PM: GLCs must not stifle private sector


  • Economy
  • Thursday, 31 Oct 2019

Corporate summit: Dr Mahathir and Zeti at the conference. With them are Economic Affairs Minister Datuk Seri Mohamed Azmin Ali (third from right) and Entrepreneur Development Minister Datuk Seri Mohd Redzuan Yusof (second from left).

KUALA LUMPUR: The call has become louder for government-linked companies (GLCs) to not crowd out the private sector, and to reassess their priorities.

The Prime Minister said GLCs and government-linked investment companies (GLICs) must re-evaluate their level of participation in corporate Malaysia.

Speaking at the Permodalan Nasional Bhd (PNB) Corporate Summit 2019, Tun Dr Mahathir Mohamad said this was necessary in order to build a solid and inclusive future for the country.

While these companies were initially set up with specific mandates, he said GLCs and GLICs had now become “very involved” in almost every sector of the economy.

“While this has created corporate juggernauts, it needs to be recognised that it is not their role to smother the opportunities of others.

“They should not crowd out and directly compete with the private sector, especially in non-strategic businesses, ” he said in his opening address.

Prime Minister Tun Dr Mahathir Mohamad delivering his opening speech at PNB Corporate Summit 2019. AZMAN GHANI/ The StarPrime Minister Tun Dr Mahathir Mohamad delivering his opening speech at PNB Corporate Summit 2019. AZMAN GHANI/ The Star

Dr Mahathir said there were some exceptions to this, such as in the manufacturing sector, whereby its steady growth had been underpinned by strong private investment.

He said multinational corporations from more than 40 countries have invested in over 5,000 Malaysian companies in the manufacturing and related services sectors.

“This is a clear indicator of the positive impact of allowing the private sector to take the lead.

“This is not to say the GLCs and GLICs should not play a role, but they – especially the GLICs - all have distinctive purposes, ” he said.

PNB, he noted, had been set up with a clear mandate on affirmative action to increase bumiputra participation and ownership in the corporate sector – and had done an excellent job.

Others include LTAT – to generate returns for the pensions of members of the Armed Forces – and Retirement Fund Inc (KWAP), which is the pension fund for

the civil service.

“These companies have well-established and clear mandates.

“Unfortunately, despite this, they were previously made to serve the interest of self-serving and greedy leaders, ” he said, adding that the government had “no business to be in business”.

GLCs and GLICs, he said, must be professionally-run and should not stifle private-sector competition.

A competitive landscape, he added, would ensure healthy competition and efficient outcomes.

Dr Mahathir said the imbalance between public and private sector participation in corporate Malaysia, if left unchecked, could prove detrimental to the country’s future.

“GLICs and GLCs must focus on creating strong institutions and establishing the necessary infrastructure and supporting policies to fuel the growth, and by doing so, become a catalyst that will spur the private sector, ” he said.

The PNB Corporate Summit was organised by PNB Research Institute Sdn Bhd, the research unit of PNB.

PNB group chairman Tan Sri Dr Zeti Akhtar Aziz, in her welcoming speech, said the summit aimed to surface the important issues relevant to the corporate sector.

The private sector, she said, had a key role in driving and achieving the country’s sustainable growth agenda.

“Towards this end, and echoing the government’s call for transformation, GLICs and GLCs must be conscious of their role in the economy and for the need to re-evaluate their priorities, ” she said.

She added that these companies must take on an important role in propelling greater private-sector participation to contribute to Malaysia’s long-term sustainable growth.

Later, during a panel session, Khazanah Nasional Bhd managing director Datuk Shahril Ridza Ridzuan said corporates should not be deemed as “GLCs” just because they had GLCs or GLICs as investors.

“Just because Khazanah happens to own shares in CIMB (Bank), it doesn’t mean CIMB should be considered a GLC.

“It has to compete head on with all the other commercial banks – as well as with the fintech companies and other disruptors, ” he said, citing the bank as an example.

The best thing that the government could do, he said, was to “unshackle” these companies from having to act like GLCs or government entities, and to enable them to focus on improving their business and competing on a level playing field.

“And if this means being disruptive to your own workforce, or shedding jobs, then you should just do it, ” he said.

He noted, however, that there were some national monopolies, such as Tenaga Nasional Bhd, for which a slightly different approach was needed.

which is the pension fund for the civil service.

“These companies have well-established and clear mandates.

“Unfortunately, despite this, they were previously made to serve the interest of self-serving and greedy leaders, ” he said, adding that the government had “no business to be in business”.

GLCs and GLICs, he said, must be professionally-run and should not stifle private-sector competition.

A competitive landscape, he added, would ensure healthy competition and efficient outcomes.

Dr Mahathir said the imbalance between public and private sector participation in corporate Malaysia, if left unchecked, could prove detrimental to the country’s future.

“GLICs and GLCs must focus on creating strong institutions and establishing the necessary infrastructure and supporting policies to fuel the growth, and by doing so, become a catalyst that will spur the private sector, ” he said.

The PNB Corporate Summit was organised by PNB Research Institute Sdn Bhd, the research unit of PNB.

PNB group chairman Tan Sri Dr Zeti Akhtar Aziz, in her welcoming speech, said the summit aimed to surface the important issues relevant to the corporate sector.

The private sector, she said, had a key role in driving and achieving the country’s sustainable growth agenda.

“Towards this end, and echoing the government’s call for transformation, GLICs and GLCs must be conscious of their role in the economy and for the need to re-evaluate their priorities, ” she said.

She added that these companies must take on an important role in propelling greater private-sector participation to contribute to Malaysia’s long-term sustainable growth.

Later, during a panel session, Khazanah Nasional Bhd managing director Datuk Shahril Ridza Ridzuan said corporates should not be deemed as “GLCs” just because they had GLCs or GLICs as investors.

“Just because Khazanah happens to own shares in CIMB (Bank), it doesn’t mean CIMB should be considered a GLC.

“It has to compete head on with all the other commercial banks – as well as with the fintech companies and other disruptors, ” he said, citing the bank as an example.

The best thing that the government could do, he said, was to “unshackle” these companies from having to act like GLCs or government entities, and to enable them to focus on improving their business and competing on a level playing field.

“And if this means being disruptive to your own workforce, or shedding jobs, then you should just do it, ” he said.

He noted, however, that there were some national monopolies, such as Tenaga Nasional Bhd, for which a slightly different approach was needed.

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