The recent decision to award the second 5G network license to U Mobile has sparked significant public concern, with many calling on the Malaysian Communications and Multimedia Commission (MCMC) to clarify its choice.
On Wednesday, MCMC listed several reasons for selecting U Mobile, noting the company’s track record in customer satisfaction and its relatively low complaint rate. However, U Mobile’s size—being the smallest player compared to contenders like TM, CelcomDigi, and Maxis—wasn’t the only issue raising questions. The telco's ownership has also come under scrutiny, with Singapore-based Straits Mobile Investments holding a 48.26% stake and DYMM Yang di-Pertuan Agong Sultan Ibrahim holding 22.31%.
This ownership structure has drawn commentary from Pasir Gudang MP Hassan Karim, who expressed concern on his Facebook page. Hassan argued that Prime Minister Anwar Ibrahim is treading a similar path as former PM Dr. Mahathir in fostering crony capitalism, with the U Mobile case illustrating the third and perhaps most concerning form of such favoritism.
"Under PM Anwar’s administration, there’s a unique, small but privileged group that seems shielded by specific legal protections often referred to as '3R' laws," Hassan wrote. "This elite group enjoys certain privileges, even in sectors where the law traditionally restricts royal involvement. This privilege was displayed when the federal government, through MCMC, granted the 5G license to U Mobile—a company where 22.31% of shares are held by an institution prohibited by Article 34(3) of the Federal Constitution from any commercial engagement."
So, what does Article 34(3) actually say? It specifies that the Yang di-Pertuan Agong "shall not actively engage in any commercial enterprise."
The issue, therefore, extends to whether His Majesty can be involved in such dealings—even passively. This isn’t the first instance where a company linked to the Agong has received government contracts. In February, REDtone, a firm partially owned by Sultan Ibrahim with a 17.34% stake, won a government contract worth over RM300 million.
Speaking to this author, Lawyer Khairul Azam Abdul Aziz highlighted the importance of the term "active" in Article 34(3).
“Inactive involvement isn’t a violation,” he said. “However, there’s no legal definition of ‘active’ in this context, so its meaning remains open to judicial interpretation.”
In other words, a court has yet to decide whether holding shares constitutes active involvement. Khairul added that the size of the shareholding could also influence whether an involvement is seen as active or passive.
Senior lawyer Haniff Khatri Abdulla provided further context, explaining that “active” involvement in legal terms usually implies participation in a company’s management decisions.
“If His Majesty were to appoint a representative after becoming Agong, he’d no longer be ‘active.’ This provision allows the Agong and Sultans some involvement in business,” Haniff stated. “But to clarify this fully, the courts would need to interpret the term ‘active’ in the Constitution.”
Haniff also noted to this author that concerns about conflicts of interest persist, even if the King’s involvement is technically inactive. He linked this issue to another proposal made by Sultan Ibrahim before assuming his role as Agong: putting the Malaysian Anti-Corruption Commission (MACC) under royal oversight.
Haniff had previously expressed his support for this idea but emphasized the need to prevent conflicts of interest.
“There’s a real risk of conflict if the King and Sultans are involved in business,” he said. “Business dealings often intersect with corruption cases. How would MACC objectively investigate companies with royal interests?”
According to Haniff, active involvement isn’t the only consideration; the King should ideally refrain from business altogether, though he acknowledged this would require amending the Constitution.
In addition to this, Haniff previously opined on the suggestion to put judges' appointments under royal power, that the states' Undang-Undang Tubuh needs to be synchronized with the Constitution on Article 34(3) so that the provision in the Federal Constitution also applies to states' royal institutions.
This brings up a larger question: should the Agong and Sultans be prohibited from engaging in business altogether? And if so, how would they maintain their dignity and livelihood?
Haniff offered a possible solution, suggesting a national agreement to allocate a portion of the GDP to a royal trust fund for the Sultans’ use.
“A clear formula should be proposed and presented to the Conference of Rulers for their endorsement. This formula could become a new constitutional schedule, outlining how each state receives its allocation,” he explained. “The royal trusteeship, led by the Keeper of the Rulers’ Seal, would adjust based on the economy—decreasing if GDP falls and increasing if it rises.
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