Politicians should not be appointed to run government-linked
companies (GLCs) to keep graft in check, said Malaysian Anti-Corruption
Commission Advisory Board Chairman Tunku Abdul Aziz Tunku Ibrahim.He
said politicians holding GLC positions might face conflicts of interest,
leading to abuse of power and responsibility.
ABOUT a month before Malaysia’s parliamentary election in May, then-opposition leader Tun Dr Mahathir Mohamad raised concerns over the role that government-linked companies (GLCs) were playing in the economy, being “huge and rich” enough to be considered “monsters”.
Data support his description – GLCs account for about half of the benchmark Kuala Lumpur Composite Index, and they constitute seven out of the top-10 listed firms in 2018. They are present in almost every sector, sometimes in a towering way. Globally, Malaysia ranks fifth-highest in terms of GLC influence on the economy.
Calls to do something about GLCs have increased since the election following the release of more damning information, although most of it relates to the GLCs’ investment arm: government-linked investment companies (GLICs).
Some experts have proposed the formation of an independent body with operational oversight for GLICs, after institutional autonomy is established and internal managerial reforms are introduced. Unlike most GLCs, GLICs are not publicly listed and face little scrutiny. The same applies to the various funds at the constituent state level, which need to be looked at too.
For GLCs, the answer is less straightforward. PM Tun Mahathir claims that GLCs have lost track of their original function. Before the Malaysian government decides on what to do, it needs to examine the role GLCs should play – as opposed to the role they currently play – and to examine their impact on the economy.
In Malaysia, GLCs were uniquely tasked to assist in the government’s affirmative action program to improve the absolute and relative position of bumiputras. The intention was to help create a new class of bumiputra entrepreneurs – first through the GLCs themselves, and then through a process of divestment.
Given the amounts of money involved and the cost of the distortions introduced, the benefits to bumiputra were unjustifiably small and unequally distributed. The approach of using GLCs as instruments of affirmative action failed because it led to a rise in state dependence, widespread complacency and even corruption, as Tun Mahathir himself recognised in his memoirs, A Doctor in the House, and again more recently. There is also empirical evidence that GLCs have been crowding out private investment, a concern raised in the New Economic Model as early as 2011.
Additionally, the new government has correctly highlighted the need to include certain off-balance-sheet items and contingent liabilities, such as government guarantees and public-private partnership lease payments, in any complete assessment of debt outstanding. The use of offshoot companies and special purpose vehicles (SPVs) in the deliberate reconfiguration of certain obligations mean that traditional debt calculations underestimate Malaysia’s actual debt.
All these factors combine to place new impetus on reconsidering the extent of government involvement in business. Divestment will not solve Malaysia’s debt problem, but it can help if there are good reasons to pursue it. So how should the government proceed?
It is important to recognise at the outset, that there is a legitimate role for government in business – providing public goods, addressing market failures or promoting social advancement. And like in most other countries, there are good and bad GLCs in Malaysia. If a GLC is not crowding out private enterprise, operates efficiently and performs a social function effectively, then there is no reason to consider divestment. But a GLC that crowds out private investment in a sector with no public or social function, or one that is inefficiently run, should be a candidate for divestment. In this regard, one has to carefully study why GLCs should be present in retail, construction or property development, for instance.
In assessing performance, one needs to separate results that arise from true efficiency, versus preferential treatment that generates artificial rent for the GLC. The latter is a drain on public resources and a tax on consumers. Divestment in this case, will likely provide more than a one-off financial injection to government coffers – it will provide ongoing benefits through fiscal savings or better allocation of public resources.
The divestment process should be carefully managed to ensure that public assets are disposed at fair market value, and does not concentrate market power or wealth in the hands of a few. This has allegedly happened with privatisation efforts in the past.
The new government has committed itself to addressing corruption and improving the management of public resources. As part of this process, one must re-examine just how much government is involved in business. This is one of the many tasks that the Council of Eminent Persons is undertaking in the first 100 days of the new government.
To be done correctly, would require a careful study of GLCs and their impacts. This could then rejuvenate the private sector while enabling good GLCs to thrive, and fortify Malaysia’s fiscal position in the process. This is what Malaysians should expect – and indeed demand – of the “New Malaysia”.
Jayant Menon is Lead Economist in the Economic Research and Regional Cooperation Department at the Asian Development Bank. This is an abridged version of an item that first appeared on the East Asia Forum.
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On the rise: A man walks past the Employees
Provident Fund headquarters in Kuala Lumpur. Remuneration of GLC chiefs,
senior management and directors have been on the uptrend following a
transformation initiative to make them more competitive commercially.
Overpaid CEOs and social duties of GLCs set for review
The new government has clearly said that there is a need to review the role of GLCs and the remuneration paid out to their top executives
A GLANCE at one of the annual reports of the country’s government-linked companies (GLCs) reveals that its chief human resource officer earned close to a million ringgit or about RM80,000 per month, last year.
Other senior personnel were also compensated with generous remuneration, with its chief executive taking home over one and the half million ringgit in financial year 2017.
More importantly, this was at a company that had courted much controversy in recent times over allegations of mismanagement and under-performance.
Such a scenario, however, is not uncommon at GLCs, where remuneration of key executives tend to run in the millions but performances sometimes leave much to be desired.
By definition, GLCs are companies where the government has a direct majority stake via their entities such as Khazanah Nasional, Employees Provident Fund, Permodalan Nasional Bhd (PNB), the Armed Forces Fund (Lembaga Tabung Angkatan Tentera) and the Pilgrims Fund (Lembaga Tabung Haji).
In recent years, remuneration of GLC chiefs, senior management and its directors have been on the uptrend following a transformation initiative to make them more competitive commercially.
