Cronyism earns Malaysia bad reputation abroad, says Jomo

comments     Susan Loone     Published     Updated

Malaysia has earned a bad reputation by practising "transnational cronyism" and abusing special privileges given by governments in countries which it can influence despite being a major proponent encouraging South-South investment, said an economics professor today.

Universiti Malaya's Prof K S Jomo said these countries where Malaysia has some influence were basically persuaded to give special privileges to some Malaysian investors who in turn did not carry out projects awarded to them or in some cases acted as commission agents for other transnational corporations.

For example, Jomo explained, a choice piece of land facing the Indian ocean in Durban, South Africa was given to Malaysia's highly indebted company Renong Sdn Bhd who did not do anything about the land despite promises made in the interest of South Africa.

Renong's former chief executive director Halim Saad, 47, is a protg of Prime Minister Dr Mahathir Mohamad's confidant and ex-finance minister Daim Zainuddin, who has worked closely with the country's top leaders for years.

It's well documented that since Halim's company was formed in part from Umno's assets, Halim had once described himself as the business proxy for the organisation.

Two percent commission

"Another example is where a particular project was given to one ostensibly Malaysian company but the ostensibly Malaysian company collects a commission of about two percent, which is a lot of money for a multi-million ringgit project and sub-contracted it to a European company," Jomo added.

Jomo was speaking at a public lecture entitled Globalisation for Whom? A World for All at the Institute Kajian Malaysia dan Antarabangsa or Ikmas, Universiti Kebangsaan Malaysia in Bangi, Selangor in memorial of Dr Ishak Shaari, a renowned economics professor who died of cancer last year.

During the question-and-answer session, Jomo talked about his new book Ugly Malaysians: South-South Investment Abuses which he had published in South Africa to "escape" further dafamation suits.

Jomo also noted widespread concern about the independence of the judiciary after Chief Justice Mohamad Dzaidin Abdullah's term ends.

"This will affect the outcome of a number of defamation cases and since my total assets do not even amount to one percent of the amount I have been sued for, I do not want to compound it further" he said, tongue-in-cheek.

Jomo is currently facing a defamation suit from tycoon Vincent Tan for his articles relating to cronyism and business in the country.

Petronas has good reputation

Jomo said his new book deals with some Malaysian investments which give the country a bad reputation internationally although he also emphasised that some investors such as Petronas has a good reputation and is rather sympathetic with the concerns of developing countries.

As a result of transnational cronyism, Jomo pointed out that it is extremely important to recognise that Malaysia's international standing has often been compromised by the abuse of policies which are in principle quite desirable.

"I personally don't think a principle that favours South-South investment is undesirable. But if you do not take responsibility for monitoring your corporations, you then have a very unfortunate situation where Malaysia acquires a bad reputation not because of government action but government inaction against those who have been promoted by the very same government," he added.



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