[Editor's Note]

In Malaysia, “black-box decisions” made between political parties and Government-Linked Companies(GLCs) have been a major concern in sustaining the country’s democratic system. Such practices exacerbate the monetization of politics, which leads to the problem of business-government intertwined corruption. What makes matters worse is that the current financial corruption in Malaysia has become more serious due to other factors such as internal conflicts within a party and transactions of covert funds. The authors, Iman Amran and Aira Azhari from the Institute for Democracy and Economic Affairs, point out that Malaysia does not have adequate legal enforcement to punish such misdeeds in politics which is evident in the 1MBM scandal. To create a more transparent political finance environment, the authors recommend a three-pronged approach: 1) initiating reforms in political parties to improve accountability of funds, 2) fairly allocating direct and indirect political funds, and 3) empowering the public through voter and civic education to achieve political literacy that would monitor the transparency of Malaysian politics.

※ The following are excerpts from the article. For the full text, please check the attached file at the top of this page.

Malays National Organisation’s (UMNO) 60-year rule, extensive networks were formed in which proxies of UMNO held UMNO’s money through different companies. It is widely known that these proxies were then mobilized to provide financing during the party and general elections, which further strengthened UMNO’s grip on power. Malaysia’s Government-Linked Companies (GLCs) have also played a significant role in the financing of politics. GLCs are meant to serve many important social objectives and should be run independently, transparently, and with accountability. However, over the years increasing political interference has undermined the role they are supposed to play and has caused abuse of power and corruption to fester. Furthermore, the appointments of politicians and politically linked persons into the Boards and management of GLCs have greatly compromised their independence. Political appointments have also been used as a means to reward party members who won in elections. This political interference within GLCs has caused monetization of politics, as corporations and businesses who support the ruling party gain easier access to government grants and contracts – making the procurement system opaque and considered as a ‘black-box’. Black-box decisions are made with minimal objectives and little to no clarification over the decision-making process. This is usually how political financing and appointment decisions are made in Malaysia for the past few decades. Even during the COVID-19 pandemic, multiple GLC appointments were made.

Malaysia has a long history of political involvement and interference in business. During United Malays National Organisation’s (UMNO) 60-year rule, extensive networks were formed in which proxies of UMNO held UMNO’s money through different companies. It is widely known that these proxies were then mobilized to provide financing during the party and general elections, which further strengthened UMNO’s grip on power. Malaysia’s Government-Linked Companies (GLCs) have also played a significant role in the financing of politics. GLCs are meant to serve many important social objectives and should be run independently, transparently, and with accountability. However, over the years increasing political interference has undermined the role they are supposed to play and has caused abuse of power and corruption to fester. Furthermore, the appointments of politicians and politically linked persons into the Boards and management of GLCs have greatly compromised their independence. Political appointments have also been used as a means to reward party members who won in elections. This political interference within GLCs has caused monetization of politics, as corporations and businesses who support the ruling party gain easier access to government grants and contracts – making the procurement system opaque and considered as a ‘black-box’. Black-box decisions are made with minimal objectives and little to no clarification over the decision-making process. This is usually how political financing and appointment decisions are made in Malaysia for the past few decades. Even during the COVID-19 pandemic, multiple GLC appointments were made.¹ These appointments were highly criticized as the ruling party’s move to further entrench and consolidate the political party’s position in the government. Business and politics are deeply intertwined in Malaysia, making it difficult to separate the two unless robust reforms are done within the political landscape to strengthen the system of political finance in Malaysia.

■Iman Amran is a research intern at IDEAS’s Democracy and Governance Unit. She is a final year student of Economics and Philosophy at the University of Sheffield.

■Aira Azhari manages IDEAS’ Democracy and Governance Unit, where she oversees research and advocacy on the topics of accountable governance, anti-corruption and creating a more policy-oriented political culture in Malaysia. She provides political analysis for IDEAS and various audiences including diplomats, MNCs, the media, the corporate sector as well as civil society organisations. Aira has been interviewed by the BBC (World News and Radio), Astro Awani, Bernama, Channel News Asia, Radio Televisyen Malaysia, Lite FM and BFM on matters relating to Malaysian politics, economics and governance. Aira graduated with a Master of Laws in Public International Law from the London School of Economics and Political Science and a Bachelor of Laws from the University of Liverpool, United Kingdom.

• Typeset by Juhyun Jun, Research Associate
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