The thinking behind this is that in order to attract talent – subjective as the definition of that may be – top dollar should be paid.
Some, however, argue that GLCs should in fact prioritise national service a little more.
Universiti Malaya’s Faculty of Economics and Administration professor of political economy Edmund Terence Gomez says GLCs have social obligations.
“What this essentially means is that GLCs cannot operate in a purely commercial manner as they also have to look at the social dimension,” he says. “The GLC professionals have many times articulated that they are doing national service. Going on that alone, one can argue that they shouldn’t be paid private sector salaries,” Terence adds.
And so it is now, there is a disquiet building up among GLCs following the change in government.
The new government has clearly said that there is a need to review the role of GLCs and the remuneration paid out to their top executives and senior management.
In this regard, the Pakatan Harapan government is understood to be mulling over making drastic changes in the appointment and remuneration of key directors at GLCs which include government agencies.
It was reported recently that the Council of Eminent Persons, headed by Tun Daim Zainuddin, who was Finance Minister in the 1980s, has requested details of the salaries of some of the top executives at GLCs as part of the review.
Already, there have been a couple of GLC chief executives who have left and more of this is expected to materialise over the coming weeks.
“It appears to be a purge of Tan Sri Nor Mohamed Yakcop’s boys,” quips an industry observer, referring to the veteran politician who was instrumental in the revamp and transformation of Khazanah which started in 2005 and subsequently, driving the GLC transformation initiative.
UM’s Terence says if the new government is to appoint new individuals, it must ensure that the process is transparent.
“If you are removing these people, who are you replacing them with? More importantly how are you selecting these people?
He adds there needs to be a transparent mechanism in the appointment of this new breed of professionals that will be brought in and what must also be looked into is the kind of check and balances being put in place to ensure governance.
“There should be a debate on these things,” he says.
Economist Yeah Kim Leng believes that a review is timely and appropriate as part of a deeper institutional and structural reform.
“The broad aims are firstly, to reduce excessive payoffs which don’t commensurate with performance and secondly, to address the widening wage and benefits gap between the top and bottom rungs of the organisation,” he says.
Such rationalisation will result in a more equitable salary structure as well as raise the generally depressed wages of middle management and support staff which form the largest number of most organisations, Yeah adds.
Unfair advantage
The role of a head honcho, be it at a GLC or non-GLC, is seldom a walk in the park.
CEOs make critical operational decisions that affect everything from future business directions to the health of a company’s balance sheet and employee morale.
The job generally entails long hours and tremendous pressure to meet expectations of shareholders and stakeholders.
But again, while local GLCs have been key drivers of the economy, one key feature is that they are ultimately owned by the government.
This, some argue, give GLCs unfair advantages such as access to cheap funding and political patronage over their private counterparts.
So, is running a GLC more of a stewardship role as opposed to an entrepreneurship role?
Therein lies the issue that in turn will have a bearing on the remuneration levels of GLC heads.
Minority Shareholders Watch Group (MSWG) chief executive office Devanesan Evanson puts it this way.
“Entrepreneurs have their skin in the game in that there are often the major or substantial shareholder in a company.
“It is in their direct interest to perform as this will be translated into share price appreciation which will impact the value of their shareholdings – this is motivation to grow the entrepreneurial spirit,” he says.
On the other hand, GLC heads do not have their skin in the game save for their limited shareholding through ESOS or share grant schemes.
“If a GLC loses money, the impact on them is limited. They may be prepared to take perverse risks as the eventual loser is the government-linked investment companies or GLICs (and the minority shareholders of the GLC), which eventually are the people who are the members or subscribers of the GLICs.
“In that way, we are not comparing apple to apple and yet, we need talent to run GLCs.
“So we can conclude that, we need to pay for talent at GLCs but it should not be as much compared to what one would pay the CEO of a firm which he started,” Devanesan says, noting that remuneration of some of the GLC heads have risen too fast in recent years.
Rising remuneration is a given, others say, as the government had recruited top talent from the private sector to helm these companies.
A case in point is Axiata Group Bhd, which has done relatively well with the infusion of the “entrepreneurial spirit” under the helm of president and group CEO Tan Sri Jamaludin Ibrahim, who has helmed the Khazanah-owned telco since 2008, they point out.
Prior to that, Jamaludin was with rival Maxis Communications Bhd, a private company controlled by tycoon Ananda Krishnan.
Other GLCs which have performed consistently over recent years include banks like Malayan Banking Bhd
and CIMB Group Holdings Bhd which have expanded their operations out of Malaysia, carving a brand name for themselves regionally.
Under a 10-year transformation programme for GLCs initiated in 2005, companies were given quantitative and qualitative targets to meet as measured by key performance indicators.
Now, the 20 biggest GLCs currently make up about 40% of the local stock market’s market capitalisation.
One of the principles under the programme was also the national development agenda, which emphasised the principle of equal growth and development of the bumiputra community with the non-bumiputras.
Asian Strategy and Leadership Institute (ASLI) Centre of Public Policy Studies chairperson Tan Sri Ramon Navaratnam says the purpose of establishing GLCs to encourage bumiputras to participate in business has largely been fulfilled.
“Now that the bumiputras are on a strong footing in the corporate sector with able leaders who have wide experience, it (GLCs) could be seen as an erosion to the welfare and progress of the smaller and medium-sized industries, particularly those where other bumiputras are involved,” Ramon says.
Having said that, he says although many GLCs are doing well, they have performed well “mainly because of protective policies and monopolistic practices”.
“The time has come in this new Malaysian era for more competition and less protection.”
