Speaking to FMT, two economists and the head of a prominent think tank commended the SC’s update of the Malaysian Code on Corporate Governance (MCCG).
In its update, the SC noted that all active politicians should not be appointed to the boards of listed companies.
Economist Edmund Terence Gomez said the government should heed the SC’s recommendations as they were acting in the interest of the people and the economy.
Gomez said he had grave concerns about politicians becoming directors in listed companies as eight government-linked companies (GLC) were leading enterprises.
“At a time where GLCs are such a key component in terms of helping the economy survive, the government should ensure that people holding positions in boards are extremely competent and have knowledge on the industry so they can provide their expertise in keeping the company and the economy afloat.
“Professionals should be appointed based on their qualifications and not on their political affiliations,” he said.
According to Gomez, with the government being the major shareholder in a GLC it must provide proper justifications as to why politicians were being appointed.
“The government has a duty to be transparent and be accountable to the nation,” he said, adding that all it would take was for Prime Minister Muhyiddin Yassin to clearly say he would not appoint politicians on boards of GLCs and this could inspire confidence in investors.
“The government should make it a regulation that politicians should not be sitting as directors in any listed company.”
IDEAS chief executive officer Tricia Yeoh said she hoped to see more of such evaluations in the future, including having a Corporate Governance Index for all listed companies so the public could view how all listed companies were performing transparently.
Yeoh said this would provide a useful scorecard so the general public would know which listed company had complied with the guidelines.
“In the long run, the government should introduce this recommendation as new regulation in order for companies to mandatorily comply,” she said.
However, Yeoh said it would be difficult for it to become law due to political interests.
Yeoh added politicians sitting on boards had a lucrative source of income as they received directors’ fees, aside from wielding a lot of influence.
“Since Malaysia operates on a patronage system, political parties are incentivised to distribute positions to loyalists and in return continue to receive their support,” she said.
Yeoh said the government could take the lead by welcoming the SC’s new guidelines and announce ways in which it would start implementing these guidelines.
Economist Firdausi Suffian said the recommendations were a good starting point as politicians in GLCs could not integrate political interests and economic rationale.
“Politicians would surely think about how they can meet the needs of their party and if they do not do so, they would also receive backlash. Therefore, how can they be judicious in making decisions?” he asked.
Firdausi added GLCs played an important role to help the economy recover and therefore a reset button needs to be pressed.
He too called for smart professionals with strong financial and economic background to run GLCs, adding that there would be no harm in doing that.
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