This Week in Asia

<![CDATA[Fears for Malaysian economy as Muhyiddin's political patronage raises a Najib-era ghost]>

Recent appointments to government-linked companies by Malaysia's new ruling coalition show political patronage is on the rise " and could have disastrous consequences for an economy already ravaged by the coronavirus.

That's the view of critics who say the Malay nationalist Perikatan Nasional coalition is trying to buy the loyalty of its constituent parties by offering their members plum jobs with the companies, known as GLCs.

The development, they say, is a sign that the coalition " made up of the Malaysian United Indigenous Party (Bersatu), the Malaysian Islamic Party (PAS), the United Malays National Organisation (Umno), and several smaller race-based parties " has become increasingly fragile.

Since coming to power two months ago, the coalition has terminated a slew of appointments made by its predecessor the Pakatan Harapan, which held power for just 21 months.

It has removed the leadership of the education and development statutory body Majlis Amanah Rakyat (Mara) and installed Prime Minister Muhyiddin Yassin onto the board of sovereign wealth fund Khazanah. At the same time, there has been a spate of resignations at banks and loan agencies catering to small and medium sized business.

A health worker uses a swab to collect a sample for coronavirus testing from a man in Gombak on the outskirts of Kuala Lumpur. Photo: AFP alt=A health worker uses a swab to collect a sample for coronavirus testing from a man in Gombak on the outskirts of Kuala Lumpur. Photo: AFP

In widely criticised remarks, the law minister Takiyuddin Hassan promised recently that all government members of parliament would "be given a chance to play a role in GLCs [government-linked companies]".

Economist Terence Gomez said that appointing politicians rather than qualified professionals to GLCs could be a bad move, particularly with a coronavirus-induced global downturn looming.

"We are staring a serious recession in the face," Gomez said. "As we have a largely interventionist state we can activate the government sector comprising [GLCs] to work efficiently, productively " but to do so, we must put the right people in to head them. Not just politicians. But the government isn't thinking economy " it's thinking politics."

Awang Azman Awang Pawi, a political scientist from University Malaya's Institute of Malay Studies, warned the government had to "be careful not to appoint incompetent or corrupt individuals".

"These new appointments must be monitored to ensure no abuse of power and corruption," he said. "To assuage public perceptions, the question of whether these appointments are political rewards must be tested through achievements " perhaps a temporary trial appointment could be required to ensure performance."


Muhyiddin came to power on February 29 after a weeklong political crisis that included the resignation of former prime minister Mahathir Mohamad and the fall of the Pakatan Harapan coalition from power after it won national polls in 2018, sparking anger in Malaysians who had voted for the coalition and saw the new administration as a backdoor government.

In a push to consolidate power after his appointment by the nation's king, Muhyiddin appointed an array of politicians from his former party, Umno, to his Cabinet.

"Now, with no more Cabinet roles to dole out, Muhyiddin must turn to government agencies to appease his coalition partners in PAS or Umno, especially as the latter party has far more seats than his Bersatu party does in Parliament and is reliant on their support," Gomez said.

It was particularly important for Muhyiddin to shore up his support as he faced the possibility of a vote of no confidence when parliament resumes on May 18 after an absence due to the coronavirus.

His party's Malay vote bank is split between Bersatu, Umno and PAS, and any friction within the coalition could lead to a split of votes, particularly given Umno's long history of governing and its parliamentary strength.

"His goal is political survival " but this could prove severely detrimental to the economy and lead us further aground," Gomez said.

The practice of handing out leadership roles or board appointments to politicians was rampant when the country was ruled by the Barisan Nasional coalition. That period was also marked by corruption, including a scandal at the 1Malaysia Development Berhad (1MDB) sovereign wealth fund in which billions of ringgit went missing. Najib Razak, who was prime minister at the time, is currently on trial on charges of abuse of power and graft.

When Pakatan Harapan came to power it promised to end the practice of political appointments, and received heavy criticism and scrutiny when it failed to fulfil this promise on several occasions.

Economists fear that with Perikatan Nasional's unity under question, the politics of patronage, in which short-term political gain is prioritised over the economy, will once again come into vogue.

They warn that taking on political appointments could make it difficult for these companies " which include wealthy pension funds, palm oil conglomerates and banks " to attract professional talent.

New blood will find it hard to enter the mix, and interference with staffing appointments could spook an already skittish market and further cloud uncertainties over government policies as the Perikatan Nasional sets about undoing decisions made by its predecessor.

Gomez said it was acceptable for political appointments to be made to agencies or statutory bodies closely involved with government policies, but even then "there must be checks and balances".

Lee Hwok Aun, a senior fellow at the ISEAS-Yusof Ishak Institute in Singapore, said that with the likelihood of increased bankruptcies and unemployment looming " the International Monetary Fund has predicted a rise to 4.9 per cent from 3.3 per cent last year " the timing could not be worse.

"The coming economic downturn will be severe, and a protracted recession is distinctly possible. Even if growth resumes, Malaysia's economy may remain sluggish for some years, depending on global economic conditions. GLCs should face these challenges with experienced and capable leadership, and people familiar with the organisations they are leading."

This article originally appeared on the South China Morning Post (SCMP).

Copyright (c) 2020. South China Morning Post Publishers Ltd. All rights reserved.

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