Malaysia ‘ready’ to break industry monopolies

We are ready to bring in more players across all sectors, not just in energy and telecommunications, but also in the railway sector, says expert


EXPERTS believe that the country is prepared to move towards greater economic liberalisation in line with the Pakatan Harapan-led government’s pledge to disband monopolies on all industries.

Prime Minister Tun Dr Mahathir Mohamad had already announced his plan to review exclusive controls on imported rice, satellite television and medicine to curb onerous price increases.

The current crackdown on industry monopolies resembles the government’s move in the mid-1980s when policies in favour of liberalisation and deregulation were introduced to drive growth and industrialisation in the local economy.

Some of the key sectors that were subjected to substantial deregulation under Dr Mahathir’s administration at the time included telecommunications, transport, power generation, education and financial services.

Economist Prof Dr Yeah Kim Leng said this renewed interest towards dismantling industry monopolies suggests Malaysia’s readiness for the next stage of liberalisation.

“What this means is we are ready to bring in more players across all sectors, not just in energy and telecommunications, but also in the railway sector, for example.

“Different models can be brought in to encourage more players,” Yeah told The Malaysian Reserve. Yeah said the Malaysian industries remain highly concentrated with typically the top three companies in each industry determining market prices and movements.

“Without adequate competition, prices will be higher and this gives them the market power to make excess profits.

“They will also have no incentive to increase productivity, so generally, we see a lot of inefficiencies from monopolies,” he said.

Asian Strategy and Leadership Institute research and business development director Lau Zheng Zhou added that it is now harder to defend a monopolistic position as industries have proven to be more efficient when subjected to competition as seen in the electrical and electronics sector.

However, he said while opening up industries to competition may “theoretically” improves consumer welfare, in reality, firms may try to sustain themselves through costcutting measures at the expense of the people.

“Opening up the market is a good start, but it has to be complemented by other regulatory changes such as product quality checks, reducing red-tape or bureaucracy challenges, and perhaps encouraging more localbased content and participation by local supply chain partners,” he said.

Lau also said certain industry monopolies could have strategic or national interests, such as Tenaga Nasional Bhd (TNB) that has the social responsibility to provide access to electricity for the poorer segments of the society.

“It could also be an issue, say, when foreign firms try to penetrate into certain industries such as the utilities or when these sectors open up — will the people find this comfortable?” he said.