For immediate release
 
Kuala Lumpur, 28 April 2016 – In the 2015 National Transformation Programme Annual Report last Tuesday, the government claimed that it has achieved great success in transforming the economy.  However, a new study by the Institute for Democracy and Economic Affairs (IDEAS) found that not all promises have been kept.  The commitment to reduce the government’s role in business remains unfulfilled and has in fact gone the opposite way.
 
Prime Minister Dato’ Sri Najib Tun Razak in his Budget 2010 speech on 23 October 2009 said that “the Government will gradually reduce its involvement in economic activities, particularly in areas where it competes with the private sector.”  This is in line with the promise of the New Economic Model (NEM) and the Economic Transformation Programme (ETP) that the government’s role in business needs to be reduced and the private sector should become the engine of growth. 
 
In the 2014 Economic Transformation Report, the government claimed to have fully achieved this target and in the NTP 2015 Report announced last Tuesday, the government only touched this issue as a footnote as if it is already an accomplished mission.   
 
But in a paper released today by IDEAS titled “Lesser Government in Business: An Unfulfilled Promise?”, author Wan Saiful Wan Jan explains how the government’s grip on the economy has actually grown rather than been reduced. 
 
“When it comes to reducing its role in business, the government’s track record appears mixed,” says Wan Saiful Wan Jan, who is also IDEAS Chief Executive Officer. “The government claims a 100% achievement rate when it comes to divestment of companies under GLCs and GLICs. However, they only stated half of the story while conveniently hiding the fact that the government has been actively buying more equities than they have sold.”
 
Wan Saiful adds “Our calculation shows that from 2011 to 2015, the government’s share in the KLCI increased from 43.7% to 47.1%, indicating that its control of the largest companies in Malaysia has increased. It also signifies that the Malaysian government has been accumulating shares of its investments in various companies from 2011 to 2015.  
 
On top of that, the government has also increased its investments in private companies as compared to its disposals. Data indicates that the total GLC acquisition value of RM51.7 billion dwarfs the total disposals at RM29.5 billion. 
 
This means government speech writers have been very clever in choosing words for the Prime Minister.  They only highlight the fact that some GLCs have been divested, but they are hiding the bigger story, which is that the government has completely failed to reduce its overall role in business. The government’s grip has actually increased.”
 
Wan Saiful concludes that “the Malaysian government has forgotten its promise to reduce its role in business.  Even PEMANDU, the body supposed to push the divestment agenda, is no longer serious about it.”  
 
“PEMANDU has set up a brand new GLC called the BFR Institute, and they are entering the consulting market which was free from government interference before.  At the beginning, they even gained unfair advantage by using the Prime Minister’s Office as their official address and until today their office is within a government facility.  Rather than consistently pushing for a solution, PEMANDU itself has become part of the problem in this respect.

END

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For media enquiries:  T: +603 6201 8896/ 8897 E:wansaiful@ideas.org.my

About IDEAS

IDEAS is Malaysia’s first think-tank dedicated to promoting market-based solutions to public policy challenges. We are an independent not-for-profit organisation. As a cross-partisan think tank, we work across the political spectrum. Our purpose is to advance market-based principles, and we are not bound by party politics, race or religion. Our mission is to improve the level of understanding and acceptance of public policies based on the principles of rule of law, limited government, free markets and free individuals. For more information, please visit http://ideas.org.my/

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