Norfaryanti Kamaruddin

History of GLICs

This chapter provides a historical review of the evolution of the GLICs. This study traces why these seven GLICs were incorporated and how they have emerged as major actors in Malaysia’s corporate sector. Each of the seven GLICs was incorporated at a different point in Malaysian history, with the earliest ones being the pension-based funds, KWAP and EPF. MoF Inc., the government’s holding enterprise, was created in 1957 to hold the corporate assets of the British colonial government. LTH was in created in the 1960s, in particular to help poor Muslims save funds for the hajj pilgrimage, while LTAT was incorporated to protect the well-being of armed forces staff after they retired from service. The role of these GLICs in the development of Malaysia’s economy as well as domestic enterprises, specifically those owned by Bumiputeras, is reviewed here. This chapter also outlines how the GLICs differ in terms of their economic and social roles, as well as how they have been employed by Malaysia’s six Prime Ministers since Independence in 1957.

GLICs and Corporate Ownership

This chapter deals with GLIC ownership structures, looking particularly at the companies in which they have a majority interest among the top 100 enterprises quoted on the domestic stock exchange, the Bursa Malaysia. These GLICs have majority ownership of 35 companies publicly listed among the top 100 enterprises in terms of market capitalization. In this chapter, the development of these 35 GLCs is traced, with specific focus on how the GLICs have come to obtain ownership of these firms. The ownership patterns of these companies are assessed from a sectoral perspective, that is, utilities, plantations, property development and construction, oil and gas, banking, media, services and healthcare. The chapter pays particular attention to how the GLICs have come to acquire a significant presence in four core sectors: plantations, banking and finance, property development and construction, and media.

Conclusion: The Implications

The main findings of this study revolve around a single key question: who owns corporate Malaysia today? The chapters have revealed a major transition that has occurred in Malaysia’s political economy, namely, how corporate power has shifted from UMNO and well-connected businessmen to the government. Huge groups of GLICs have emerged, controlled by the government and dominating key sectors of the economy. UMNO members no longer figure as owners of leading publicly listed companies or as directors of government-owned enterprises. The GLICs and the listed companies under their control are now led by well-credentialed, highly competent professionals with no involvement in the political system. However, these professionals are ultimately responsible to the Minister of Finance who has significant control over the corporate sector through the GLICs and GLCs that come under his jurisdiction.

Global Strategies of Firms and the Financialization of Agriculture

A sustained growth of investment in the agricultural sector is being observed the world over. Some of these investment strategies, which rely on financial mechanisms such as private equity or shareholding structures, directly involve the financialization of agriculture. On the one hand, this financialization is a consequence of the new trends of globalization of the agricultural sector and value chains, more particularly of the need for capitalization and risk management. On the other hand, it in turn reshapes the sector and its value chains. The first part of this chapter intends to explore these dynamics by describing this process of financialization in practice based on two case studies, one in Africa and the other in Asia. The chapter then presents the drivers of financialization, its real spread into agriculture, as well as its implications in terms of integration and advanced verticalization, and of corporatization of agriculture. These dynamics form the basis for new issues concerning the structuring of the sector and its capacity to act towards sustainable development.