Govt’s plan to divest assets should be sector-based, says IDEAS

by ALIFAH ZAINUDDIN / TMRpic

THE sale of government assets to plug the gaping financial hole left by the previous administration must be done with vigilance, but certain strategic sectors must continue to be largely owned by Putrajaya.

University of Malaya political economist Prof Edmund Terence Gomez (picture) said the Pakatan Harapan government must ensure the state’s shareholdings in key sectors like banking, utilities and transportation remain in its control.

“Frankly, I will be very careful about banking. I will be very careful in transferring these huge banks — Malayan Banking Bhd (Maybank) and CIMB Group Holdings Bhd — into private hands.

“But if you are looking at companies in construction, I have no problems with the government divesting its stakes in them.

“We have to go sector by sector. Some sectors such as utilities and transportation are out of the question,” he told reporters after the launch of a new study by the Institute of Democracy and Economic Affairs (IDEAS) entitled “Government in Business: Diverse Forms of Intervention” in Kuala Lumpur yesterday.

Gomez is a senior fellow at IDEAS.

Prime Minister Tun Dr Mahathir Mohamad, in an interview with The Malaysian Reserve (TMR) this month, said the government is looking to dispose of or reduce stakes in companies that it owns as part of its revenue-raising activity.

Dr Mahathir has spoken about reducing government shares in Petroliam Nasional Bhd’s subsidiaries, while sources said Khazanah Nasional Bhd may dispose of its 60% stake in M+S Pte Ltd to joint-venture partner Temasek Holdings Pte Ltd.

In the banking sector, government-linked investment companies such as Permodalan Nasional Bhd, Khazanah, the Employees Provident Fund, Lembaga Tabung Haji and Lembaga Tabung Angkatan Tentera all have major shareholdings in the country’s leading lenders such as Maybank, CIMB, Public Bank Bhd, BIMB Holdings Bhd and Affin Bank Bhd.

Despite seeing top management changes at some of the banks, there have been no indication that the government’s investment arms would divest their stakes in the banking segment. The financial sector is among the most lucrative, delivering billions in dividends to government owned investment funds. Gomez said Dr Mahathir’s plan to reduce government stakes in selected companies raises a couple of concerns. “Firstly, we do not want to create a situation of wealth concentration in the hands of a minority. We have talked about the rise of oligarchs in Indonesia and Thailand, where there is a problem of state capture. We have to be very careful with this.

“Secondly, who are these investors who are going to get it? If you’re talking about a Bumiputera policy that will continue to be in place, who are these Bumiputeras who are going to get it?

“By right, it should be an open tender system. We shouldn’t be talking about race. It is the question of whether they have the capacity and the financing to take these companies forward,” he said.