GLC reforms a must after GE14, says economist
After the 14th general election (GE14), the government of the day must have the courage to introduce reforms related to government-linked companies (GLCs) says a prominent economist.
Speaking to FMT on the sidelines of a talk at Sunway University, Woo Wing Thye of the Jeffrey Cheah Institute said there were too many GLCs in the country crowding out the private sector.
“Nowadays, the GLCs are operating in too many sectors like property and medicine. This has to be cut back drastically.”
Woo said there wasn’t much that GLCs could do better than the private sector as GLCs had less incentive to be efficient.
“If we look at Malaysia Airlines, the service they provide can also be provided by other private sector players. The difference is that when Malaysia Airlines doesn’t do well, they can count on being continually bailed out by the government.”
On the other hand, he said, private sector players had no choice but to be efficient. In some cases, he added, they had to be extraordinarily efficient to earn enough to pay the taxes to support their loss-making GLC competitors.
Woo said GLCs had also been misused for political patronage, which affected their ability to operate efficiently.
“The government should greatly reduce the range of activities that GLCs can participate in.”
Last year, Universiti Malaya academic Edmund Terence Gomez had called for an operational oversight body for GLCs and government-linked investment companies (GLICs).
Gomez, an expert on corporate Malaysia and politics, said control of Malaysia’s corporate sector was presently concentrated in the hands of the finance minister.
He said this after researching the control and ownership of seven federal GLICs: Minister of Finance Inc, Khazanah Nasional Bhd, Permodalan Nasional Bhd, Employees Provident Fund, Lembaga Tabung Angkatan Tentera, Lembaga Tabung Haji and Kumpulan Wang Persaraan.
According to Gomez, these seven GLICs control 35 of the top 100 listed companies in the country.
Source: Free Malaysia Today
This article first appeared in Free Malaysia Today on March 8, 2018
