a clear conflict of interest when an MP,
09:01a sitting politician is appointed onto these boards.
09:04So there's a larger story there.
09:06So, yes, which one?
09:07Maybe add on to that a little bit.
09:09I just want to invite the viewers to look at the political appointees in all these FSBs
09:14and think about the rationale behind it.
09:15For example, look at who typically sits in Mara and Felda.
09:20If people aligned to UMNO.
09:22So it gives you an inclination how potentially that access to the rural community
09:28can be abused for political purposes.
09:31Access.
09:32So exactly when you look at these appointments,
09:34we have to think about why is that particular individual placed over there.
09:39We need to start thinking of that kind of process to critically analyse how it could go wrong
09:43or what is the objective of that individual sitting as the head or chairman of the particular FSB.
09:49So beyond corruption risks or the risk of leakages and corruption, pushpun,
09:58talk to me about political patronage because Aira used a really interesting phrase.
10:04She said, these positions are given out.
10:07And that speaks to me of almost a reward.
10:12So talk to me about that angle, the political patronage of it all.
10:17So again, it goes back to the entire ecosystem.
10:20So when you have political parties in power and you have to satisfy many of the so-called leadership level,
10:27lower level warlords, the only way you can satisfy them is to have some kind of opportunity for them
10:32or position available for them.
10:34Hence, that ecosystem is a good system to actually turn out appointments,
10:40directorship, chairmanship to even lower level or smaller companies.
10:44You see, so that is a whole system designed to actually encourage patronage and loyalty.
10:50So if you look at, I think, if not mistaken, Murni Yassin's spirit,
10:53a lot of JLCs were given out, positions were given out to actually consolidate political power.
11:00Aira, consolidating political power, is that harder in coalition politics?
11:05Because I'm thinking now you have more mouths to feed, more egos to stroke, more people to appease.
11:12Yeah, so I mean, okay, firstly, this is exactly why we can't have political appointments
11:17because the politics is fluid, right?
11:21So our politics is becoming more fluid.
11:24So we don't actually have much certainty on who will get into power after the next election.
11:29And then, you know, this kind of distribution of patronage will just become more serious, I would argue.
11:40And I mean, just look at the findings from our report, right?
11:43So during this, Datuk Sya Anwar's administration,
11:49our findings revealed that there have been 238 political appointments.
11:53This is FSBs, including FSBs and JLCs, right?
11:57So 238 political appointments.
12:01And although the government actually came up with a circular in 2024,
12:06so we call it Circular 5 of 2024, Perkeliling 5 2024,
12:11that does sort of aim to tackle this issue of political appointments,
12:16it still does not address the systemic weaknesses in the governance of these appointments.
12:23Because at the end of the day, ministers can still appoint the chairperson of the board.
12:28And this is in the act, as I mentioned earlier, kan?
12:31So what actually needs to be done is these acts is the one that needs to be amended, actually.
12:37Because the system allows it.
12:38It's not like macam you're a minister and you get into power of a certain ministry,
12:45and then you give these appointments.
12:48It is allowed by the law.
12:50So it's at the minister's discretion.
12:53Yes, so there is a controlling ministry for each of these FSBs.
12:57So for example, Mara is under the Ministry of Rural and Regional Development.
13:02And Tabong Haiji is under the Prime Minister's office, right?
13:06So there's a ministry where these FSBs are sort of parked under.
13:12So that gives a lot of power to the minister.
13:15Is the issue just about corruption risks?
13:21Or is it also about competence and professional acumen?
13:25It's both, yeah.
13:26Because I do wonder, you know, it's not easy to get a spot on a board of directors in a
13:33corporate company.
13:34You have to go through multiple checks and balances.
13:36So why should they just be handed out in these institutions that, as I mentioned earlier, has a public mandate,
13:42right?
13:43So they're not there, again, just to make profits for shareholders.
13:48But they are there to fulfill a very important social objective.
13:54So with Tabong Haiji, that's very clear, right?
13:56These are savings that Muslims are putting into Tabong Haiji for their hajj.
14:01For Mara, that plays a very important role in the development of Bumi Putra, entrepreneurship, education.
14:08So I would argue that that's more reason why you need men and women who are competent
14:15and who's been through a rigorous process, appointment process, for them to get those positions.
14:23Pushman, was this part, was addressing this issue of political appointees ever part of any administration's reform promises?
14:33I do wonder, because you said that there's so much to gain.
14:36So are any administrations incentivised to reform the way the current system works?
14:43I think, just to go back a little bit, I think the only one that really took some effort is
14:48Ahmad Badawi.
14:50So he actually came up initially to look at the GLICs as a reform area.
14:55But subsequently, all the other administration have actually not delivered.
