THIS IS HOW BADLY NAJIB REGIME RAPED THE ECONOMY: ‘MOSQUITO GLCS’ IN SUCH BAD SHAPE THEY ARE VIEWED AS ‘MORAL HAZARDS’ BY BANKS WHO DARE NOT LEND THEM MONEY

STAMPING out “mosquito government-linked companies” that bleed public coffers and ending monopolies are two ways Putrajaya can unlock the full potential of the Malaysian economy, said experts.

Other measures include upgrading the skills of workers and students, weaning companies from cheap foreign labour and investing in technology to increase productivity, they said at a university forum in Kuala Lumpur yesterday.

Such “mosquito companies”, said former treasury-secretary-general Mohd Sheriff Mohd Kassim, are in such dubious financial shape that they could not even procure loans as banks considered them “moral hazards”.

“Every ministry and state government have mosquito GLCs. They are small but they can still sting,” said Sherriff, an economist by training and former managing director of sovereign wealth fund Khazanah Nasional Bhd.

“They can’t get bank loans so they draw their budgets from their respective ministries. But the ministry’s budget is from public funds and meant for the public sector,”  Sheriff said at a HELP University forum titled Building a new Malaysia: agendas and aspirations.

Since they are in the private sector, these GLCs crowd out and compete unfairly with private companies funded by taxpayers.

The economy, Sheriff said, has the capacity to grow by 6% a year but it is only growing by about 4.6%. By reducing the government’s role in the private sector, more private firms can be nurtured, thus boosting overall economic growth.

Patrick Tay says monopolies have distorted prices for everything, from rice to high-end legal services. – The Malaysian Insight pic by Afif Abd Halim, January 15, 2019.

However, the government should maintain top-tier GLCs in strategic sectors, such as Khazanah Nasional, the Employees Provident Fund (EPF), Permodalan Nasional Bhd and Tenaga Nasional Bhd, he said.

“These GLCs maintain the highest levels of corporate governance. It’s the smaller ones in each ministry whose existence should be reviewed.”

Another economist, Patrick Tay, said Malaysians have to support the government to get rid of monopolies that have distorted prices for everything, from rice to high-end legal services.

“I’ve always been frustrated by how many monopolies exist in Malaysia. We need to get the public behind this (plan) and remove them,”   said Tay, a partner in PwC Malaysia.

“Only by removing them can we create an environment of dynamism and innovation,” Tay said.

Tay added that Malaysia must start investing in productivity boosting technology, such as automation, instead of depending too much on cheap foreign labour.

“Over the past decades, we have relied too much on (cheap labour) and are now struggling to keep it. We just have to bite the bullet and intensify capital investment in technology that will boost productivity.”

– https://www.themalaysianinsight.com