KUALA LUMPUR: The Institute for Democracy and Economic Affairs’ (IDEAS) latest research found that government-linked investment companies (GLICs) hold high equity shareholdings in capital-intensive sectors such as telecommunications and media, transportation and logistics, as well as utilities.
The report, entitled “GLIC Footprint in the Private Economy: Sectoral Concentration and Policy Dilemma”, is a research by IDEAS on GLIC shareholdings in Malaysia’s top 100 public listed companies that highlighted the outsized role they place in Malaysia’s economy.
Its chief executive officer Tricia Yeoh said the high concentration of GLIC shareholding in the same companies 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.
In a statement today, she cited an example of 78.6% cumulative stake held by Khazanah Nasional Bhd, Employees Provident Fund, Retirement Fund (Incorporated), Lembaga Tabung Haji and Permodalan Nasional Bhd in telecommunications company Axiata or GLICs’ near-majority stake in Malaysia Airports.
Thus, IDEAS has called on the government to provide more disclosure on what entails in the Perkukuh Pelaburan Rakyat (Perkukuh) programme announced on Aug 12, which was designed to reform the mandate and roles of Malaysia’s GLICs to align them with the national agenda and to support the country’s economic recovery plan.
IDEAS also welcomed measures under Perkukuh to differentiate between sovereign wealth funds (SWFs) 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,” it said.
While GLICs have long contributed to the economic development of Malaysia, Yeoh said, 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 nought,” she added.
IDEAS also called for the programme announcement to be accompanied by a policy document that will detail how the key outcomes will be achieved and how the 20 key initiatives will be implemented through 2024. – Bernama