15:00But I'm particularly disappointed with the Bandhani government because the reform platform was the one they came onto power with.
15:09That they want to reform, need to change the GLIC ecosystem.
15:12And even in 2018, when they took over power, Ma'adai himself said, this is an ecosystem which is a
15:17monster.
15:18You know, you need to reform it.
15:19He did, yes.
15:19So, but surprisingly, when Anwar is in power now, except for the Circular 5, which I don't think is binding,
15:27there has not been any significant changes.
15:30In fact, when the first time he came, he said there will be no more political appointees.
15:35Yet, immediately after that, you can see so many appointments done to all the agencies, DLCs, et cetera, as well.
15:41So, in that context, there is no administration so far that has delivered that.
15:47But we also need to consider this factor as well.
15:49It's not only on federal level.
15:51If you notice, the trend continues even in state level.
15:54And different, different states now have different political parties who are also running it.
15:59But again, the same political or the political power in their hands now, they see the benefit of having the
16:05ecosystem in place.
16:06How they can potentially use it as a tool, as a patronage, as a method of use.
16:11Because that's why you don't feel or don't see any movement from both federal political parties, even state ministries, I
16:20mean state governments, that you move towards reforming this ecosystem.
16:23It's at every level, isn't it?
16:24Exactly, exactly.
16:26All right.
16:26So, IDEAS has come up, has looked into this, wonderfully laid it out in the report.
16:31But you haven't stopped there.
16:33You went as far as to give some recommendations.
16:35Because if I understand correctly, you looked at other bodies, other countries, excuse me, that have structured appointment processes for
16:44public bodies.
16:45So, do other countries not elect or not appoint political appointees to their government-linked agencies?
16:52Yeah, we looked at the three Commonwealth jurisdictions, right, that we usually use as a comparison because the way that
17:03their cabinet works and the appointments also quite similar.
17:06So, UK, Australia and New Zealand.
17:07I mean, if you look at these three countries, it is unthinkable that this system would exist over there, right?
17:16So, but also I think in those countries, their ecosystem of state-owned enterprises also different from us.
17:25The state is largely out of the economy, out of the business sector.
17:33So, that's also one, but I mean, if you look at these countries, then it shows that it is possible
17:41to have a cabinet, a Westminster parliamentary system where you do have appointments that are merit-based and goes through
17:52a process that is accountable and transparent
17:56and is not so blatantly political reward, it's not so blatantly something that is just handed out to political allies.
18:07So, is idea saying that politicians should be barred from sitting on boards of either GLCs or FSBs?
18:16Yes.
18:17Politicians in general?
18:18So, definitely sitting MPs should not be given these positions and there is a definition of political appointee in the
18:32Pantau Kuasa website
18:34and so here political appointments, right?
18:37So, refers to the appointments of individuals who currently hold or have held within the past two years.
18:44Legislative, executive, minister, chief minister, state executive council members or political party positions, including national, state, divisional, sub-divisional, executive
18:53committee members.
18:54So, it's a very wide definition.
18:56But, so there's a kind of cooling off period.
18:59There should be a cooling off period.
19:01So, let's interrogate that a little bit.
19:04There is also a perception that if technocrats are put on board of federal statutory bodies,
19:14there seem to be government appointees as well and government linked.
19:19Therefore, there's this idea that, oh, you're biased one way or another.
19:24You've lost your neutrality that you once had in the private sector.
19:29Is that a concern?
19:31I think one of the reasons why there's been that argument of let's put a politically aligned person in place
19:37because it's just more transparent that way.
19:42We know where your loyalties lie and there's no cost to a so-called neutral corporate person.
19:49A little bit about the situation before I answer this.
19:52We also need to make a distinction between the Australia and New Zealand sample as well
19:57because we need to understand Malaysian FSBs or JLCs are very interventionist.
20:05They play an intervention role.
20:06So, they try to correct or realign the economy based on situations, based on troubling times.
20:13So, they have a role to play to help to align social issues, economic issues.
20:19So, they play a very significant role.
20:21So, in that context, there has a kind of distinction as to how the role they play
20:25and why it's more important to have better governance, even higher than what they have in the other countries.
20:32Because the role they play, the access to money they have and the political linkages creates that kind of a
20:38problem.
20:38It's almost market setting in some ways.
20:41Exactly. That's why they're also saying that they actually control the market
20:44because they're so huge as an ecosystem.
20:48They can actually disrupt SMEs, disrupt supply chain lines
20:53and they can cannibalise their own supply chain as well.
20:56So, these are considerations that we need to put in place
20:58when looking at how you want to reform the JLCs as a whole.
21:03So, I think that's the point I wanted to raise earlier.
