Fight the disease, not the symptoms

23 Aug 2018 / 09:22 H.

    WILL Prime Minister Tun Dr Mahathir Mohamad step down on May 9, 2020 after holding office for two years? Nine years after being appointed as independent directors of public-listed companies (PLCs), why must shareholders vote for their reappointment every year instead of every three years?
    Both issues spotlight the merits and drawbacks of term limits.
    In theory, term limits are necessary to prevent a concentration of power at top echelons of the political hierarchy while a tenure exceeding nine years could threaten the independence of a PLC director.
    Under the Securities Commission's Code on Corporate Governance, extending the tenure of an independent director of a PLC beyond the ninth year requires the approval of shareholders annually.
    Arguably, if the electoral process is fair to both incumbents and challengers, elections are held regularly and voters are given a real opportunity to terminate the tenure of the prime minister (PM), why is there a need for term limits?
    Similarly, if all directors must be re-elected at regular intervals by shareholders at the annual general meeting, doesn't this render the annual re-election of independent directors redundant?
    One argument against term limits is it restricts the options available to voters and shareholders.
    Richard Briffault, professor of legislation at Columbia Law School and vice-chairman of Citizens Union in the US, describes term limits as "the denial of the democratic right to vote for the candidate of voters' choice".
    A classic example is the US. Because American presidents are legally prohibited from contesting for a third term of office, President Barack Obama was forced to be a non-contender in the November 2016 presidential elections.
    Assuming term limits are desirable, a more difficult question is determining how long should a person remain in office. Too short a term could render the leader ineffective while a too-long tenure risks entrenching the incumbent.
    Another related issue is whether term limits should also apply to state chieftains. In the US, only 37 out of 50 states impose term limits for governors while similar restrictions for legislators prevail only in 15 states.
    Interestingly, Promise 12 in Pakatan Harapan's (PH) manifesto titled "Buku Harapan" adopts an all-encompassing approach – the tenure for the prime minister, mentri besar and chief minister is limited to two terms.
    Writing in The Chronicles of Philanthropy, Rick Moyers points out two disadvantages of term limits. First is the lack of continuity, particularly if one term is very short.
    "Making important decisions about an organisation's mission and direction requires in-depth knowledge and an understanding of history and context," he says.
    "Frequent changes of leaders may risk the organisation becoming "rudderless," he suggests.
    Second, term limits can be used as an excuse not to address performance issues, he adds. Why bother to discuss a board director's poor performance if the incumbent will be rotated out soon, he suggests?
    In the US, few presidents have attempted to remedy deep-seated intractable economic problems. One example is the typical American worker's stagnant earnings totalling US$44,500 a year; adjusted for inflation, this is roughly the same pay as 40 years ago.
    Why initiate remedial action that could take years to implement, requires elusive bipartisan support, risks angering strong vested interests while the benefits are visible only after the incumbent's eight-year tenure?
    In Malaysia, after nine years, independent directors must be re-elected annually or be re-designated non-independent – a requirement that could discourage companies from extending their tenure. Lacking capable and highly experienced directors could inhibit PLCs from venturing into areas that are high risk but profitable and with long lead times.
    Proponents for term limits argue in developing countries where the ruling party has held the reins of power for decades, possesses the ability to utilise vast public resources during the election campaign and can amend electoral procedures to enhance their chances of winning re-election, term limits may be deemed essential.
    Malaysia's recent 14th General Election (GE14) is one example. The Election Commission disallowed the registration of the opposition coalition PH, polling was held on a Wednesday instead of the more usual Saturday while Mahathir's photo was cut out from campaign billboards.
    Ironically, such unfair tactics made voters even more determined to defeat the ruling Barisan National coalition.
    Instead of instituting term limits, some analysts argue a two-pronged approach is needed – reduce the power of political and corporate decision-makers and institute strong checks and balances.
    Writing in Americas Quarterly, Patricia Navia argues the push to eliminate presidential term limits should be seen as a symptom of an ill-functioning democracy rather than its cause. It would be wiser, therefore, to fight the disease itself – not the symptoms, she adds.
    Whether in politics or in the corporate world, the disease requiring an urgent cure is a leader enjoying untrammelled power without significant restraints.
    Opinions expressed in this article are the personal views of the writer and should not be attributed to any organisation she is connected with. She can be contacted at

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