Mr Teck Chi Wong1
1University of Queensland, Brisbane, Australia
Biography:
Teck Chi Wong is a PhD Candidate at the School of Political Science and International Studies at the University of Queensland.
Abstract:
The financialisation literature has tended to regard financial capital as a disruptive force, which “intrudes” and “dominates” the economy or society. The case of Malaysia, however, shows that financialisation could be harnessed to protect the interests of powerful social forces. This is what Gramsci called “passive revolution”, where dominant elites are able to lead financialisation without losing power. In short, while financialisation is transformative, it is not necessarily disruptive. Using a State Transformation approach rooted in Gramscian political economy, this paper advances this argument by examining the financialisation of state capital in Malaysia through two sovereign funds, Khazanah Nasional Berhad and the now defunct 1 Malaysia Development Berhad (1MDB), which became dominant domestic asset owners and managers in post-Asian Financial Crisis Malaysia. They are what sovereign fund scholars call ‘sovereign development funds’, which seek to deliver national development while achieving competitive financial performance. I examine how Khazanah and 1MDB served contradictory political economy agendas under the Najib Razak administration (2009-2018). In particular, Khazanah remained committed to professionalism while the newly created 1MDB became the prime minister’s slush fund. Two findings are made. First, while financialisation has changed the form of state capital in Malaysia, it didn’t alter the country’s dominant power relations expressed by a powerful state capitalist class in pursuit of nation building and economic development. More importantly, sovereign funds shifted the location through which the dual and sometime contradictory dimensions of the Malaysian state – developmental and predatory – were managed, rather than eliminating corruption and rent seeking.