21:05So, on the point of appointing technocrats to these positions,
21:11is there a danger or a risk that these technocrats might get painted by a political brush inadvertently?
21:19And therefore, it's a disincentive almost to wanting to take on these positions.
21:26I will first maybe look at it in a bigger context as well.
21:30And I think C4 has always been no politicians anywhere near the ecosystem of JLCs.
21:38Now, I just want to raise the issue of conflict of interest.
21:42There are three types of conflict of interest.
21:44You have potential, you have actual, and you have another kind of...
21:49There are three types of basically.
21:50So, whatever output you look in terms of conflict of interest,
21:53wherever he sits as a politician, wherever he wants to be independent,
21:57he will not be able to portray that position because there's always inherent conflict of interest.
22:03So, any JLC he sits into, you have the risk.
22:06Whether it happens or it doesn't happen, the risk is always there.
22:10And the second thing is, when you put politicians in that particular space,
22:14how would you get accountability if it's aligned to the political party that controls the country?
22:19That's the problem we face all this while.
22:21There is no accountability.
22:23And accountability is a bad word in our country.
22:25We never seem to get anybody to be accountable for whatever they do, you see.
22:30So, again, that is the problem we face when you have that kind of scenario where politicians play a role.
22:36And because of Malaysia's problem over the many decades of the same issues happening over and over and over again,
22:42we have to be very careful how we want to argue if you want to put a politician in that
22:48SRB again.
22:49We need to be very careful.
22:50Okay, because it's a slippery slope.
22:52It's a slippery slope.
22:53Ira, any takeaways from the report that you think policymakers should really prioritize or pay attention to?
23:03Yeah, I mean, I think, you know, we have a whole list of recommendations on how the board composition can
23:10be,
23:11how we can appoint people to these boards in a transparent and accountable way.
23:18And because I think, you know, we've alluded to this, right, which is there is this overall perception that you,
23:28no matter what you do, oh, there's always going to be some conflict of interest.
23:32So, there's always going to be partisan politics involved.
23:36Right.
23:37But does that mean we should just continue with the status quo?
23:41I definitely don't think so.
23:42So, there is a better way of doing things.
23:44And I think a lot of, some of the concerns that I've heard as well is that, oh, you know,
23:50we can't divorce politicians or MPs completely from the process because, you know,
23:58it is also their job to, like, be involved in some of these public bodies.
24:05But, yes, that is true.
24:07But there is a way for MPs to be involved, which is through their role in parliament, not for you
24:13to sit in the board, right?
24:14So, as an MP that, who, your job is in parliament is to pass laws but also is oversight, right,
24:23of public bodies, of the executive.
24:25So, that's where their role is actually really important and which right now they're not doing, they're not doing that,
24:33that role is not being played properly through parliamentary select committees, for example.
24:39So, we have parliamentary select committees in parliament now, which is good, but I would argue that they are not
24:46empowered enough to provide that oversight and that scrutiny that our FSBs really need.
24:54So, that's where they can play their role and that is where their role as an MP will be very
25:02useful and where it's much needed because they have that democratic mandate, right?
25:06So, MPs are elected by people in their constituency, they form the government and then they sit in these parliamentary
25:13committees where they can then scrutinise.
25:16That's their actual job, isn't it?
25:18It's not to sit in the boards.
25:20I really appreciate that we have this data now because this is where we continue to see whether it's increasing
25:28or reducing what trajectory we're on and I think this is where, you know, as you said, Pushpan,
25:34we try to keep things accountable, let's reverse that negative connotation in this country.
25:41But maybe I can add a little bit just quickly on the reform part.
25:45I think just a quick question, we have 30 over million in Malaysia.
25:49You're telling me we can't find a real good guy to run the FSB at JLC?
25:53Come on, we're smart people.
25:54We have the talent.
25:55We have the talent.
25:56People are taking our talent away, so we need to put them here.
25:59And I think the first reform that we want to do is in terms of JLC ecosystem, the basic one,
26:04very simple.
26:05Let's map out the JLCs.
26:08We have not even mapped it out.
26:10It's got seven, eight layers of companies that is owned by the government.
26:14You don't even know how many are there.
26:16Whatever reform you want to go forward, you need to clean up that ecosystem first.
26:21Clean up how many you have, what mandate they have, what roles they play, are they usurping SME's role?
26:26What is the function of those small, small companies that you created?
26:30Clean that up, then we can go forward.
26:33I think that will be the first reform we need to touch.
26:35Get that going first.
26:36Okay.
26:37Pushpan, Ira, thank you so much for being on the show and shedding light into this very important matter.
26:42I appreciate you both.
26:43That's all the time we have for you on this episode of Consider This.
26:46I'm Melissa Idris, signing off for the evening.
26:48Thank you so much for watching and good night.
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