A case of state intervention in the economy

In the third public lecture of The Sir John Monash Lecture series for 2017, Professor Edmund Terence Gomez speaks on the topic, ‘The government’s business: Politics, policies and the corporate sector in Malaysia.’

Specialising in state-market relations and the linkages between politics, policies and capital development, Professor Gomez is currently the Professor of Political Economy at the University of Malaya, and has held appointments at Universities in the UK, Australia and Japan. He has also served as Research Coordinator at the United Nations Research Institute for Social Development (UNRISD) in Geneva, Switzerland.

He divided his lecture into two parts ‒ 1) the nature of the state, what are the political factors behind the ways which the state intervened in the economy; and 2) the businesses and in this case, government-linked companies (GLCs) as they have become key players in the economy.

“If you looked at the historical evolution of GLCs, it tells you the story of the intervention in state and how the state intervenes. It tells you the story of what happens when there is a political transition,” Professor Gomez said.

He noted an important difference when he showed the figures from 1971 to 2016, and the first thing that stood out is that many of the outcomes we are seeing today has been influenced, or shaped by who was the country’s leader at particular moments in history.

In the following part of his lecture, Professor Gomez focused not only on the GLCs, but the government-linked investment companies (GLICs) who are major players in the ownership and control of the corporate sector. He also highlighted two concepts ‒ institutions and key actors.

“The defining moment was when the GLC Transformation Programme was introduced, that was when a real transformation occurred in the GLCs. Most politicians were taken out of the GLCs and the professionals came in.

“When we looked at the shift, what is interesting are the key actors. The two most important people, the managing director and chairman, where the former are all professionals while the latter are not. It is now that you can see the revamp happening,” he said.

Professor Gomez concluded by noting he has seen the power shift involving the nexus between politics, business and the federal government. He believes the country needs a major revamp in its public policies, and businesses especially need to be based on entrepreneurial capacity.