Benchmarking
Still, if simplistic comparisons are to be made, the CEOs of the country’s two largest GLC banks, Maybank and CIMB for instance, took home less than the CEO of the country’s third largest bank, the non-GLC Public Bank Bhd
last year.
In 2017, Public Bank’s managing director Tan Sri Tay Ah Lek took home some RM27.8mil in total remuneration while Maybank’s Datuk Abdul Farid Alias earned RM10.11mil and CIMB’s Tengku Zafrul Abdul Aziz made RM9.86mil.
Across the causeway, a survey of CEO remuneration of Singapore-listed companies by one financial portal shows that Singaporean GLC CEOs earned 31% more than their non-GLC counterparts in 2017.
Singapore’s Temasek Holdings-owned DBS Bank, which is Singapore’s largest bank, paid out S$10.3mil (RM30.36mil) to its head honcho, while in the telecommunication sector, SingTel’s remuneration to its top executive was some S$6.56mil (RM19.34mil) for the most recently concluded financial year.
By definition, Singapore GLCs are those which are 15% or more owned by the city-state’s investment arm Temasek Holdings.
UM’s Terence does not think Singapore should be a benchmark for Malaysian companies.
“Singapore is a much smaller country and the manner in which they operate in is also different ... their GLCs are deeply conditioned by their holding company, which is the Minister of Finance Incorporated,” he says.
MSWG’s Devanesan notes that determining remuneration is “not exactly science” as there are many parameters to be considered.
Some of the factors to note include whether the companies are in a monopolistic or near monopolistic position and the performance of the GLC heads over the years.
“Based on these parameters, we can instinctively know if a GLC head is over-remunerated,” he says. Over in China, state-owned Industrial and Commercial Bank of China (ICBC), the country’s largest lender by assets, paid out about 63.43 yuan or about RM39mil in total remuneration before tax for the year 2017 to its top executive.
Notably, the Beijing-based ICBC’s net profit’s was at a whopping US$45.6bil (RM182bil) in 2017.
Sources: Gurmeet Kaur and Yvonne Tan The Star
GLC singers sing a different tune
Some officials singing 'Hebat Negaraku'.
Swan song for some after 'Hebat Negaraku' post-GE14 - CEO think video to showcase musical talents
Several heads of government-linked companies (GLCs) have come together
in a heartwarming music video titled "Hebat Negaraku" (my country is
great).
The heads of government linked companies (GLC) who sang a song that later became the theme song for the Barisan Nasional’s election campaign have distanced themselves from the controversial music video.
Those who sang and played musical instruments in the music video titled “Hebat Negaraku” (my country is great) said they did not know the video or the song was going to be a political theme song.
There have been repercussions on the CEOs who appeared in the music video. They have come under scrutiny for making a song that was used as propaganda by Barisan in the last general election.
Three of the GLC bosses in the video have either retired or resigned since the new government took over.
Several more have been speculated to leave in the coming weeks or months but nothing is cast in stone. Sources said this is because most of the CEOs are not known to have campaigned openly for either Barisan or Pakatan Harapan.
“None of the CEOs had a clue it would become a political song. Do you really think the CEOs would have done it if they knew it would become political?” asked one of the CEOs who appeared in the video but declined to be named.
“We have said no to so many things, and we could have easily have said no to this if it was political.’’
Another CEO said he was approached and felt it was “more of a patriotic song and nothing more.”
“At that point in time, we did not think much (of the repercussions). Hebat Negaraku was announced as Barisan’s campaign theme long after the recording was made. We did not know that.’’
Another CEO added: “We thought it was a casual thing when we were approached as some of the CEOs have their own band.’’
It all started when several CEOs were called to be part of a music video and they thought it was to showcase the musical talents of 14 GLCs heads, plus staff members of the 20 key GLCs.
The song is about the greatness, advancement and inspiration of Malaysia. It was released on YouTube on March 22 but has since been taken down.
But fingers have been pointed at the GLCs bosses who made the music video because it became a political video.
Datuk Seri Shazalli Ramly has been said to be the main orchestrator for the group in terms of making the music video. He was also said to be the branding chief for Barisan’s elections campaign.
Barisan lost the elections held on May 9 to Pakatan, which has since formed a new government and is scrutinising all the performance, processes, remuneration and procurement of the government and GLCs.
Shazalli quit his job as group CEO of Telekom Malaysia Bhd (TM) on June 6. Malaysian Resources Corp
Bhd (MRCB) group managing director Tan Sri Mohamad Salim Fateh Din has retired as group MD last week and it was something he had planned to do. Malaysia Airports Holdings Bhd
Datuk Badlisham Ghazali did not get his contract renewed. All three were in the music video.
There is a GLC secretariat that now comes under the purview of TM, which was earlier parked under Khazanah Nasional Bhd. The secretariat organised the making of the music video, according to sources. The CEOs were called to attend a session and within a few hours it was all done with no prior rehearsals.
“When you are called, it could be difficult not to comply since it is the secretariat that called you. We have to oblige but we really did not know it was going to be a campaign slogan. This is really unfortunate that it has turned out like this.
“We were surprised when we found out it was a party slogan but it had already been done and what can we do, we are in the picture,’’ said another CEO.
Not all CEOs who were invited took part in the video. Prior engagements were the reason used for declining to appear. - By b.k. Sidhu The Star
‘Enough with being yes men’ - MACC chiefs warns top civil servants against brown-nosing
The Malaysian Anti-Corruption Commission (MACC) has warned civil servants to stop the culture of bodek-bodeking (brown-nosing) in the public service.
Directors-general and heads of department must stop being “yes men” to ministers and deputy ministers, Chief Commissioner Datuk Seri Mohd Shukri Abdull (pic) said.
