Four Malaysian states – Kedah, Kelantan, Perlis and Terengganu – have formed a joint company to pool their resources and share wealth. While it remains to be seen whether this new venture will attract investments to the four states governed by Parti Islam Se-Malaysia (PAS), if the goal was to consolidate political power, it is both a timely and strategic move.
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In early September, it was reported that the four state governments ruled by the federal opposition coalition Perikatan Nasional (PN) had banded together to set up a company called SG4 Group Sdn Bhd. The objective of this company is to pool the resources of the four relatively rural states to share wealth equitably, with each state holding a 25 per cent stake in the company.
According to the company’s adviser, former prime minister Mahathir Mohamed, Terengganu, Kelantan and Kedah contain rare earth elements, while Perlis has dolomite, which is used in processing these elements. Terengganu and Kelantan also possess valuable oil and gas resources, while Kedah and Perlis have agricultural land. Hence, the five key clusters the group will focus on are infrastructure and logistics; trade, investment and industry; agriculture and food security; education and human capital; and new sources of revenue. Each state will appoint an executive council member to lead each cluster.
The idea of clustering states together is not new. When Pakatan Harapan – then Rakyat – governed the states of Penang, Perak and Selangor following the 2008 general election, there were attempts at common policy platforms. However, the most that was achieved in that first Pakatan term was hosting chief minister summits, bringing together the three – and then later only two, when Perak switched hands to Barisan Nasional (BN) – states alongside their aides and civil servants to discuss administrative matters such as water and land policy.
The SG4 Group’s innovation, based on the idea of pooling resources and sharing wealth, is therefore the first of its kind.
State governments, constrained by an overly centralised federal structure in which states have relatively few responsibilities and receive minimal revenues, have continually expanded initiatives to take control of their assets through state economic development corporations or state-level government-linked companies. Successful examples include Johor Corporation and Menteri Besar Selangor Incorporated. While setting up a multi-state company is unusual, whether it will achieve its chief purpose of attracting investment remains to be seen.