So recently, there’s been a piece of news that hasn’t REALLY been shared or viewed or commented on. And it’s about a new mysterious Ministry called… THE MINISTRY OF ECONOMIC AFFAIRS. It’s so fresh that its wiki literally has one line.
Since the formation of the ministry, Azmin has made some comments about the state of the economy being okay and stuff, but perhaps the biggest piece of news was the transfer of control over some Malaysian GLCs, TO this new ministry, FROM the Ministry of Finance under Lim Guan Eng, and the Prime Minister’s Office as well.
Why is this a big deal?
Well, those GLCs represent control over more than half of the Malaysian stock market
As we mentioned in a previous article, Malaysia’s economy is unique in the sense that over the years, government-led companies have become a major force of influence over our economy. And this actually discourages investors, simply because the market is less driven by market forces. Anyways, among the companies transferred to the new Ministry of Economic Affairs (MEA) are…
- From the Ministry of Finance (MOF) – Petronas, Khazanah and PNS (Permodalan Nasional Berhad)
- From the Prime Minister’s Office – PNB (Perbadanan Nasional Berhad), EPU (Economic Planning Unit), and Tabung Haji
All these companies are worth…. over RM1 TRILLION RINGGIT.
If you take into account that the market cap of BURSA Malaysia is RM1.74 trillion ringgit, that means that Azmin Ali might now be overseeing over 57% of listed Malaysian stock.
“Azmin, I think, has his plate full. He has to manage almost RM1 trillion worth of assets from Khazanah, Felda and others. He is a very meticulous person. He’s an economist by training and had worked extensively as a part-time waiter at a Japanese restaurant. So, if you can cut fish that meticulously, you can do anything.” – Nurul Izzah, in an interview with NST, June 24 2018.
According to The Star, one of the complications that might arise is the changes required to the law to seal the transfer of oversight from Parliament, which will require the house to vote. Will the component parties agree to PKR’s deputy president holding so much power?
Could this be a political play from Mahathir?
The Straits Times Singapore report has sources that report the move is to solidify Azmin Ali’s power base. If you read our earlier article about Azmin Ali, you’ll know he and Mahathir are long-time BFFs (Mahathir was even the guest of honour at Azmin’s wedding). And quite a few people are saying that this move strengthens Azmin’s position, while weakening Anwar’s, who doesn’t seem to quite get along with Azmin these days (eventhough he started his political career as Anwar’s special officer, yes yes it’s super rojak buah).
“In early negotiations after PH’s victory in the May 9 election, PKR’s bid for one of the top portfolios – finance, home affairs, defence or education – was rebuffed.
Yet rising star Mr Azmin – seen by analysts as Dr Mahathir’s preferred successor – was given the MEA, a move that will curb Mr Anwar’s considerable influence in PH.” – Shannon Teoh, The Straits Times.
Some question the necessity of the new ministry over the current Finance Ministry. And social media is having similar reactions, with some saying that Lim Guan Eng’s role has been kinda reduced…
Even stranger still, when asked about the new Ministry, and the movement of responsibilities… Lim Guan Eng said that there will be no overlap of functions between the MoF and the MEA, and that MEA would focus on economic policy while the Finance Ministry would play its traditional role of managing the country’s finances.
“Finance will operate as usual. Economic Affairs will be similar to the Economic Planning Unit in the Prime Minister’s Department previously,” – Lim Guan Eng, The Star, May 30th
It’s important to note however, that this comment was made BEFORE the news of Khazanah and GLCs moving to Azmin’s MEA. On that note, since the news broke on 8th June, the alleged transfer of control of the GLCs has NOT been verified or denied by the government.
And this comes at a senssitive times, with DAP leaders complaining of being left out of ministerial positions.
But perhaps it isn’t a bad thing to move power away from the Ministry of Finance?
Earlier we mentioned that the gomen being in charge of more than half the economy not necessarily putting faith in investors, and that a substantial amount of that control resides (at least until the MEA is officially clarified) with the Ministry of Finance. Some of you might remember that during Najib’s time – although that was when the PM and FM were the same person.
“The fact that Prime Minister Najib Razak is also Malaysia’s finance minister allows him to wield considerable authority in state assets and government-linked investment companies (GLICs) such as Khazanah Nasional and the Employees Provident Fund (EPF)” – FreeMalaysiaToday, Sep 25, 2017
Actually, Najib wasn’t even the first. Before him, Badawi was also PM and FM at the same time. Double actually, the guy who started this trend was triple-actually Tun M himself.
“When I was PM, I held the post of finance minister twice. This was because we were waiting to find a candidate to become finance minister. When one finance minister was dropped or could not serve anymore, we took a little time to look for a new, good candidate.” – Tun M, Feb 2018, Malaysiakini
Thankfully, Pakatan’s manifesto did promise to say that the Prime Minister can no longer hold double positions, and they seem to be holding true to it, with Mahathir rescinding his self appointment as Education Minister. However, with the size of portfolio, and even sovereign funds like 1MDB and Khazanah, does the Ministry of Finance have too much power?
Well, in Norway, their MoF is responsible for the largest sovereign wealth fund in the world, worth over US$1 trillion (phew …lucky 1MDB smaller). In China, they’ve got two really big ones too, and they’re all under the Ministry of Finance too.
What about companies? Well, in New Zealand, companies with public interests, like New Zealand Post and New Zealand Rail fall under the Ministry of State-owned enterprises, which clearly draws a line of all state-owned enterprises. In Indonesia, companies like Telekomunikasi Indonesia and Garuda are owned by the government through a similarly named Kementerian Badan Usaha Milik Indonesia.
Perhaps we could change the rather generic name of our Ministry of Economic Affairs?
But what’s important is that power is distributed, rather than centralised
To be honest, Tun M’s policies so far have been about decentralising power (particularly away from the Prime Minister), which is arguably a good thing for any democracy.
In recent news, the Elections Commission, the Malaysian Anti Corruption Commission and 7 other agencies were moved to Parliamentary oversight, versus under the massive Prime Minister’s Office during Najib’s tenure. This is probably good news for Malaysians, which will ensure that we have less power in the hands of one guy.
That said, with the Ministry of Economic Affairs and the Ministry of Finance, it’s ALOT of power moving around, and VERY LITTLE conversation about it. So it’s best that we, as citizens of MalaysiaBaru, be more aware, and more educated, and try to keep these gems from all falling to the same gauntlet.