The Role of GLCs in the Modern Malaysian Economy
There has been much debate of late on the role of Government-Linked Companies (GLCs) in Malaysia. They are seen as the source of important tax revenues but are also claimed to have crowded out investments in the private sector. What is clear is that GLCs are a dominant presence. According to an OECD Trade Policy Paper, Malaysia ranks fifth-highest in terms of GLC presence among large firms.
Many GLCs were created to fulfil a socio-economic objective. In Malaysia, GLCs like PNB and Felda, were set up to increase the share of wealth of the Bumiputeras in the economy. But some are also profitable concerns in their own right. Our national investment vehicle, Khazanah, plays a crucial role in increasing the nation’s income from strategic investments within and outside Malaysia, similar to the role played by Singapore’s Temasek Holdings.
But is the Malaysian economy too dependent on our GLCs as contributors to the national coffers and providers of jobs, and are our GLCs discouraging private sector investments? Further, as technology enables rapid flows of information including economic and business data, as robotics and automation take over human tasks, and as business agility and nimbleness become more important than size, what is the role to be played by GLCs in the new economy?