“Do your own work and don’t interfere in the tasks of others. In fact, civil servants should consider this a warning – from now on, stop with the bodek-bodeking culture.
“By right, ministers have no authority on projects, they can only create policies. That is why the directors-general and heads of department must be brave enough to say no.
“Do not be ministers’ crutches or their yes men. It does not matter if we get kicked around as long as we are doing the right thing,” he told Sinar Harian.
He said that the separation of powers between the legislative, executive and judiciary should be abided by, and boundaries of authority should be clear at each level.
“Do not ever breach the boundaries of another person’s job scope.
“That can cause chaos,” Mohd Shukri said.
He also said heads of department, especially those in enforcement divisions, must give clear and accurate advice to ministers, deputy ministers and other policymakers.
“Only say yes if you know it’s true, don’t just say yes, yes, yes although the matter may be untrue. You must be brave,” he said, adding that they should refer to the MACC if they were unclear about instructions.
Mohd Shukri also called on directors-general and heads of department to be bold enough to give the right advice as demanded by their rank.
“If you are not brave enough to say no to something that is not right, then it’s better to not hold that position in the first place,” he said.
He suggested the Government appreciate those who have served with integrity and not the kaki bodek (apple polishers), saying the latter group was ruining the country’s system.
“Get angry at me if you want, I am speaking the truth and the truth hurts but it’s worth it.
“Look at the situation now. When misdeeds are exposed, who wants to help? No one. Only we can help ourselves,” he said.- The Star
Wan Azizah to civil servants: Serve govt of the day or else ...
Concerned Ministers: (from left) Rina, Dr Wan
Azizah and Dr Maszlee speaking to the media during a press conference
after chairing the national Children’s Well-being Roadmap meeting in
Putrajaya. — Bernama
Civil servants must serve the government of the day and not obstruct the workings of the new administration, says Deputy Prime Minister Datuk Seri Dr Wan Azizah Wan Ismail.
“It has come to my attention that a small number of civil servants are not supporting, but obstructing, the Pakatan Harapan government.
“This is a warning to those doing so that we expect professionalism from our civil service and for them to serve the government of the day,” she said in a press statement after chairing a meeting for a national Children’s Well-being Roadmap in Putrajaya yesterday.
Her warning follows concerns raised by Prime Minister Tun Dr Mahathir Mohamad earlier this month over the loyalty of civil servants who campaigned for Barisan Nasional during GE14.
On the Children’s Well-being Roadmap, Dr Wan Azizah, who is also Women, Family and Community Development Minister, said that more input was needed from stakeholders to develop strategies and programmes to address pressing issues affecting children.
She highlighted the need to develop a more integrated and coherent approach when dealing with children with growth deficiencies.
“We do not want a piecemeal approach to this,” she said.
Dr Wan Azizah said the roadmap would also cover marginalised, stateless and refugee children along with children who are victims of sexual abuse.
“This inter-ministerial meeting was called to create coordination as well as an expression of political will and our determination to get to the bottom of these problems.
“We can’t claim to be a caring society if we ignore and neglect those who are most in need of care,” she added.
Present at the meeting were Health Minister Dr Dzulkefly Ahmad, Education Minister Dr Maszlee Malik, Rural Development Minister Rina Mohd Harun, representatives from the United Nations Children’s Fund (Unicef) and Home Ministry secretary-general Datuk Seri Alwi Ibrahim. - The Star
Every bit of money that was borrowed by 1MDB had Najib's signature, says PM
It is impossible for Datuk Seri Najib Tun Razak not to know of transactions related to 1MDB when his signature was on the documents, says Tun Dr Mahathir Mohamad.
The Prime Minister said he could not believe his predecessor’s claim that he knew nothing about money from the state fund ending up in his personal account.
“Who wants to believe him (that he didn’t know), when he signed (his name)?
“Every bit of money that goes in and out of the first borrowing of RM42bil, all (had) his signature,” said Dr Mahathir.
The amount refers to the total debt accumulated by 1MDB, a fund which was, in fact, founded by Najib in 2009.
“If he doesn’t know, it must be that he doesn’t understand what a signature means,” Dr Mahathir was quoted as saying in an interview with the Malay Mail yesterday.
Dr Mahathir described as “ludicrous” for someone to direct RM2bil to be transferred into his account, while refusing to be informed of the transaction.
“This cannot be. Because I have to sign to use the money.
“To use the money, I have to issue cheques. Najib always assumes that people are stupid,” Dr Mahathir added.
It was previously reported that about US$700mil (RM2bil) was allegedly misappropriated from 1MDB into Najib’s personal account.
In a Reuters report on Wednesday, Najib blamed his advisers and the 1MDB board for keeping the alleged embezzlement information from him.
He said he did not know if hundreds of millions of dollars that moved through his personal account was from 1MDB, and if money from the fund was eventually laundered to acquire assets globally, including yachts, paintings, gems and prime real estate.
To this, Dr Mahathir said the Government had all the information on Najib’s alleged involvement in moving the 1MDB money, and that it knew how much money had gone into Najib’s account.
On Wednesday, the Prime Minister disclosed that the authorities had “an almost perfect case” against Najib for embezzlement, misappropriation of funds and bribery.
1MDB had fallen RM42bil in debt since its inception in 2009, and Dr Mahathir had been at the forefront raising questions on it over the past three years. -The Star
Najib: If I was informed about the troubles the fund was in, I would have acted
He does, though, have explanations for the vast sums of cash, luxury handbags and jewellery recently seized from his homes by the Malaysian authorities.
