Malaysia: Recent Trends and Challenges

9. Reinventing Governance in Corporate Malaysia: The Challenges Ahead

Michael Yeoh and Farizal Hj. Mohd. Razalli 210 Reinventing Governance in Corporate Malaysia: The Challenges Ahead M i c h a e l Y e o h a n d Fa r i z a l H j . M o h d. R a z a l l i Introduction Finally, Malaysia has a new prime minister in 22 years. The smooth yet historic power transition from one of the longest-serving to one of the few pre-selected prime ministers in Asia draws everyone’s attention to the unique democratic procedures in Malaysia. Without any unruliness taking place in the background of this momentous event, Malaysia once again proves to the rest of the world that the local political scenario takes on a somewhat sound and stable base. With the new prime minister installed, it is traditional to expect to see some changes, if not at all, to the administration. The most popular question remains whether or not this new administration will result in new ways of doing things or at least improved methods in dealing with issues and problems. This question takes on more importance when framed within the context of the business or corporate environment. 211 9: Reinventing Governance in Corporate Malaysia This chapter is simply oriented toward this interesting question. It is tempting to explore the nexus between the new administration and the forthcoming challenges facing Corporate Malaysia. The authors argue that a solid policy response from the new administration is required to empower Corporate Malaysia to enter into the new liberalised market economy. And they, therefore, foresee that in doing so, there needs to be a clear definitive role between the state and the market. Without this, Corporate Malaysia risks loosing its advantages and thus possibly damaging Malaysia’s competitiveness. In keeping with this onus, this chapter is organised in the following manner. It first introduces and defines key terms used in the chapter. It then analyses the corporate governance landscape in Malaysia whereby this overview forwards two main discussions: (1) the history of corporate governance inherited by the new administration and (2) how problems or setbacks during this history were treated and their observable effects today. The authors also put forward an analysis of the new administration’s response to the issue of further reforming corporate governance as a continuous effort to enhance Corporate Malaysia. The discussions embed the framework of the state-market relationship whereby we see events unfold in reflection of such a relationship. This analysis also incorporates the foreseeable challenges that the future holds for Corporate Malaysia under the new administration. The last section concludes this chapter by readdressing the main question of whether or not the new administration’s policy response bears any significance on reducing unwanted risks in Corporate Malaysia. Defining Key Terms The chapter contains three very important terms: (1) “reinventing governance”, (2) “Corporate Malaysia”, and (3) “challenges”. It is very crucial for all these terms to be defined within the proper context of this chapter so as to ensure readers a better understanding of the discussion to come. “Reinventing governance” refers to the process of reforming the management, in this case, the management of Corporate Malaysia. While semantically “reinvent” and “reform” might pose some differences, this Michael Yeoh and Farizal Hj. Mohd. Razalli 212 chapter, however, treats both as interchangeable.Thus the chapter treats the linguistic inventory of both terms indifferently. “Corporate Malaysia” here refers to two elements: public-listed companies (PLCs) in Malaysia with special emphasis on governmentlinked companies (GLCs)1 . Second it also refers to the environment in which these PLCs operate. In short, Corporate Malaysia is treated as both the corporate players and the corporate environment (the rules that govern them). While many would treat the word “challenges” as merely the foreseeable difficulties that one might have to overcome sometime in the future, this chapter goes a step further to refer to the foreseeable difficulties that might face the government (the new administration) as well as Corporate Malaysia (corporate players and stakeholders) in undertaking the reforms whereby these challenges are being assessed within the context of globalisation. Malaysia and the Issue of Corporate Governance It would definitely be an understatement to say that Malaysia’s practice of corporate governance has been below par. While undoubtedly such practice may have been unsatisfactory and lacking, corporate governance in Malaysia, just as in other countries in the post-Enron era, has remained an issue of...