PETALING JAYA: A think tank has urged the government to do more than divest itself of some pieces of property in order to significantly reduce the national debt.
Institute for Democracy and Economic Affairs (IDEAS) director Laurence Todd told FMT he welcomed the prime minister’s statement that Putrajaya was considering disposing of non-essential properties, but he said it would not cause a big dent on the national debt.
A major strain on government finances, he said, was operational expenditure, including the cost of running government-linked companies (GLCs).
He called for a comprehensive review of the objectives and performance of GLCs in and out of the country.
“The aim should be to establish clear goals that can be monitored,” he said.
He noted that the government held majority stakes in many big Malaysian companies and said this meant it was highly exposed to the Malaysian economy and would suffer losses during a recession.
“Instead of holding stakes of up to 70% in some companies, the government should hold 1% in more companies and let them run independently,” he said.
He also noted that the government held 40% of the share market and said it should look at eventually reducing the amount to just 10% to reduce its exposure to market adversities.
Government ownership of majority stakes also had the potential to suppress the development of the private sector, he added.
He praised the Norwegian sovereign wealth fund’s strategy of investing in overseas markets and holding small stakes in Norwegian companies, saying this was to avoid influencing domestic commercial development.
Todd also suggested that the government emulate South Korea by investing in industrial development, noting that the East Asian country had been successful in developing renowned brands like Samsung.
“The government has to create funds that way,” he said.
Subang MP Wong Chen said the government should minimise its control of ports, utility services as well as several telcos and at least two banks.
He proposed giving such GLCs three to five years to turn themselves around and replacing their executives if they fail to do so.
“Appointments should not be politically motivated,” he said.
Nazari Ismail, a professor at Universiti Malaya’s Faculty of Business and Accountancy, called for transparency in the sale of government-owned properties.
He said the government must ask for at least the market prices and ensure that the buyers are not politically connected.