No point in having GLCs involved in agro-food supply chain, says economist

 

It makes more sense for GLCs to help restructure the agriculture sector rather than take part in ventures to expand the national agro-food supply chain, says economist Shankaran Nambiar.

PETALING JAYA: An economist has poured cold water on the government’s move to get government-linked companies (GLCs) to get involved in the national agro-food supply chain in a bid to strengthen food security.

Describing it as a waste of time, Shankaran Nambiar of the Malaysian Institute of Economic Research said he would rather see private companies take up such ventures, particularly those that were already active in the agro-food industry.

“GLCs should reserve their capital and expertise for more sophisticated industries,” he told FMT.

Nambiar said not all GLCs were familiar with the intricacies of the supply chain and would need time to familiarise themselves with them.

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Shankaran Nambiar.

“If the GLCs have to pick up details of all aspects along all points of the supply chain, starting now, there is going to be time lost.”

He said it would make more sense for GLCs to be involved in the restructuring of the agriculture sector by making it more technologically sophisticated.

“This, perhaps, is the rightful manner in which GLCs could intervene.”

However, another economist, Barjoyai Bardai of Universiti Tun Abdul Razak, claimed that the private sector’s dominance in the agro-food industry had led to greed among companies and the formation of cartels.

He said there had been successful GLCs, such as Petronas and Khazanah, which had become leaders in their respective fields, adding that GLCs would be able to use their experience and expertise to help expand the national agro-food ecosystem’s supply chain.

Barjoyai Bardai.

He also said GLCs would be better able to secure the land required to carry out extensive farming due to their strong links with the government and their ample resources.

But he acknowledged that there were risks in encouraging GLCs to get involved in the agro-food supply chain, saying he was especially wary of corruption and abuse of power.

“This is a challenge. National projects such as these are of interest to everyone, and we need to make sure we have good governance,” he said.

The two were commenting on the Economic Action Council’s decision on Monday to expand the agro-food ecosystem with supply chains led by GLCs, government-linked investment companies and government agencies. - FMT