GLCs are Sabah’s worst curse
Published on: Sunday, April 11, 2021
By: Datuk John Lo
Text Size:
Why Sabah Needs So Many GLCs?
If indeed the number of GLCs in Sabah is so big, why does Sabah need so many GLCs? What do they actually do? Managing this many companies successfully, profitably in the private sector is a massive challenge. Managing all these GLCs in the government and/or political environment is an impossible task. More so when many politicians whose corporate experience is zilch are in charge of these GLCs. How many of them have managed a business successfully?
Many countries have tried GLCs for economic development but have failed badly, subsequently, becoming impoverished 3rd world countries like many in Africa. Also poignantly true are countries endowed with fabulous natural resources like Sabah which have too many GLCs. Even developed countries like USA and UK, with their well-developed “CHECKS AND BALANCES” and sophisticated management know-know have failed.
Malaysia has a long litany of GLC failures, resulting in losses in tens of billions. Only Singapore and China have succeeded in harnessing their GLCs as major development tools to successfully develop their economies. They use GLCs or “STATE CAPITALISM” as economic development tools. It must be said that even Singapore and China have some GLC failures. Can Sabah afford so many dysfunctional GLCs?
Decidedly yes! Sabah should review the number of GLCs urgently.
What Do All These GLCs Do?
When Tan Sri Harris started GLCs, he had set clear vision/direction for all of them. They were all intended to uplift the standard of living of Sabahans, gear Sabah for industrialisation and/or to generate employment. To Tan Sri Harris’ credit, quite a few of them are still generating profits for the Sabah Government now.
After Tan Sri Harris left office, all hell broke loose. GLCs have been [a] run to the ground, ending up with massive debts. Sabah government had to fork out funds to save them from bankruptcy. [b] Some GLCs were sold. [c] Assets of GLCs were striped off in the name of JVs and MBO [management buyout]. [d] Many GLCs have been given very valuable state land at nominal price of RM1,000. What happened to all these lands?
The one thing that should be done and not done is many GLCs do not serve their original purpose. Many are at cross purposes, competing with each other, wasting Sabah’s precious assets/resources.
What Is Their Performance?
The number of profitable GLCs can be counted with the fingers of my two hands. Suria Capital, Shangri-La Tanjong Aru Resort are outstanding examples of well managed GLCs. Most of the others are in life support and/or bleeding losses year in year out. Some may be profitable but their performance is nothing much compared to those in the private sector—-not even near!
The picture of their performance is ugly.
Can Sabah Manage These GLCs?
Excessively political, little attention to suitability and/or qualifications especially in the appointment of the Chairman and Directors. After the appointment of a new CM or a new government, the frenzy dash to lobby for appointments would begin. Those with the strongest political cable would get the plumiest jobs in GLCs as chairmen or directors. No consideration if he/she has experience or track records of good management.
It is assuring to see that YAB DSP Hajiji has begun to change this practice. He has appointed quite few creditable people.
Outstandingly, he has established mechanism to check on governance.
What Are GLCs’ Returns to Assets?
As is usual, shareholders of all companies would expect returns from assets held in their companies. Sabahans, as ultimate owners, expect no less from GLCs.
I stand corrected as I don’t have relevant data on the assets of all the GLCs. Some one told me it is about RM7b, not counting Sabah Foundation’s assets which must add up to many more billions. What is the return of assets from these GLCs? I do not know who has the answer. However, it won’t be wrong to guesstimate the return is very low, very much lower than normal. I would venture to say sub-normally low. Many are in negative!
Then there are some GLCs which have monopolistic privileges. Even these can lose money or perform way below expectation.
What Is Size of GLCs Debt? What Are The Accumulated Losses Over The Years?
The GLCs’ debts over the years, including those due to Sabah Government and Sabah Development Bank, must be phenomenally high, into billions or RM. Likewise, the repayment records won’t be rosy. All in all, the financial picture may look pretty awful.
These are serious leakages in Sabah’s economy. These losses could have been used to spur economic growth, to eradicate poverty.
Reformation of GLCs Is Urgent.
Sabah has a few very serious obstacles to our economic prosperity. The GLCs are definitely one of the worst. To sort out the GLCs, Sabah needs to – -[a] make logical business sense of all the GLCs. Why should they exist? [b] Categorise them to avoid duplication of function or purpose. For example, 4 GLCs are in telecommunication, competing against each other for business. End result? Not one of them has succeeded. [c] Close down those that cannot be saved or be turned around. Or just privatize them. [d] Set profit targets, returns on capital and returns on assets. [e] Impose strict governance in all aspects. Chairmen and Directors of GLCs should be made accountable for criminal negligence, misappropriation of funds, sales of assets below market price and enter into one-sided agreements. [i] legal [ii] management of and returns on assets. [iii] financial mismanagements.
There should be high level inquiry in GLCs, the equivalent of a Royal Commission of Enquiry to uncover all the wrong, criminal acts inflicted on GLCs.
Let’s face it, Sabah just cannot afford to be burdened with these many GLCs, especially those with no relevance to Sabah’s economy, those bleeding financially, those badly managed, those with poor returns on assets and above all, those infested with corruption.
Opposition Leaders – Your Solutions?
Instead of making meaningless and inconsequential noises, I hope the opposition leaders can cooperate the government by producing constructive ideas on how Sabah’s GLCs can be organised and improved for the benefit of Sabahans.
Most opposition political leaders have experience in government. They can also explain their efforts, if any, to put the house of GLCs in order or the reason for their inaction. This will give them an opportunity to showcase that they are the true LOYAL OPPOSITION in our democratic system.
Sabahans should demand GLCs to be well managed or close them down. GLCs should not/must not be for “Syiok Sendiri” for politicians to abuse their appointments in GLCs.
ADVERTISEMENT
