The Malaysian Insight

RESTRUCTURING government-linked companies (GLCs) and putting more focus on boosting agriculture productivity are among initiatives that should be included in Budget 2020, said a political economist.

Universiti Malaya’s Prof Edmund Terence Gomez told The Malaysian Insight other measures in the upcoming budget should aim at increasing the wages of low-income Malaysians.

“Since the government talks about ‘shared prosperity’, it must prove this through its policies in the budget,” Gomez told The Malaysian Insight in reference to the Pakatan Harapan administration’s economic agenda.

The “shared prosperity” economic agenda is aimed at sustainable economic growth and reducing wealth inequality among all communities and regions in Malaysia.

Proper restructuring of GLCs should be in the budget if the government is serious about curbing wastages said Gomez, who recently completed a book examining the government’s wide network of GLCs.

His book, MoF Inc, argued that the labyrinthine structure of GLCs under the federal and state governments was created by the former Barisan Nasional administration as vehicles to reward political loyalists.

A restructuring exercise will allow the government to assess whether GLCs are running at full capacity and making money for the government or if they are bleeding the public coffers, he said.

“Restructuring the GLCs has never been done but this is where most of the wastages are occurring. Are they running at full capacity and run by truly competent people?” said Gomez of UM’s economics and public administration faculty.

Gomez also said the Finance Ministry must reveal how much it has divested under MoF Incorporated and what is being done about the ailing companies under it.

“I would also look at statutory bodies and their control of GLCs and to ensure they are well functioning and generating the revenue that statutory bodies need to be self sufficient.

“Or are they tools of patronage so much so that they have to be dependent on the Finance Ministry?”

The government must also put more money in research and development for boosting productivity in agriculture and fisheries as these two industries are key to reducing income disparity between rural and urban areas.

“What incentives are there to promote productivity in those sectors because they are extremely important when it comes to reducing wealth and income inequality.

“The poverty rates are much higher in rural areas and among people in these sectors. So what are the mechanisms to help them by bringing new technology to these sectors?”

The disparity between the richest and poorest Malaysians, said Gomez, is growing and the number of poor people is bigger than the official figures suggest.

“The government says that the bottom 40% still need cash aid. In real terms that means about 12 million people.

“So what does that say? That 12 million people still need cash aid? What does that say about wealth disparity in this country?

“There is a lot to think about and weave into the budget but they will have to look at these issues.” – September 29, 2019.