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Transforming Sabah‘s bleeding GLCs
Published on: Sunday, May 16, 2021
By: Datuk John Lo
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Some gave very useful suggestions and recommendations. Common desire, as it should be, is that current GLC situation must not, should not be allowed to continue.
There must be a thorough review and transformation. To encourage further discourse on the GLCs, here are some of my further comments.
Causes of Most GLCs’ Failure.
To appreciate the gravity of GLCs’ failure, I need to highlight
[a] Many GLCs have failed despite having been granted prime/choicest pieces of commercial, development, agriculture land all over Sabah, especially in KK. For them, the premium is nominal, many cases only RM1,000. Then they would enter into JVs with dubious parties. The results are blatant, messy and huge financial losses. In many cases, Sabahan buyers have become victims to these fishy deals. Sabahans should ask which GLC development project that is iconic for Sabahans to be proud of?
[b] Many GLCs have been granted, in addition to prime pieces of land, monopolies, concessions, sweet heart deals, regulatory waivers, special rights, special interest loans and bail outs. Give these to the right private parties, billions would have been made.
[c] Poor governance, not just poor governance, but in many cases, really downright bad negligence and corruption.
[d] GLCs chairmanships and directorships have been given out as political rewards, without consideration of suitability and/or capacity and/or ability.
[e] Many chairmen and directors have treated the GLCs as their personal fiefdom, with little or no concern that they are in office as trustees for all Sabahans. Some chairmen, soon after appointments, demand endorsement from their board bigger pay and new, expensive cars, special personal officers to serve them even the GLCs are almost on life support.
[f] Lack of effective supervision which is a result of insufficient authority and resources. Above all, lack of attention/care by those in power.
Sabah’s GLCs’ Performance.
Of the 250 GLCs, few have performed ok. Even these also have plenty of room for improvement, can be vastly out of sync if compared to private sector. How many GLCs can claim to have fulfilled their objectives?
Bad, poor, terrible, inferior, dreadful, appalling, shocking are some apt descriptive words on GLCs’ performance come to mind. Worse words may be applicable if there is a full disclosure of all GLCs in the last 30 years.
Some informed persons have estimated the total losses of GLCs in monetary value, missed opportunities, leakages, corruption, valuable pieces of land, dubious deals etc could amount to RM30 billions. An independent study may reveal more.
At 250, Sabah has the largest number of GLCs among states in Malaysia. Sarawak has 60. Selangor, the largest state in economic terms, has a lot less, likewise, Johor, Negeri Sembilan and Penang. Many GLCs in these better managed states have reputable PLCs. Good example is Johor Corp which owns KPJ hospital chain. Why Sabah cannot have more listed success story like Suria Capital?
Who is to blame?
Before some politicians jump the gun, let me say this. All political parties [opposition ones included] have been in and out of government. When in power, they have done nothing to rectify the GLC 30-year-old corundum problem.
Perhaps no politician wants to touch this political hot potato, has no idea how to solve it or simply doesn’t bother?
Hopefully, the opposition, prioritizing Sabah’s economic interest as being paramount as they should, will work with the Sabah government to transform/rationalize the GLCs.
How nice if Sabahan politicians can abandon worthless political bickering and devote their energy in the politics of economic development for Sabahans’ benefit. That would be dream come true for all Sabahans.
Can Sabah Afford 250 GLCs?
Kindergarten stuff! Sabah has suffered 30 years of economic deprivation, wastages and leakages/corruption and poorly managed GLCs have been a significant contributor. Plucking this black hole and turning the GLCs into performing entities will be a great economic asset in Sabah’s economic development.
There is absolutely no doubt – Sabah can no longer afford to let most of these 250 GLC continue to run wild in the most irresponsible way.
The present GLC bleeding if nothing is done urgently, will lock many Sabahans down in poverty. Reforming GLCs will free funds and energy for Sabah’s economic development. If Sabah is lucky, the GLCs may even generate development funds as should be the case.
CM Hajiji’s Pragmatic GLC turn around efforts.
I am happy that CM Hajiji has taken pragmatic steps in this matter. He exhibited statesmanship in GLC top management appointments. Hajiji has retained those with proven track records like Datuk Ng Kiat Min of Suria Capital which has been profitable consistently, appointed Datuk Vincent Pung to the difficult turn around job in Sabah Development Bank. For Sabah’s most important and very critical industry, Hajiji has assigned Datuk Ismail Abdullah [a perfect Sabahan gentleman] to reform/transform the oil and gas industry. Datuk Ismail is also the CEO of TAED.
I am certain there are many more capable, committed Sabahans who can serve in the management of GLCs with good governance, improve their performance and nurse those useful ones back to health.
Turning Around Sabah’s GLCs.
This is a colossal, difficult job due to past massive vested, entrenched self interest
[a] Recognition of the MAGNITUDE and COMPLEXITY of managing 250 GLCs headed by politicians, most of which are non-performing.
Such recognition/admission is an important 1st step to solution. For far too many years, the Sabah government has turned a blind eye on the extensive misgovernance in GLCs, not one chairman, senior management have been surcharged or penalized for numerous past misdeeds even though there are legal provisions for it. No ministers have been held accountable or admitted for maladministration/ blunders/corruptions in GLCs under their jurisdiction.
Managing 250 CLCs successfully can be a gigantic challenge for the best corporate group. The Sabah Government’s set up is not equipped for such a task. An oversight committee consisting of government officials only – no way can they handle it. They are not trained for this. Such a committee is impotent.
[b] Set up a high-power OVERSIGHT COMMITTEE in the Chief Minister’s Department.
The Sabah Cabinet should approve the formation of this committee so that each and every cabinet minister is committed to proper governance in all GLCs under their responsibility. This committee should be accountable to the Chief Minister. Its reports should be tabled in the Cabinet for individual cabinet minister to answer for the performance of GLCs under him/her.
These reports should be made public to inform Sabahans of their respective performance.
[c] This OVERSIGHT COMMITTEE should consist of four members with corporate/commercial experience, a lawyer and a retired senior government official. No politician please.
The staff shall have a team of professional financial analysts. Industrial experts can be engaged or invited to contribute ad hoc.
[d] The OVERSIGHT COMMITTEE should be empowered to summon any GLC to account for its past and present performance.
[e] The OVERSIGHT COMMITTEE shall undertake a thorough review on the 250 GLCs, make appropriate recommendations on their re-structure, improvements, sales and/or shut downs, to determine the justification or otherwise, of having 250 GLCs.
[f] The OVERSIGHT COMMITTEE should assess the liabilities, actual and likely, implicit and explicit, of all GLCs. Likewise, liabilities that the Sabah Government is responsible for.
[g] The OVERSIGHT COMMITTEE should formulate a matrix of authority and/or entitlements for all GLCs, including acquisition of cars and allowances for chairmen, directors and senior management.
[h] The OVERSIGHT COMMITTEE should identify GLC candidates with IPO potentials to unlock value for the Sabah Government.
The whole idea of the OVERSIGHT COMMITTEE is to instil discipline in all GLCs, to prevent “every man for himself” regime from getting worse, to halt the financial bleeding for the government and to make sense of all GLCs so that they can be rationalized/ transformed into powerful agencies for Sabah’s economic development.
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