This article first appeared in The Edge Malaysia Weekly on December 18, 2023 - December 24, 2023

PERHAPS it reflects the need for reforms to happen fast in Malaysia, a resource-rich country that is looking to unleash its potential as an Asian tiger economy before it is deemed an aged nation in 2030.

Last Tuesday, Prime Minister Datuk Seri Anwar Ibrahim expanded his cabinet members to 31 from 28 and announced several key changes to the line-up, including bringing back the position of second finance minister (Minister of Finance II) and appointing a non-politician to the post.

“I have built this consensus that the Ministry of Finance, other than being headed by me, must have a strong professional team to ensure that we are on the right track and [are] focused on the economy, and not be sidelined or deflected by political pressures. And he has shown enough competence, ability and has managed the affairs of the EPF (Employees Provident Fund) in a very impressive and satisfactory manner,” Anwar told reporters, referring to the appointment of former EPF CEO Datuk Seri Amir Hamzah Azizan as senator and Minister of Finance II.

While there had been several on-off speculations of a cabinet reshuffle, there were at least two reasons the Dec 12 move came as a surprise to many. First, given that the Anwar-led unity government had just celebrated its one-year anniversary, observers expected the cabinet line-up to be refreshed sometime next year, either ahead of or in conjunction with the expiry of Minister of Investment, Trade and Industry Tengku Datuk Seri Zafrul Abdul Aziz’s second and final term as senator in early December 2024.

“It was out of the blue. I had expected it next year, after the new [Yang di-Pertuan] Agong ascends to the throne,” says an observer.

Incidentally, the change to the cabinet line-up came just two days after a rare interview with Johor’s Sultan Ibrahim Sultan Iskandar was published in Singapore’s The Straits Times, whose readers may be interested to know his thoughts on bilateral relations, water, green energy as well as whether the mammoth 350km Kuala Lumpur-Singapore high-speed rail (HSR) project — estimated to cost more than RM100 billion — should be revived and aligned with the Forest City development-cum-special financial zone in his state.

Not planning on being a ceremonial “puppet king”, the 65-year-old Sultan Ibrahim (who will be Malaysia’s constitutional monarch for five years from Jan 31, 2024) not only declared that he is a hands-on person who “doesn’t believe in wasting time” but also suggested that national oil company Petroliam Nasional Bhd (Petronas) — whose dividend payments are a key factor in keeping the annual fiscal balance in check — as well as the Malaysian Anti-Corruption Commission (MACC) report directly to the Yang di-Pertuan Agong instead of parliament.

“If it comes to the Agong, it means you are not under the influence of anybody from the executive [branch of government]. Even Petronas shouldn’t be under parliament, report directly to me,” Sultan Ibrahim was quoted as saying in the interview on Nov 23 that was published on Dec 10, in which he also declared support for the independence of the judiciary and asked that Malaysians give Anwar “a chance to prove himself”, given that political stability is needed to fix the economy.

“I will support the government, but if I think they are doing something improper, I will tell them,” Sultan Ibrahim was quoted as saying in the interview, noting that “there are good ministers like [Minister of Transport] Anthony Loke” who is among the majority who retained their portfolio in last week’s cabinet reshuffle and that the sultan does not foresee any issues working with Anwar, who “calls [him] sometimes, even at midnight, asking for advice”.

Economist Dr Nungsari Ahmad Radhi hopes that Amir’s appointment to the cabinet means Malaysia has “someone who understands the potential crisis we will face as our population ages and also as a consequence of all those EPF withdrawals”, referring to the RM145 billion in retirement savings that was prematurely withdrawn by over eight million EPF members from the provident fund during the Covid-19 pandemic.

Amir’s understanding of the need for higher wages, retirement planning and a wider social safety net would certainly come in handy in delivering on promises to strengthen social protection via reforms.

A national ageing blueprint is also in the pipeline to help Malaysia diffuse a looming retirement crisis. EPF had previously estimated that as many as 5.3 million or 15% of the population may need government aid in 2030 when Malaysia becomes an aged nation (defined as 14% of the population being 65 and above). By 2042, some 7.4 million people or 21% of the population could need government assistance, causing further policy challenges on income security, employment and healthcare, EPF warned in late 2021 when Amir was into his ninth month as CEO.

Before joining EPF in March 2021 — his eighth CEO position in 16 years back then — Amir had served 23 months as CEO of Tenaga Nasional Bhd. His experience running EPF, the country’s largest government-linked investment company (GLIC), as well as hands-on working experience at several government-linked companies (GLCs) including Petronas subsidiaries MISC Bhd and Petronas Dagangan Bhd, may also come in handy as Anwar looks to GLCs and GLICs to bolster nation-building initiatives and contribution. Having overseen a trillion-ringgit fund, Amir’s knowledge of how investors think and the depth of the local market should be to Putrajaya’s advantage.

The federal government, with more than RM1.5 trillion in debt and liabilities, will also need to navigate a high interest rate environment, tackle a high operating expenditure bill that will only get bigger the longer Putrajaya delays public pension reform. There have been discussions that GLICs managing the government’s money could be consolidated to bring better returns to bolster the government coffers and its capacity to expand the social safety net, especially with plans to implement targeted subsidies from the second half of 2024.

The Edge, which in January 2018 rightly calculated that federal government debt could hit RM1 trillion by 2021, estimated in 2022 that direct federal government debt could hit RM2 trillion by as early as 2030 should debt continue to be rolled over at higher borrowing rates and budget deficits continue. Direct federal government debt was RM1.16 trillion or 62.5% of gross domestic product at end-September 2023.

The eldest son of the late Tun Azizan Zainul Abidin — who was Petronas president and CEO and had a distinguished 28 years with the civil service, having been principal private secretary to three prime ministers (Tun Abdul Razak Hussein, Tun Hussein Onn and Tun Dr Mahathir Mohamad) — Amir has big shoes to fill indeed.

As technocrats or professionals “ultimately remain subservient to the minister”, political economist Edmund Terence Gomez reckons that more needs to happen in order for real reforms to take place and take root. These include amending laws to better protect whistleblowers, separating the office of the Attorney General and the public prosecutor as well as the MACC from the influence of the executive branch.

Pointing to scandals like 1Malaysia Development Bhd (1MDB) and the controversial littoral combat ships (LCS) procurement contract, Gomez — who is chairman of the Center to Combat Corruption and Cronyism (C4) — looks forward to seeing reforms that will cut out “the enormous wastage in the GLC ecosystem” now that Anwar has a second technocrat who is familiar with the GLC and GLIC world and knows how the system should work to prevent abuse.

Indeed, it is what transpires after the cabinet reshuffle and the appointment of a second technocrat that speaks of who the biggest beneficiaries of the changes are. 

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