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Listing GLCs to rejuvenate national economy

  • The monetization of non-crucial and non-strategic government assets will create an inflow of new funds to help the government tackle any existing revenue shortfall.

Sin Chew Daily

Council of the Elders chairman Tun Daim Zainuddin has proposed to list government-linked companies to raise funds to stimulate the country's economy.

In addition to generating market values and allowing Malaysians to invest in these companies, the move will also help consolidate overall public confidence towards government financial sustainability and economic versatility.

Daim has proposed to allow profitable GLCs to list their shares publicly. Their listing will give Malaysian investors an additional option while jazzing up stock market activities and boosting investment sentiment.

Analysts are of the opinion that there are still some companies under Petronas that have good prospects of going public, including lubricant manufacturer Engen Petroleum of South Africa.

The government, nevertheless, must take into consideration a host of other factors, such as the risk of lost lucrative bonuses the government is currently entitled to.

However, the government can still consider other related companies, but should control certain amount of stake in companies involving national interest so as not to jeopardize public interest.

By owning shares of such companies, members of the public will have the opportunity to participate in businesses of national importance to ensure they will not fall into the arbitrary control of a handful of vested interests.

In the past the government was in full control of many key businesses in this country, jostling private businesses out of the market, which is not favorable to the healthy growth of the local equity market. Moreover, the sheer presence of political intervention has significantly eroded the performance of these companies' management and businesses.

The public listing of GLCs helps improve these companies' management structure and development strategies, forcing them to hire their technical and management expertise based on meritocracy and not race. This will in turn help reverse the existing poor operational efficiency and abuse of power.

By going public, these companies are obliged to adhere to specific requirements in their management structure and information disclosure system, among other things.

To meet such requirements, these companies have no choice but to enhance their operational transparency, eradicate political intervention and administrative irregularities in order to become more economically efficient.

The government can marketize non-crucial and non-strategic assets by way of floating their shares and leasing idle government lands, assets and buildings. The monetization of these non-crucial and non-strategic government assets will create an inflow of new funds to help the government offset any existing revenue shortfall.

Having said that, there are major challenges that need to be addressed. Given the vast and deep government involvement, these GLCs will have to first undergo major revamps and reforms to ensure operational efficiency and complete freedom from government control.

The government needs to conduct in-depth studies on how to manage such a monumental government-business complex before implementing various measures to relieve the burden of public debts.

 

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