Speaking to Reuters in his first sit-down interview since his shock May 9 election defeat, Najib said his advisors and the management and board of 1Malaysia Development Berhad (1MDB), had wrongly kept the alleged embezzlement of funds a secret from him.
Newly-elected Prime Minister Tun Dr Mahathir Mohamad told Reuters on Tuesday that the authorities have “an almost perfect case” against Najib on charges of embezzlement, misappropriation and bribery linked to 1MDB.
Najib, in some of his most extensive comments yet on the 1MDB scandal, said he did not know if hundreds of millions of dollars that moved through his personal account was from 1MDB, and if money from the fund was eventually laundered to acquire assets globally, including yachts, paintings, gems and prime real estate.
“I’m not party to the yacht, the paintings...I’ve never seen those paintings whatsoever,” said Najib.
“I was not aware of these purchases. This was done without my knowledge. I would never authorise 1MDB funds to be used for any of these items. I’ve been in government so long, I know what’s right and what’s wrong,” Najib said in the interview held at a luxurious sea-facing private villa in a five-star hotel on Pulau Langkawi.
He blamed 1MDB’s board, saying it was incumbent upon them to tell him if something was wrong.
Relaxing in a black T-shirt and brown pants, Najib said he was enjoying golf, food, and time with his family.
The family booked the villa to celebrate Hari Raya holidays together. Najib’s children, including stepson Riza Aziz, a Hollywood film producer, were with him for the week, his aides told Reuters.
Malaysian investigators looking into 1MDB say they believe that Najib and his wife Datin Seri Rosmah Mansor have amassed vast amounts of wealth and property using funds from the state fund.
Rosmah briefly appeared at the interview but Najib said she would not take questions.
Nearly 300 boxes of designer handbags and dozens of bags filled with cash and jewellery were among the items taken away by police in raids at properties linked to Najib’s family.
Items included Birkin handbags from the luxury goods maker Hermes, each worth up to hundreds of thousands of dollars.
Najib said the public seizure of handbags and other luxury items created a negative perception but most were gifts given to his wife and daughter and had nothing to do with 1MDB.
“Yes these were gifts, particularly with my daughter’s they were tagged, they were actually labelled: when, by whom,” adding that a lot of them were wedding presents.
Najib said his son-in-law Daniyar Nazarbayev, the nephew of Kazakstan president Nursultan Nazarbayev, also gifted many of the handbags to Rosmah.
“People might find it hard to understand, but my son-in-law for example, he gets Birkin from his source, five or six at one go,” he said.
“His family has got some means, so it has nothing to do with 1MDB if it comes from Kazakhstan.”
US prosecutors have alleged that more than US$4.5bil (RM18.02bil) of 1MDB funds were laundered through a complex web of transactions and shell companies. The US Department of Justice (DoJ) has filed several lawsuits to claim about US$1.7bil (RM6.8bil) in assets believed to have been stolen from 1MDB.
Some of the assets sought include a Picasso painting, luxury real estate in South California and New York, shares in a Hollywood production company and a US$265mil (RM1.06bil) yacht, and more than US$200mil (RM800.9mil) worth of jewellery – including a 22-carat pink diamond pendant and necklace.
Najib said this jewellery set was also meant to be a gift for his wife but she never received it.
“And until today we do not know...she says the item is not in her possession,” Najib said.
In the interview, Najib for the first time also spoke at length about Low Taek Jho, a Malaysian financier better known as Jho Low.
US and Malaysian investigators have named Low as a key figure who benefited from 1MDB funds.
Najib said he felt that Low’s connections in the Middle East, particularly with Saudi Arabia and the United Arab Emirates, could be helpful in pulling in more investment to Malaysia from those places.
But he said he had never instructed Low to get involved in 1MDB, and had no control over what he did.
“I didn’t give him instructions, but he volunteered to do certain things, which he thought would help 1MDB. But whatever he did ultimately is the responsibility of the management and board.”
Malaysia is seeking to arrest Low, believed to be residing abroad, for his involvement in the 1MDB scandal.
He described Low and Najib’s stepson Riza as friends but said he was not aware of any dealings involving 1MDB funds in Riza’s Hollywood production company, which produced The Wolf of Wall Street among other movies.
When asked if he was still in touch with Low, Najib said:
“We have cut off communication again. I don’t know where he is.”
Low’s lawyer did not immediately respond to a request for comment.
Najib has consistently denied any wrongdoing in 1MDB. He has said US$681mil (RM2.72bil) transferred into his personal bank account was a donation from Saudi Arabia, and not as US lawsuits have alleged misappropriated funds from 1MDB.
Najib said he had been given assurances from the late Saudi King Abdullah bin Abdulaziz Al Saud that Saudi Arabia would be sending a donation.
“All I knew, I accepted at face value that this is coming from the Saudis, from King Abdullah at his behest, at his instruction,” Najib said. – Reuters
Najib: I did not benefit from 1MDB in any way
His say: ‘If anyone is found to be on the wrong side of the law, let the legal process take its course.’
LANGKAWI: Former prime minister Datuk Seri Najib Tun Razak has denied that he benefitted from 1MDB, adding that he believed that the sovereign fund had been created to do “something good for the country”.
“If I knew there was going to be misappropriation of funds, if that was my knowledge, I would have acted,” he said.
To a question if he blamed the 1MDB board for the fund’s troubles, he said:
“No. I am saying as a general principle, if they are in the know that something is not right, then it is incumbent upon them to tell me. It is the fiduciary duty of the board and the management to do the right thing. I expect them to do the right thing and to follow the law.”
He also said that they had no control over what Jho Low – who has been named the main suspect in the 1MDB investigation – did, adding that he could not pass judgment.
