POLITICAL economist Edmund Terence Gomez has urged Pakatan Harapan to set up a reform committee to look at overhauling government-linked companies (GLCs), which he said had fostered a rent-seeking culture and political patronage.

Gomez said affirmative action-based policies had been abused, undermining the rise of entrepreneurial firms, while also contributing to rampant corruption, as seen in the case of GLCs related to statutory bodies such as Felda, Mara, and Lembaga Tabung Haji.

“We need to weed out predatory policies from the progressive ones,” he told attendees at the launch of the Malaysia GLC Monitor 2018 report at Universiti Malaya today.  

“The purpose of this report is for the government to look at this monster. I don’t mean to get rid of GLCs, but they must get it right,” he said.

Gomez also referred to a comment by Dr Mahathir Mohamad in the run-up to the May 9 polls, when the latter described GLCs as “monsters”.

“Why is there no review yet of what Dr Mahathir himself called monsters?”

Through GLCs, substantial shareholdings, and joint ownership, the government has a major equity interest in 209 companies, nearly a quarter of the firms listed on the Bursa.

The report on GLCs detailed a trend of intervention in publicly-listed firms over the decades where the government took over privately-owned firms when there was no necessity to do so.

The main objective of these interventions was to nurture privately-owned domestic enterprises that contributed to economic development.

However, numerous takeovers in the construction and property development sector may have been tied to extensive political patronage by Umno, the report also said.

Gomez, who specialises in state-market relations and links between politics, policies, and capital development, said the new government must be more transparent in its intervention through substantial shareholdings and joint ownership.

The professor with Universiti Malaya’s faculty of economics also pointed to the minimal presence of GLCs in the industrial products and technology sector, which he said reflected badly on the quality of government intervention.

“In spite of intervention in the form of substantial shareholdings and joint ownership, where government institutions have a major equity interest in privately-controlled quoted companies… through selective patronage, there is little evidence that such enterprises have emerged.” – August 28, 2018.