Kuala Lumpur, 25 August 2021 – The Institute for Democracy and Economic Affairs (IDEAS) welcomed the government’s announcement of the Perkukuh Pelaburan Rakyat (PERKUKUH) programme on August 12th, but calls for more disclosure on what the programme entails. PERKUKUH is designed to reform the mandate and roles of Malaysia’s government-linked investment companies (GLICs) in order to align them with the national agenda and to support the country’s economic recovery plan. 

Research by IDEAS on GLIC shareholdings in Malaysia’s top 100 public listed companies highlighted the outsized role they place in Malaysia’s economy. The report “GLIC Footprint in the Private Economy: Sectoral Concentration and Policy Dilemma” found that GLICs hold high equity shareholdings in capital-intensive sectors such as telecommunications and media, transportation and logistics, as well as utilities. 

As observed by IDEAS CEO Tricia Yeoh, “The high concentration of GLIC shareholding in the same companies, such as the 78.6% cumulative stake held by Khazanah, EPF, KWAP, LTH and PNB in telecommunications company Axiata, or GLICs’ near majority stake in Malaysia Airports, raises concerns about whether the outsized GLIC footprint in these industries ultimately poses concentration risks to their  depositors given that their savings have investment exposure to similar company profiles.”

IDEAS thus welcomed measures under PERKUKUH to differentiate between sovereign wealth funds (SWF) and institutional investors, as it will enable the latter to maximise investment returns, including diversifying abroad, while SWFs will be able to invest in strategic sectors while acting as stabilisers in the local financial market. The review of golden shares is also welcomed to improve transparency in GLIC governance.

As stated by Tricia Yeoh, “While GLICs have long contributed to the economic development of Malaysia, their performance and contributions have not been sufficiently measured, monitored and improved upon. PERKUKUH is a welcome initiative by the government to strategically streamline and strengthen our GLIC and GLC ecosystem in Malaysia. However, we must stress that there must be political will to extricate unnecessary political influence from all government-related entities, or any reform measures would come to naught.”

IDEAS also called for the programme announcement to be accompanied by a policy document which would detail how the key outcomes will be achieved and how the 20 key initiatives will be implemented through 2024.

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Zokhri Idris, Ph.D, Director, External Relations
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