“But there are certain things which he may or may not have done. But I am right to say that investigations should proceed and if anyone is found to be on the wrong side of the law, let the legal process take its course.
“No, he was not working on my behalf. All those items he never invoked my name but he did say he was acting for someone else,” he said.
Asked who Low was acting for, Najib said: “You have to ask him that.”
He also said that he had not talked much about the 1MDB allegations because all these things happened out of Malaysia and that there were some “international ramifications” if he were to name certain prominent individuals who might affect the country’s diplomatic relations.
“I would also like to place on record that (his step-son) Riza has done very well – the movies, the box office sales has reached beyond RM3.2bil. So, it is not abusing concern. It is a profitable concern. But source of funding is subject to investigation. I think we will leave it at that.”
On RM2.6bil that was moved into his personal account in 2013, he said with the general election coming then, he had not wanted to get funding from companies as they would expect something in return eventually.
“If I have a source of funding, I could fund the elections and I could also do a lot CSR (corporate social responsibility) work without being obligated to anyone. That was my real intention you see. And I assumed everything was fine,” he said, maintaining that the RM114mil ringgit allegedly seized during investigation into 1MDB to be “genuine donations because the raid happened just two days after the 14th General Election. As president of the party, I had to prepare for the elections, and elections are very expensive affairs.
“Because donations are made in cash in election times. You don’t send cheques during election times, because people want cash. That is when monies are disbursed accordingly.”
On Barisan Nasional’s defeat in the elections, Najib said he saw part of it coming but that he did not expect it to be this catastrophic, blaming it on Opposition’s allegations that changed public opinion.
On the reopening of the Altantuya Shaaribuu murder case, he said the case had already been dealt with and denied that there was any evidence that he had ever met her.
“There are no records, no pictures or witness to say that I even knew her. It was subject to a proper trial and my name didn’t come up during the trial whatsoever.
“I’m on record to have sworn in a mosque in the name of Allah that I had nothing to do with the case.” - The Star
Although there's still uncertainty over prospects for peace on the Korean Peninsula, it seems that South Korea is highly optimistic about the economic aspect of its cooperation with North Korea.
North Korea has a population of about 25 million. The largest city, the capital of Pyongyang, has about 3.2 million people and other cities generally have populations of about 300,000. The country's per capita GDP is a mere $530.
By comparison, with a population of 51 million, South Korea boosts per capita GDP of more than $27,500. But South Korea's economic growth is believed to have peaked, and its export-oriented growth model has run into trade protectionism.
If the hypothesis of merging and unifying North and South Korea were true, South Korea's population would increase by 50 percent. In light of this, although North Korea's GDP is a negligible fraction of that of South Korea, there is a chance that South Korea could see a 50 percent rise in its GDP that now adds up to $1.4 trillion. With a GDP of more than $2.1 trillion, a unified Korea would have an economy half the size of Japan's, or larger than the economies of Brazil, Italy or Canada.
South Korea's economy is dominated by family-owned conglomerates known as chaebol, with the top 10 chaebol accounting for a hefty part of GDP. Economic growth is seen mainly benefitting big chaebol such as Samsung and Hyundai, which in theory would have the opportunity of maintaining a fairly high rate of wealth growth over the next 10 years.
An assessment of Asia's economic future based upon the hypothesis of Korean unification indicates that it would be hard for Japan, China and even the US to derive any meaningful economic benefit from such an outcome.
North Korea's abundant pool of cheap labor and its market eager to see wealth growth will mostly benefit South Korea. In the past, China used to host a certain number of North Korean workers, but that was during an era when North Korea was blockaded by the outside world and could only rely on China for foreign-currency earnings.
If Korean unification, or to be exact the two nations' economic unification, becomes a reality, the situation will change. In this case, China or Japan will be just onlookers.
China might even find itself challenged by a unified Korea with lower costs in the world market. Japan might fare slightly better, considering its technological advantages and traditional partnerships with South Korean business groups. The benefits the US would get from unification would be limited or nil, taking into account uncertainties about its geopolitical interests.
For the world economy with total GDP of more than $70 trillion, Korean unification is likely to boost global growth by 1 percent. But much is still uncertain if this scenario is to play out.
North and South Korea still face tough obstacles including ideology, capital, nuclear weapons and internal political stability on the path toward genuine unification. The outcome also depends particularly on US political moves. Nevertheless, amid uncertainties there seems to be one certainty: The only way to avoid risk is to have the foresight to make future-proof plans.
By Chen Gong Source:Global Time
The author is the chief research fellow with Beijing-based private strategic think tank Anbound. bizopinion@globaltimes.com.cn
Chinese President Xi Jinping met North Korean leader Kim
Jong-un in Beijing on Tuesday, and the two leaders discussed topics
including the US-North Korea summit in Singapore.
Source: Global Times | 2018/6/19 22:53:39
China will impose 25 percent in tariffs on 659 US goods worth $50 billion, including soybeans, cars and seafood.
The move came as a tit-for-tat response to the tariffs announced by the Trump administration Friday morning. An expert said the US decision does not aim to tackle the trade deficit with China but to block the Chinese government's efforts in high-tech development.
Tariffs on 545 US goods worth $34 billion will take effect on July 6, involving agricultural products, car parts and seafood, according to a statement released by China's Ministry of Commerce (MOFCOM) on Saturday morning. Soybeans, which are China's biggest import from the US in value, are on the list.
Chemicals, medical equipment and energy products from the US will also be subject to 25 percent tariffs, which will be announced at a later date.
The revised list is longer and involves more categories of products than a preliminary list of 106 US goods published by the ministry in April, but the total value of the products remains at $50 billion.
