‘Responsible privatisation’ can spur recovery, says economist

 

Economist Geoffrey Williams says ‘responsible privatisation’ of GLCs can help the government raise funds and cut costs.

PETALING JAYA: An economist has proposed what he calls “responsible privatisation” to minimise government interference in the economy and promote growth as Malaysia attempts to recover from the pandemic’s effects.

Geoffrey Williams of the Malaysian University of Science and Technology said this transfer of ownership or management of public assets to the private sector would be aimed at maximising not only their economic value but also their social value.

In contrast to traditional notions of privatisation, he said, social benefits would weigh heavily against the potential for maximum profit.

“’Responsible’ means taking everything into account, not just finances. For example, selling a public company to a private buyer who will cut jobs to raise profits or who has a bad environmental record would be excluded. Selling to modern day slave traders would also not be allowed.

Geoffrey Williams.

“Even if the buyer offered a high price, the social and environmental costs would outweigh the sale price,” he said.

He said such a shift in policy would help the government raise funds and cut costs that had been directed toward these assets and would give SMEs in the private sector more business opportunities, both key factors in post-pandemic recovery.

“It also provides options for people who lost their companies and might be interested in taking on an existing asset. And it creates opportunities for community groups to develop social enterprises in areas that need help in recovering by creating meaningful work,” he said.

Williams said the central tenet should be fostering a market with private enterprise as its core, with the government playing a supporting role without undue interference.

“There is a lot of wastage in the public sector. So, responsible privatisation would aim to sell enterprises that are non-critical, non-core and not strategic or which duplicate private functions,” he said.

He referred to a Universiti Malaya research that found the top 35 GLCs had as many as 68,000 subsidiaries combined.

“Not only do these crowd out SMEs, which is a big gripe about GLCs, they are channels for patronage and corruption,” he said.

Williams acknowledged that it would be a bold shift for the country, but said it was achievable with Malaysia’s current young talents.

“It isn’t as easy as a fire sale. It does take some management and leadership brains to pull it off. But I think Malaysia has that talent pool in its younger generation, and that’s where this policy is aimed,” he said. - FMT