Media Statement by Yeo Bee Yin, Committee Member of Selangor
Statutorary Bodies and Government-Link-Companies (GLCs) Select Committee and State
Assemblyperson for Damansara Utama on Wednesday 19 Aug 2015.
We call upon the state
government to restrict its involvement in businesses, redefine the role and
jurisdiction of Darul Ehsan Investment Group (DEIG) and focus first to
establish proper accountability mechanism for Menteri Besar Incorporated (MBI).
While we welcome MBI’s plan to consolidate and restructure
the 74 GLCs under MBI to ensure the GLCs are run efficiently, we are very concerned
with MBI’s proposed method - through the formation of a new state investment
company Darul Ehsan Investment Group (DEIG).
100% owned by MBI, DEIG will be the holding company for the 74
GLCs under MBI with a combined land bank of more than 5,000 acre of state lands
and a combined asset value of RM6.3 billion. It is to also to be the
“investment holding-arm for the state of Selangor.” [1]
Below are my three concerns on this newly formed state
investment company.
Firstly, I think the state government must recognize that our
main role is not to do business or investment. I believe that the prime role of
the government is not to generate profits from businesses or investments but to
create macro-environment that is business friendly. Better infrastructure,
greater talent pool, reduced red-tape and rent-seeking should be our priority,
not profit-making.
According to MBI’s Request for Proposal (RFP) announcement,
MBI is to do joint-venture with private developers to develop the 5,000 acre
land bank. I cannot see the reason why the state government need to be
developer in matured townships where there are already many private takers.
Such direction of DEIG worries me that it will be involved in more businesses
in the future and such worry is further exacerbated with the lack of tight
governance of DEIG. For example, what are the mechanism to ensure that the joint-venture agreement is
not lopsided?
Secondly, despite DEIG control of RM6.3 billion of state
assets, which account to about 3 years of state budget, unlike MBI, which is
governed by MBI Enactment 1994, it is not restricted under any state enactment
to take up loans or other forms of borrowing. In the question and answer
session yesterday, Dato Menteri Besar has promised that DEIG will not do any
borrowing, but a promise is not sufficient. There must be a law that restrict
it and a proper institution must be established to govern it.
In addition, although DEIG role is to do strategic investment
for the state, so far there is no independent directors especially those with
experiences in financial market, have been appointed to the board of directors
of DEIG yet.
The DEIG’s ability to control 74 Selangor GLCs, the absence
of law preventing DEIG from making borrowings as well as the lack of independent
experienced directors in DEIG board is a worrying combination. Such
centralization of power without proper check and balance will leave leeway that
will lead to DEIG making investments, worse still, taking loans to make
investments, that do not benefit the state.
Good leaders come and go but good institution remains. The
question that I am asking now is not the integrity of our current leaders but
more on when all of us are gone and new leaders come in the future, is our
institution strong enough to prevent any persons in power from using the loose
governance in DEIG for personal gain?
Thirdly, I believe that our current priority should be to
focus first on establishing good accountability mechanism under MBI. MBI
Enactment 1994 itself should be amended in order to mandate the annual audit of
account of by the State Auditor as well as
the tabling of annual report to the state assembly so it can be debated.
We must first fix the current already loose governance of GLCs under MBI before
adding more “layer” into the structure.
With that I call upon the state government to restrict its
involvement in businesses, to redefine the role and jurisdiction of DEIG and to
establish proper accountability mechanism for MBI to ensure good governance for
the 74 GLCs under it.
Selangor State Government is not Barisan Nasional government,
the spirit of accountability and transparency must be upheld to the highest
standard and strong institution must be built to ensure responsible handling of
public funds.
