The two most powerful positions in corporate management are of chief executive officer (CEO) and chief financial officer (CFO). The CEO is the boss and sets overall direction. The CFO controls the purse-strings.
Quite often good CEOs and CFOs will disagree. CEOs by nature and expectation have to seek new growth opportunities to expand corporate profits. They would tend to emphasise the rewards over the risks. CFOs are entrusted with financial stewardship. And when it comes to stewardship, being conservative and risk-averse are the preferred traits.
So, that’s how it works in the corporate world. No reasonable board of directors would countenance the CEO also holding the CFO position. There is just too much at stake to have one person holding the two most senior positions.
That’s also how it’s supposed to work in government. The prime minister leads and the finance minister tells him what the government can afford. Perhaps the most celebrated such pair in recent history was telegenic British prime minister Tony Blair and dour Chancellor Gordon Brown.
Over here in Malaysia though, no eyebrows are raised that the prime minister is also the finance minister. This practice began during prime minister Mahathir’s tenure, was continued by Abdullah Badawi and now Najib has continued the practice.
This might explain the deteriorating state of government finances. By 2009, we would have run 12 consecutive years of budget deficits. Our federal government debt alone is expected to reach RM414bn in 2009. This is more than double the RM206bn level nine years ago in 2000.
Put in other ways:
1. Federal government debt today is more than half the size of our entire RM741bn economy.
2. This is a burden that our youth will have to repay. The debt is equivalent to RM20,700 per person, based on about 20m youths (defined as Malaysians aged 39 and below.
Note that the actual debt burden is higher. The RM414bn number excludes debt incurred by other government-linked corporations (GLCs) such as PLUS Expressways and Tenaga Nasional. Other countries which have not embarked on extensive privatisation programmes incur road construction and electrification costs as part of their national budgets. PLUS and Tenaga alone among the GLCs have RM33.3bn of borrowings – equivalent to 8% to the federal government debt. On top of that, there is borrowing by other government-linked entities such as Syarikat Perumahan Nasional Berhad (SPNB), Putrajaya Holdings Sdn Bhd …..
Even more concerning is that we incurred the increasing debt even while we reaped the windfall gains from high oil prices. More in my up-coming book ….
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6 comments:
Aiyah, you know how POWDERFUL the Finance Minister portfolio is??? After Daim, all the PMs also want to be one...
Aiyah, you know how POWDERFUL the Finance Minister portfolio is??? After Daim, all the PMs also want to be one...
spot on. check and balance must be there.
an entrepreneur might be the "date to dream" kind but he needs someone a distance from his dreams to provide a reality check.
the difference is an entrepreneur gamble with his money or borrowed funds which he is liable to repay.
whereas a Malaysian Prime Minister may seemed to be able to spend tax payers' money with impunity and without remorse, accountability and the responsibility to reimburse any lost via wastage, negligence or abuse.
Tunku Abdul Rahman had Tan Siew Sin as a misery check and balance and once joked about how the Finance Minister is controlling him.
having the PM being also the FM is a practice started by a certain doctor.
being politicians, controlling the nation's wealth may give enormous power and influence to an individual giving rise to the risk that people can't distinguished what belongs to the state, the people, the party or his missus.
either that, Malaysia must have the most financially astute prime ministers in the world.
Maggie T, Winston Churchill, never assume such capacity
they are powerful because we chose them! simple logic.
Salam
Makes looting easier. Further, hire some pretend 'know-nothings' like in the PKFZ top facilitate abuse. Still, Malaysia can always claim that we are better than Zimbabwe.
This is cool!
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