A Chinese commerce expert found that aircraft were removed from China's new list, which is noteworthy.
"We need aircraft [from the US]. We have to consider the costs of the countermeasures we plan to take," Bai Ming, deputy director of the Ministry of Commerce's International Market Research Institute, said on Saturday soon after the Chinese tariffs were announced.
It's like acting as a soccer referee who will not call out the offenses and let the play continue when the game still benefits the attacking team even though an attacking player is fouled, Bai further explained.
China is one of the fastest-growing civil aviation markets in the world, and 15 to 20 percent of Boeing's aircraft deliveries are projected to end in the Chinese market over the next two decades, according to Morgan Stanley.
The US has kept changing their mind and ignited a trade war, which China does not want and will firmly oppose, a spokesperson of the MOFCOM said immediately after US took trade measures on China. "This move not only hurts bilateral interests, but also undermines the world trade order."
"China and the US still have hopes of negotiating and reaching an agreement, as both the tariffs announced by the two countries will not take into effect until next month," said Wang Jun, deputy director of the Department of Information at the China Center for International Economic Exchanges.
Wang told the Global Times that the removal of aircraft from the new list can be a signal that China still wants to talk, and also aircraft can be a valuable chip in the next round of trade negotiations.
Meanwhile, Wang said the Trump administration's newly published list is not so much a solution for the trade deficit problem with China as efforts to hinder China's technology development.
US President Donald Trump on Friday announced 25 percent tariffs on $50 billion in Chinese goods, containing industrially significant technologies related to China's "Made In China 2025" strategy.
According to a list published by the office of the US Trade Representative, the tariffs will be applied on more than 1,000 types of Chinese goods, including aircraft engine parts, bulldozers, nuclear reactors and industrial and agricultural machinery.
American industry also opposed Trump's decision.
"Imposing tariffs places the cost of China's unfair trade practices squarely on the shoulders of American consumers, manufacturers, farmers, and ranchers. This is not the right approach," US Chamber of Commerce President and CEO Thomas J. Donohue said in a statement posted on the chamber's website on Friday.
By Zhang Ye Source:Global Times
Related:
China Warns! Washington’s ‘Capricious’ Trade Actions Will Hurt U.S Workers
https://youtu.be/TtGDD9T5XM0
China says it regrets U.S. capriciousness on trade
https://youtu.be/E7yHDsjHRz4
Donald Trump Escalates Trade War With China
https://youtu.be/aPKZhnDKAic
China on Tuesday launched a swift and sharp response to
the latest trade provocations from the US, which threatened to slap
tariffs on almost all Chinese exports to the US, calling the US move
"blackmail" and vowing to respond with strength to protect its own and
the world's interests.
Dealing with the US is difficult, but China can easily
refuse theft and coercion. China will remain with the US through
negotiations and war. If a trade war between the two becomes fierce, the
result will not provide a favorable political environment for President
Trump.
China will launch an immediate, powerful response to US
tariffs on billions of dollars' worth of Chinese goods, threatening to
target US goods on the same scale and intensity, a spokesperson for the
Chinese Ministry of Commerce (MOFCOM) said on Friday.
US President Donald Trump's trade and fiscal policies are
likely to increase the risks to the US and global economy, the
International Monetary Fund (IMF) said Thursday.
China has unveiled a list of products from the United
States that will be subject to additional tariffs in response to US
announcement to impose additional duties on Chinese imports.
Japan may have led Malaysia's Look East policy of yore, but the stakes are heavily tipped in China's favour now as the leader of the new world order.
PRIME Minister Tun Dr Mahathir Mohamad (pic) has announced that Malaysia is renewing, or to be more precise, upgrading the Look East policy he adopted as a foreign policy 30 years ago.
It was unveiled after he came to power in 1981 and now, as the premier for the second time, he has picked up the pieces of his past and repackaged it.
His inclination to Japan then was understandable since the country was the rising star of Asia.
Although Look East included South Korea and Taiwan, it basically meant Japan.
There were sound reasons to why Dr Mahathir wanted Malaysia to emulate some of the East Asian characteristics, both economically and ethically.
I think any Malaysian who has visited Japan can vouch for the people’s work ethic, honesty, orderliness, politeness, punctuality, cleanliness, precision, dedication to excellence, innovation and good manners.
Malaysians in Japan feel safe – they rarely get cheated despite being tourists, which is more than can be said for many countries.
Personally, Japan remains my No. 1 holiday destination. Like Dr Mahathir, I have the highest admiration for the Japanese. They are certainly exemplary, and that is indisputable.
Dr Mahathir has continued to have high regard for the Japanese and history seems to be repeating itself.
His Look East Policy shocked and confused the Malaysian foreign ministry, with many officials viewing it as undefined and vague.
The Ministry being left in the dark about the Prime Minister’s move led to it being unaware of how to implement the policy.
Fast forward to 2018. It’s likely that his new batch of ministers were also caught off guard with the revival of the Look East policy, more so when the Foreign Minister has yet to be installed.
Without doubt, Japan is an important partner to Malaysia because we have more than six decades’ ties with the country.
In 2016, Japan ranked Malaysia as its fourth-largest trading partner with bilateral trade standing at RM120bil.The strong trade and investment relations between the nations are also underpinned by the Malaysia-Japan Economic Partnership Agreement.
The latest Malaysia-Japan collaboration includes the Bukit Bintang City Centre project, which has managed to attract the leading real estate group in the Land of the Rising Sun, Mitsui Fudisan Co Ltd, to invest in what will be the mega project’s RM1.6bil retail mall.
But Dr Mahathir’s choice of his first foreign visit to Japan as PM has raised many eyebrows. Perhaps it was just the coincidental timing of the annual Nikkei Conference, which he attends without fail.
