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AWSJ: Malaysia Finance Minister Moves Ahead
By Kapal Berita
12/10/2000 6:14 pm Thu
From Asian Wall Street Journal
Malaysia Finance Minister Moves Ahead
With Revamp of Management Structure
By LESLIE LOPEZ Staff Reporter of THE WALL STREET JOURNAL
KUALA LUMPUR, Malaysia -- Malaysian Finance Minister Daim Zainuddin is
pressing ahead with a controversial revamping of the management
structure of state-owned corporations, a plan that is stirring
resentment among Malaysia's top bureaucrats.
Senior government officials say the Finance Ministry issued a
directive two weeks ago that will remove some of the country's most
experienced government executives from the boards of many state
agencies, state-controlled public companies and joint ventures with
local and foreign investors.
Under the plan, senior managers of government enterprises and agencies
can sit on the boards of no more than five wholly owned subsidiaries
of their parent organizations. They must immediately relinquish
positions on the boards of other units and associate companies.
The plan will affect several high-profile corporations, such as
publicly listed Telekom Malaysia Bhd. and power utility Tenaga
Nasional Bhd., as well as state oil giant Petroliam Nasional Bhd., or
Petronas. So far, only one company, Malaysia Airports Bhd., appears to
have complied with the directive. Early last week, Basir Ismail,
executive chairman of Malaysia Airports and a confidant of Prime
Minister Mahathir Mohamad, relinquished his executive powers. The
company announced that Tan Sri Basir will remain as chairman.
The Finance Ministry, whose latest directive hasn't been publicly
disclosed, had issued an order in May that banned senior managers of
government enterprises and agencies from serving as directors of any
subsidiary or associate company. That initiative was derailed after
senior civil servants complained to Dr. Mahathir.
While Tun Daim's new order offers a slight concession by allowing
senior managers to sit on the boards of five subsidiaries, few
government officials believe it will appease the chiefs of large
Officials from Tun Daim's office declined to comment on the latest
directive. But several senior government officials, who declined to be
named, say senior civil servants plan to again appeal to Dr. Mahathir.
They contend that the plan would create a management vacuum in key
state enterprises and agencies.
Dr. Mahathir is currently traveling overseas.
Malaysian political analysts say Dr. Mahathir's reaction could provide
clues to the state of his relationship with Tun Daim. The once close
ties between the two men have been strained in recent months over
More importantly, businessmen and government officials say Dr.
Mahathir's handling of the matter will have an impact on the
relationship between Malaysia's political elite and its civil service.
Many Malaysian bureaucrats are alienated from Dr. Mahathir and his
ruling United Malays National Organization, or UMNO, after the
premier's sacking of his former protege and deputy, Anwar Ibrahim, in
"The new ruling has brought some of the top chiefs [in
government-controlled companies] together in their opposition to the
Finance Ministry," says a Malaysian businessman who enjoys close
relations with Dr. Mahathir. He says that unless the issue is resolved
amicably, antagonism between the civil servants and their political
masters could stymie government policy-making and management.
Patronage Opportunity Detected
Several analysts and government officials also see a strong political
dimension to the Finance Ministry's plan. They say the new policy
could become a tool for Tun Daim to dispense patronage, noting the
minister will be able to fill the newly vacated positions in the state
agencies and companies with his own appointees. That could shore up
Tun Daim's support within UMNO -- where he serves as treasurer -- and
within the government. The Finance Ministry's move may be in reaction
to growing pressure from UMNO members who want to be rewarded for
their support with government appointments, some analysts suggest.
Proponents of Tun Daim's plan say the new policy will prevent state
agency chiefs from dominating their subsidiaries and will help promote
transparency by separating the powers of directors and managers.
But critics contend that the removal of chief executives from the
boards of subsidiaries and associated companies doesn't necessarily
ensure better management. What's more, some government officials
opposed to the plan say such a move isn't likely to go down well with
foreign joint-venture partners of Malaysian state agencies, who expect
to work with top-drawer government executives.
Write to Leslie Lopez at email@example.com