Kuala Lumpur, 31 January 2019- Today, IDEAS has published a Policy Brief titled: “Responsible Privatisation: A New Malaysian Model of the role of government in the economy”, written by Professor Dr Geoffrey Williams. In the paper, Professor Williams considers the history of privatisation in Malaysia and how the government should reflect on these lessons to develop a new model of privatisation that stimulates the private sector, reduces government debt and delivers social benefits. The paper follows announcements by the government to ”monetise” government assets and reduce the role of government in the economy. However, the government has yet to provide clarity on what reforms are envisaged and concerns have been raised over whether the government will take the necessary action to reform the complex structure of Government-Linked-Companies (GLCs) that has developed.
In the paper, Professor Williams makes the following conclusions:
- Privatisation and the reform of GLCs offers a new opportunity to create a vibrant, innovative and entrepreneurial commercial sector that can help Malaysia rise to the challenges of the next phase of economic development in the high-income world of the fourth industrial revolution. Privatisation will also need to be a component of the government’s strategy to address the national debt.
- Previous attempts at privatisation have raised significant concerns, including the transfer of assets to connected individuals and vested interest groups; privatisation of profits and socialisation costs; and the concern that the social and development aim of GLCs are lost to market-driven private interests.
- To address these concerns, Malaysia needs a new model based on the principles of Responsible Privatisation. Under Responsible Privatisation, the government can dismantle the channels of patronage that have emerged by placing large numbers of GLC subsidiaries into the private sector within new business models including social enterprises, mutual ownership schemes and employer buyouts. This has the potential to increase wider capital ownership and improve entrepreneurial development by transferring existing entities into the hands of community-based business people.
Commenting on the release of the paper, Ali Salman CEO of IDEAS said that: “This paper is an important contribution to the ongoing debate about the government’s role in the economy. The government should move forward with concrete measures to reform and reduce the role of GLCs in the economy – and this paper shows that this can be done while focussing on the government social objectives. I hope that the government provides further details soon on their plans to reform GLCs and they consider a bold new approach of Responsible Privatisation to stimulate the development of the private sector while protecting the interests of the Malaysian people.”
A copy of the paper can be downloaded here.
Professor Dr Geoffrey Williams is Professor at the ELM Graduate School at HELP University. In 2017, he was honoured with the Lifetime Contribution Award for his work on corporate social responsibility (CSR) and sustainability around the world.