ECONOMY Minister Mohd Rafizi Ramli has announced that the government is studying a law to curb the rent-seeking culture in Malaysia.

He said locals have been renting out their businesses to foreigners for a long time without any law to stop the practice.

Rent-seeking is an economic concept that occurs when an entity seeks to gain added wealth without any reciprocal contribution of productivity. 

A more colloquial way of describing this behaviour is “privilege seeking.”

The rent-seeking concept was named by Gordon Tullock. According to him, corrupt politicians utilise their power to engage in rent-seeking activities. To gain benefits, rent seekers may bribe politicians.

Limited resources are used to pursue wealth transfer rather than creating wealth anew.

Now, let’s analyse the concept of rent-seeking in government bailouts.

The Malaysian government is in the habit of using taxpayer’s money to bail out companies that perform badly. It interferes with the governance of private corporations, calling it nationalisation.

Poor-performing and highly indebted companies such as Malaysian Airlines Bhd and Boustead Naval Shipyard Sdn Bhd (BNS), have continuously received government money to avoid winding-up.

These companies have no value. BNS is currently in charge of completing the littoral combat ship project.

But one question to ponder, will a new law be able to combat this form corruption? – June 22, 2023.

* Matilda George reads The Malaysian Insight.

* This is the opinion of the writer or publication and does not necessarily represent the views of The Malaysian Insight. Article may be edited for brevity and clarity.