PUTRAJAYA believes in the dictum “the business of the government is not to be in business”, and will continue to reduce its direct participation in the equity ownership of companies, said Finance Minister Lim Guan Eng today.

The new administration wants the private sector to take the lead in driving the economy, compared to the previous government which only “talked about a private sector-led market economy”, Lim said at the Malaysia: A New Dawn investment conference in Kuala Lumpur.

“We have heard numerous complaints from investors and businessmen alike that our capital market is too illiquid, effectively controlled by several government-linked investment corporations,” he said, adding that it had resulted in a lower MSCI Emerging Markets weightage of only 2.48%.

Lim said the government will reduce equity ownership of companies to allow listed entities to have higher average daily volumes for Bursa while improving market liquidity.

“The above move is a stone that will help us kill two birds. We will be unleashing the power of the private sector and reduce the crowding out effect caused by the government.

“In addition, we will also be able to gradually realise the value of government owned assets and utilise these proceeds to pare down our debt obligations.”

He said he will end the direct negotiation practice done by the previous government in relation to public-private partnerships which had led to corruption.

He said contractors had carried out government projects such as building new affordable homes, schools, police stations, fire stations and army camps, in exchange for government land, instead of being paid in cash.

“But unfortunately, they were negotiated directly so we do not know what is the real cost of the public project, or the real value of the government land being sold or exchanged. Under such opaque terms, corruption, extraordinary profits for crony companies and poor returns on investment were rife.”

“The new true PPP model, or what I would term as PPP 2.0, will decouple the land swap by carrying out open auctions for the land to be sold, while at the same time executing an open tender for the project to be built.”

Lim added that will be no cancellation of PPP projects. “They will be continued but under a different format and mechanism.”

Over the longer term, a tax reform committee will review and reform of the overall tax system, he said.

The committee will be given the mandate to minimise the tax gap, diversify the tax revenue and make the tax system more “efficient, neutral and progressive”, he said. It is also tasked to explore ways to minimise tax leakages and evasion, he added. – October 9, 2018.