I was told that his office had informed the Chinese Embassy here, as a matter of courtesy, to avoid reading into the matter, given the long, bitter rivalry between the two nations.
Dr Mahathir was also visiting Japan after a series of announcements, calling for the review, if not cancellation or postponement, of several mega Chinese-driven projects in Malaysia.
The method of repayments with China, involving huge amounts of money, has, of course, been called into question and condemned. One critic even described the terms as “strange.”
It’s apparent the situation is delicate now, and we need to tread carefully because we are dealing with a global leader.
Powerful alliance
The PM admitted that his government was “dealing with a very powerful country. As such, matters affecting both parties will require friendly discussions”.
Former finance minister Tun Daim Zainuddin also said that Malaysia will carefully handle business contracts with China made by the previous administration.
In an interview with The Star, Daim admitted that the economic superpower is a friend to Malaysia.
“China is very important to us,” the Council of Eminent Persons spokesman said.
“We enjoy very close relations, but unfortunately, under the previous administration, a lot of China contracts are tainted, difficult to understand and the terms are one-sided,” said Daim.
There is plenty at stake here. The world has also changed, and Malaysia needs to be mindful of its diplomatic move. These are sensitive times, and to the Chinese, the issue of “face” is an important one.
Whether we like it or not, the whole world is looking towards China because this is where the fundamental building blocks of a future global digital economic model is being curated and built.
Japan’s economy, on the other hand, has been in regression over the last two decades, and open data is easily available to prove this point. Just google it.
That aside, China is Malaysia’s largest trading partner in Asean, especially after Malaysia-China bilateral transactions rose as much as 28% to RM139.2bil in 2017’s first half.
The Chinese government has been very positive with bilateral relations with Malaysia over the years, and this great foundation is what we must build on. It doesn’t matter who the Malaysian Prime Minister is now.
With Ali Baba and Tencent coming to Malaysia, SMEs – which comprise more than 95% of Malaysian business entities – exporting to China will be a huge foreign trade opportunity.
Of all the Asean nations, Malaysia has the largest pool of businessmen who speak the relevant Chinese dialects and understand the culture. But it’s not just the Malaysian Chinese businessmen who stand to benefit, but other races too.
Let’s not forget that China will be under steady stewardship for the coming decade since Xi Jinping has strengthened his position as the premier. And with Dr Mahathir rightfully announcing that Malaysia will be a neutral country, this will mean a stable foreign policy which is crucial for the rules of engagement.
The same can’t be said of Japan, though, as it has a history of turbulent domestic politics, with frequent changes in leadership.
Truth be told, China has outperformed Japan. The republic has become a model of socio-economic reform that connects, not only the past with the present, but more importantly, can rewrite the history of human development into our common future.
The One Belt, One Road initiative is the future. It was also reported that China has overtaken Japan in global patent applications filed in 2017 and is closing in on the United States, the long-standing leader, the World Intellectual Property Organization said in a report.
With 48,882 filings, up 13.4% from a year earlier, Chinese entities came closer to their American counterparts, which filed 56,624 applications. Japanese applicants ranked third with 48,208 demands for patents, up 6.6% from a year ago, the report, released Wednesday, revealed. According to the Geneva-based institution, China will likely overtake the US as the world’s largest patent applicant within three years.
“This rapid rise in Chinese use of the international patent system shows that innovators there are increasingly looking outward, seeking to spread their original ideas into new markets as the Chinese economy continues its rapid transformation,” WIPO director-general Francis Gurry said.
The overall filings in 2017 were 243,500, up 4.5% from a year earlier.
Data indicates that China and Japan were key drivers of the surge in applications.
“This is part of a larger shift in the geography of innovation, with half of all international patent applications now originating in East Asia,” Gurry reportedly said.
Two Chinese firms topped the list, led by Huawei Technologies Co with 4,024 patent applications and ZTE Corp with 2,965 submissions. Intel Corp of the United States is placed third with 2,637 filings, followed by Mitsubishi Electric Corp with 2,521.
China has also declared its ambition to equal the US in its AI capability by 2020 and to be number one in the world by 2030.
If there is a single country to take a cue from, then it can only be China. Look at its growth since 1957, 1967, 1987, 1997 and 2017, and see the strides it has made in the shortest time. Remember, China was once poor and backwards. Many Malaysian Chinese used to send money back to their families in China, especially in 1950s and 1960s, and even 1970s. But look where the country is now.
Malaysia is in pole position to take advantage since our neighbour Singapore has always been perceived to be too US-centric. It will be a waste if we let politics get in the way, as no one can dispute that China now plays a respected and vital role.
Anyone can tell that China will reshape the new world order. It is the new Middle Kingdom and is the country to look to.
And Dr Mahathir should pick up on this because at the end of his trip to Japan, the press bombarded him with the predictable and nagging question – when will he be visiting China?
By Wong Chun Wai On The Beat
Wong Chun Wai began his career as a journalist in Penang, and has served The Star for over 27 years in various capacities and roles. He is now the group's managing director/chief executive officer and formerly the group chief editor.
On The Beat made its debut on Feb 23 1997 and Chun Wai has penned the column weekly without a break, except for the occasional press holiday when the paper was not published. In May 2011, a compilation of selected articles of On The Beat was published as a book and launched in conjunction with his 50th birthday. Chun Wai also comments on current issues in The Star.
KUALA
LUMPUR: The Multimedia Super Corridor (MSC) programme, mooted by Prime
Minister Tun Dr Mahathir Mohamad some 20 years ago, has been
instrumental in inspiring the establishment of Alibaba Group, Jack Ma
said.
