THE G25 group of prominent retired civil servants are surprised that Perikatan Nasional chairman Muhyiddin Yassin sees no problem with appointing politicians to the boards of government-linked companies (GLCs) if the coalition wins power in the state elections.

It said as all countries are now adopting international best practices in their system of corporate governance, Malaysia will lose out to its neighbours and globally if the country continued with undesirable old ways. 

“GLCs operate in the private sector, competing with local and foreign companies in the marketplace for business.

“Therefore, they should not have politically linked directors on their boards so as not to create unhealthy suspicions about their business decisions,” it said in a statement today. 

G25 said this was very important to foreign multinational corporations which looked for suitable business locations in Southeast Asia.

In an interview with Free Malaysia Today, Muhyiddin said in the lead-up to state elections, PN had agreed on how administrative posts would be distributed among component parties if it won.

Muhyiddin said PN, which is contesting all 245 seats in the six state elections, wished to avoid bickering over top positions in government and state GLCs should it win any or all of the states of Selangor, Negri Sembilan, Penang, Kedah, Kelantan, and Terengganu.

G25 said Muhyiddin’s statement was surprising because it contradicted reform measures that were introduced following the devastating effects of the 1997/98 East Asia financial crisis to strengthen the system of corporate governance in both private and public sectors.

“The new guidelines introduced by our Securities Commission follow world best practices as recommended by the Organisation for Economic Cooperation and Development.

“All boards are required to take full responsibility over board appointments, without being influenced by political or other interests.”

G25 said where politically linked candidates were proposed for board or management positions, the board must analyse whether they are politically active and professionally qualified. 

“The world’s best practice is that no politically active candidates should be accepted for board appointments or for top management posts.”

They said statutory bodies are not GLCs as they are not incorporated under the Companies Act. 

“They have their own legislation governing their establishment and operation. 

“They are the implementing arm of ministries and therefore their governance system is different from GLCs. The Securities Commission guideline does not apply to statutory agencies of government ministries.” – July 4, 2023.