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The role of government-linked investment companies (GLICs) and government-linked companies (GLCs) in contributing to the realization of the Malaysia Madani concept has sparked a debate on the effectiveness of GLCs in Malaysia’s economy.
Murray Hunter, a writer for Asia Sentinel, argues that GLCs are relics of centrally planned or communist economies.
Hunter suggests that GLCs operate from artificially created monopolies, where the means of production, distribution, and/or service are state-owned.
These monopolies limit competition and create higher prices for Malaysian consumers.
GLCs have also created a massive elite community of apparatchiks (a blindly devoted official, follower, or member of an organization, as a corporation or political party) who have become financially affluent and influential in business and government circles.
This has led to growing income inequality in Malaysia, with GLCs failing to enhance the income and well-being of Malaysians.
This is nonsense. Cut GLC management pays as well @anwaribrahim @rafiziramli https://t.co/h5QM2xKzTw
— Sean Wong 🇲🇾🏴 (@KeitSean) May 26, 2023
Furthermore, GLCs have crowded out many markets, which has distorted the quality of opportunity within the Malaysian economy.
According to World Bank data, the Malaysian GINI index, which measures income inequality (0=total income inequality, 100=total income equality), has fallen from 48.6 in 1984 to 41.2 in 2018.
GLCs comprise around RM445.6 billion or 25 per cent capitalization on the Malaysian Bursa or stock exchange.
Other studies indicate that GLCs control assets amounting to 51 per cent of Malaysia’s GDP.
GLCs Fail To Enhance Income And Wellbeing Of Malaysians
Hunter argues that GLCs have failed to meet their objectives and instead appear to be enhancing elites’ wealth at the cost of the rest of the Malaysian community.
This has created artificial market landscapes that purposely create barriers to entry and stifle innovation.
As a result, the Malaysian industry has lost its relative productivity position within the region, and Malaysia remains a low-cost labour economy today.
The debate on the effectiveness of GLCs in Malaysia’s economy is ongoing, with some arguing that they are necessary for protecting strategic industries and enhancing public welfare.
This is an affirmation of the huge income inequality in Malaysia ~ nothing more. https://t.co/HsMqSunszE
— khalid karim ARISE MALAYSIA (@khalidkarim) May 30, 2023
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