Rationale For GLCs: Bypassing The Lumbering Civil Service

Rationale for GLCs:  Bypassing The Lumbering Civil Service

M. Bakri Musa

www.bakrimusa.com

The third mission of GLCs–bypassing the lumbering civil service–is still valid if not more so with today’s service having deteriorated even further. The obvious solution would be to improve the civil service itself. However, an institution that has been left to ossify for decades could not and would not be changed overnight. Until that happens, if ever, you would still need a mechanism to bypass it.

The present favored path is for the government to “privatize” the particular government agency or function. This has been done to the railway, airport, water utilities, and the University of Malaya, among others. The rationale being that once these entities were freed of the micromanagement by meddling incompetent civil servants, those agencies would be liberated to chart their own course.

That at least is the theory or rationale. This being Malaysia however, the reality is far different. The problem was in the implementation. Consider the University of Malaya. Yes, it was “corporatized,” but its senior management and board of trustees remained the same. Nothing had changed except the management chart, paper flow, and of course the letterhead and logo.

In other instances the entity would be “corporatized” following a “buy-out” by senior management in cahoots with favored senior civil servants and political cronies. Those assets would be purposely and ridiculously underpriced. If the process had been above board, meaning, the assets had been competently appraised and put out to open bids, it would not have triggered much resentment. The government would also get the best price for its assets.

To make those deals even juicer, those buyers were generously funded by a GLC bank, often with no equity (cash) from the “investors.” If those new owners were competent enough and added value to the company, then perhaps those sweetheart deals could be justified. Alas far too often those new owners would strip the company down by selling off its assets. Then the government would be forced to buy back the company in order to protect consumers.

No surprise then that such “buy-outs” triggered much discontent especially among the workers who had strived hard to build up their companies only to see them being commandeered by these politically-connected menenggek (carpetbagger) managers. Those buy-out maneuvers are nothing but barely concealed confiscation of prized state assets by political cronies, reminiscent of what happened to Russia in its early days after emerging from communism.

When Malaysia Airlines was privatized, there was an exodus of its senior pilots, especially Malays. They were fed up with the highhanded ways of its new owner, one Tajuddin Ramli. These pilots were from the original Malaysia-Singapore Airlines. Their patriotism made them choose to be with Malaysia Airlines even though they would have been much better off if they had opted for Singapore Airlines. Then this upstart Tajuddin who could not tell the difference between flaps and slats began ordering these experienced pilots around.

            There was yet another twist to this Malaysian brand of crony capitalism manifested by these GLCs. Its grossest manifestation was the National Feedlot Corporation tasked with producing beef for the country. The project was “awarded” to an untested company owned by a minister’s husband, together with a vast tract of land in Gemas as well as a quarter billion ringgit in soft loans. Astoundingly, there were no covenants of any sort attached to that massive line of credit. That husband’s first priority was to siphon off the money to buy for himself a few luxury condos in Singapore even before the first cow shed was built! Only the exposé by Rafizi Ramli, a chartered accountant and an opposition Member of Parliament, exposed the sly scheme.

            As for developing Bumiputra human capital, another goal for these “transformed” GLCs, only two have formal educational arms. Petronas has its Universiti Teknologi Petronas (UTP) with its architecturally award-winning campus in Tronoh, Perak, and Tenaga, its Universiti Tenaga Nasional (UNITEN).

The academic offerings at these two institutions are, as expected, heavy on the technical side. Their “university” label is misleading; they are more like polytechnics offering a narrow field of study. Both institutions lack the basic departments one expects of a university, like the humanities. Significantly, considering the critical need for professionals able to communicate well in English, both universities are also without a Department of English.

The absence of a liberal arts core means that their students have limited exposure to courses where they could exercise their critical thinking and develop their communication skills. The products of both institutions are less broadly-educated professionals, more narrowly-trained technicians. Malaysia needs those kinds of personnel, no mistaking that. However, they are more suited for maintenance work, not innovative thinking. These graduates are not likely to guide Malaysia along any new paths.

Khazanah, Petronas, and Tenaga Nasional all offer scholarships tenable abroad. While Khazanah and Petronas select the best students and send them to top universities, Tenaga is content with sending its “scholars” to Britain’s Brighton College, now “souped up” to be a “university.”

These GLCs have failed not only in their basic mission as business entities, that is, to generate profits, they have also not fulfilled their mandate with regards to the development of Bumiputra human capital or the spearheading of Malays in commerce.

Next:  Better And Cheaper Alternatives to GLCs

Adapted from the author’s book, Liberating The Malay Mind, published by ZI Publications, Petaling Jaya, 2013. The second edition was released in January 2016.