Former RAM Holdings Group Chief Economist Dr Yeah Kim Leng, currently a professor at Sunway University Business School, said both the countries had several GLCs which faced political pressure and interference from their government but were doing well.

He said in Singapore, the CEOs are given a free hand to hire the best and fire at will.

“The CEO sets the tone for the management and best practices to be on par with international standards. There are no two ways about it,” he told FMT.

If the CEO fails to rake in profits, the government, instead of bailing out the GLC, hires a new team to run the company, he said.

“The board of directors are on their toes because they know they have to do well. That is why they hire the best to be in the team.”

In Malaysia, he said the CEOs do not have the same freedom as these GLCs, but instead operated for two purposes — one is to maximise profits and the other to offer jobs.

“CEOs cannot simply hire and sack people. That is the first limitation a CEO in a Malaysian GLC faces.

“They are torn between maximising profits and fulfilling obligations to retain people.

“This was clearly seen in Malaysia Airlines where they employed more people than needed, but the CEO could not sack staff.”

The second problem was that the GLCs do not face competition. In China, the government has two or three players in the same industry.

“The GLCs compete within themselves in China. To survive there, they have to be on their toes.

“Here, there is no competition. The CEOs are not competitive. The government bails out the GLCs. This makes the CEO and board members become less competitive.”

Yeah said there was also too much political interference which made it difficult for the CEOs to exercise their full management capability.

For instance, in the case of Malaysia Airlines, despite hiring a foreign CEO, Christoph Mueller, to restructure the business, it was initially an impossible task as staff in GLCs are usually not fired or made redundant.

Luckily, after much resistance, good sense prevailed, resulting in the axing of 6,000 jobs, or 30% of the carrier’s 20,000 employees.

“It is part of social obligations of GLCs to provide jobs. Here is where the GLCs lose out on trying to make money while trying to fulfil social obligations.”

He said GLCs should operate as a corporate entity.

Furthermore, he said MAS had undergone three to four massive bailouts.

“They know the government is there to bail them out. But the restructuring was not massive. It needs to undergo an overhaul to make money.”

He said GLCs like Maybank and Petronas are some of the successful GLCs.

Petronas, the national oil company, was given a free hand to develop the company to be competitive at the global level, he added.

“They had to compete with international oil companies. They needed to hire the best people to run it.

“From the start, the company was doing it right. They developed their own best standards.

“Now, they will have to maintain it or their performance might slide down, along with falling oil prices.”

The same was true for Maybank. Yeah said they operated just like any corporate organisation.

He said another GLC, Telekom, was not doing well initially. But after facing tough competition from other private telecommunication companies, it started bucking up.

“Now, they are doing a lot better. It shows that these companies need to have competition. They need to face threats. And they should not receive government bailouts.

“Only then will we see a difference in Malaysian GLCs. They must know they have no choice but to do it on their own.”

As for debt-ridden Proton, Yeah said it was a high-cost field, but the government had insisted on continuing to invest in the auto industry.

“The current model of selling cars will not work unless the government ties up with niche car companies. The Indians have bought Jaguar and Land Rover. The Chinese have also bought some.”

Yeah said Proton should not be about national pride any more. “It is about how to survive. It is a small player and it needs ways to work along with the big guns to make it.”

He further added, in Malaysia, GLCs were set up to have more Bumiputera participation in the private sector, which has seen several successful Malay entrepreneurs.

“But it has only created a few entrepreneurs. To make it work, these entrepreneurs should not depend on the umbrella company. They need to venture in and out of the country.

“This will make way for others to benefit from the establishment of GLCs.”