Port Klang Free Zone or PKFZ is an integrated 1,000-acre Free Commercial and Industrial Zone providing facilities for international cargo distribution and consolidation centre. PKFZ is situated in Port Klang, adjacent to port, the world’s 15th ranked port in 2009 in terms of throughput volume. However, problems occur when few Malaysia’s politician has been charged in persuading the government to spend an additional RM227m on acquiring additional land for the Free Zone development.
This paper starts with the definition of corporate governance and discussion about the Port Klang Free Zone scandal. The discussion included the review of Port Klang scandal, reasons and impact of the scandal to Malaysian.
2.0Definition of Corporate Governance
Corporate Governance refers to the way a corporation is governed. It is the technique by which companies are directed and managed. It means carrying the business as per the stakeholders’ desires. It is actually conducted by the board of Directors and the concerned committees for the company’s stakeholder’s benefit. It is all about balancing individual and societal goals, as well as, economic and social goals. Corporate Governance is the interaction between various participants (shareholders, board of directors, and company’s management) in shaping corporation’s performance and the way it is proceeding towards. The relationship between the owners and the managers in an organization must be healthy and there should be no conflict between the two. The owners must see that individual’s actual performance is according to the standard performance. These dimensions of corporate governance should not be overlooked. A definition by the Finance Committee on Corporate Governance in Malaysia in the Report on Corporate Governance (2002) stated that: “Corporate governance is the process and structure used to direct and manage the business and affairs of the company towards enhancing business prosperity and corporate accountability with the ultimate objective of realizing long term shareholder value, whilst taking account the interests of other stakeholders”. This indicates that corporate governance is not only applied to the shareholders but the other stakeholders as well.
Corporate Governance deals with the manner the providers of finance guarantee themselves of getting a fair return on their investment. Corporate Governance clearly distinguishes between the owners and the managers. The managers are the deciding authority. In modern corporations, the functions/ tasks of owners and managers should be clearly defined, rather, harmonizing.
Corporate Governance deals with determining ways to take effective strategic decisions. It gives ultimate authority and complete responsibility to the Board of Directors. In today’s market- oriented economy, the need for corporate governance arises. Also, efficiency as well as globalization are significant factors urging corporate governance. Corporate Governance is essential to develop added value to the stakeholders.
Corporate Governance ensures transparency which ensures strong and balanced economic development. This also ensures that the interests of all shareholders (majority as well as minority shareholders) are safeguarded. It ensures that all shareholders fully exercise their rights and that the organization fully recognizes their rights
3.0Port Klang Scandal
The Port Klang Free Trade Zone, a commercial and industrial project south of the capital, was conceived as a 1.82 billion ringgit (539 million dollar) venture constructed over 1,000 acres (405 hectares). However, what started off as a 1.8 billion Malaysian ringgit ($516.2 million) project has ballooned into one which could cost more than 10 billion ringgit following an acrimonious pullout by the Jebel Ali Free Zone Authority.
The story started when, according to the Price Waterhouse Coopers report, Kuala Dimensi sold the land to the Port Klang Authority for...