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Reevaluate GLC role in bumiputera economic development, says IDEAS

KUALA LUMPUR, 19 AUGUST 2020 – A rigorous evaluation of the role government-linked companies (GLCs) play in supporting bumiputera economic development is needed as part of the next phase of Malaysia’s development planning, says Institute for Democracy and Economic Affairs (Ideas).

In a paper called “GLCs and Shared Prosperity”, published today, the research institute endorsed calls for a fresh look at the Shared Prosperity Vision 2030 (SPV2030) and the 12th Malaysia Plan.

Ideas said that the SPV2030 highlights a number of economic development challenges, including the ongoing income disparity between bumiputera and other ethnic groups in Malaysia.

“In this respect, SPV2030 represents a policy continuity with previous economic vision statements, and it is likely that any relaunch of SPV2030 will continue to highlight inter-ethnic income disparity,” said Ideas, adding that GLC development is likely to be a factor.

“Whilst there is evidence to suggest that GLCs have played a role alongside the public sector in creating employment opportunities for bumiputera professionals, this is limited in scope given the small size of the GLC workforce relative to the bumiputera population as a whole,” it said.

The paper indicated that the top 20 GLC companies employed 225,050 Malaysians in 2014, of which 178,191 (79 percent) were bumiputera.

However, in comparison to the workforce as a whole, GLCs only employ 6.9 percent of all bumiputera workers while the public service employs 10.4 percent of such workers.

For the purposes of the paper, statutory bodies such as Mara and Felda which have an explicit mandate to promote bumiputera and rural development were not included.

The paper called for the development of bumiputera business to be given priority, which it said, “continues to be an issue of concern.”

The government last month announced the establishment of the Bumiputera Prosperity Council (BPC) in efforts to empower the socio-economic development of the bumiputera community.

Minister in the Prime Minister’s Department (Economy) Mustapa Mohamed said the BPC would be chaired by Prime Minister Muhyiddin Yassin.

Mustapa added that the establishment of the BPC was part of a strategic intervention framework to drive the empowerment of the bumiputera economy through various programmes.

The Ideas paper also said that an evaluation of GLC vendor development programmes is needed to assess the long-term outcomes for bumiputera businesses.

“At the same time, the government should recognise the limitations of these tools and focus on how GLCs can support economy-wide structural reform, which can help to create an environment more conducive to entrepreneurship, including for bumiputera entrepreneurs,” it said.

“This should be done carefully, and the regulatory and social protection function of GLCs should be transferred to more suitable institutions,” added Ideas.

First published in Malaysiakini, 19 August 2020

2020-08-27T10:22:44+08:00 20th August 2020|News|Comments Off on Reevaluate GLC role in bumiputera economic development, says IDEAS