Home TA Online Three key institutional reforms to boost efficiency of government-linked firms

Three key institutional reforms to boost efficiency of government-linked firms

Institutional reforms could curb wastage and corruption and provide the government with much-needed funds

Web of government-linked companies/Jaringan syarikat berkaitan kerajaan – TERENCE GOMEZ

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By Raveen Jeyakumar

One of the key problems facing the Malaysian government is a lack of funds to finance pro-people programmes to raise ordinary people’s living standards and boost their socioeconomic security.

One effective way to raise much-needed funds is by implementing institutional reforms to crack down on all forms of corrupt practices involving unlisted firms and subsidiary companies under government-linked companies.

This will slash wastage of funds and raise the profits of these firms. The government can then use the extra revenue it gains through taxation and dividends from these firms to implement pro-people programmes. Dr Edmund Terence Gomez, the chairman of the Centre to Combat Corruption and Cronyism (C4), has elaborated on many of the points mentioned in this article.

Some politicians and bureaucrats from various ministries use these unlisted firms and subsidiary companies to muster support through patronage, to indulge in rent-seeking, and to raise funds for political party activities.

Some politicians are even appointed as directors or employed as senior officials of these companies. As directors of these companies, these appointed politicians may be given contracts, some of which could be further subcontracted to their cronies.

Using the profits generated by these companies, some of these directors may even declare bonuses that further enrich themselves.

These unlisted firms and subsidiary companies under government-linked firms have long become an economic tool during elections to muster electoral support, particularly among rural communities. These firms may carry out activities in poor, less developed constituencies under the guise of implementing corporate social responsibility activities.

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And because these companies do not seem to have much oversight and accountability, the opportunity for corrupt activities and abuse by wayward politicians and bureaucrats is tremendous.

Corrupt practices such as patronage, rent-seeking, cronyism and nepotism have become rooted in Malaysian public governance for some time now. Such corrupt practices over the years have siphoned out large amounts of the profits generated by the government-linked companies.

These lost funds could have been used by the government to improve the quality of life of underprivileged communities through various programmes.

No wonder serious problems such as deep poverty and poor basic infrastructure issues in rural areas persist to this day.

The government should curb corrupt practices in these unlisted firms and subsidiary companies and stop the ‘leakage’ of much-needed funds. It can do this by implementing several political reforms at both the federal and state levels.

First, shut down unlisted firms and subsidiaries that have the same functions but are not as effective as private enterprises within the same sector.

The government should systematically and thoroughly review such companies to identify redundant companies and the number of employees involved.

These companies should be closed in stages. But first, the government should take care of the job security of the affected employees. It must ensure that alternative high-paying jobs are available to these employees.

These closures will eliminate the wastage of funds in redundant companies. The funds saved could then be absorbed into the parent government-linked companies. This will raise these companies’ profits, and the government can then use the extra taxes and dividends from these profits to implement more pro-people programmes.

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Second, impose a stringent system of institutional checks and balances with independent oversight institutions on all government-linked companies, especially their unlisted firms and subsidiary companies.

Parliamentary action committees, led by opposition members, should have oversight of these enterprises.

The leaders of these companies should be apolitical and autonomous so that they can weed out inefficiencies and abuse of power effectively.

Such a move will also boost efficiency and eliminate the wastage of funds in these companies.

The result: the government will gain a greater share of the profits generated by these companies, which it can then use to raise the ordinary people’s socioeconomic position.

Third, enact legislation to expand the definition of corruption to include patronage, cronyism, abuse and misappropriation of funds.

At present, corruption in Malaysia seems narrowly defined as just rasuah or bribery – the receiving or giving of bribes as a reward or incentive for an individual to do or not do something related to his or her official duties. Such a definition is far too narrow.

Expanding the definition can deter other forms of corruption and provide effective punishments for individuals engaged in such activities.

In short, institutional reforms covering government-linked companies could curb wastage and corruption and provide the government with much-needed funds.

With these additional funds, the government can then wipe out poverty, redistribute wealth fairly and resolve the socioeconomic problems faced by the low-income group. This will boost public support for the government.

Raveen Jeyakumar, an Aliran volunteer, is a 29-year-old based in Ipoh with an interest in social and environmental issues

The views expressed in Aliran's media statements and the NGO statements we have endorsed reflect Aliran's official stand. Views and opinions expressed in other pieces published here do not necessarily reflect Aliran's official position.

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Paul Lim
Paul Lim
16 Jul 2023 3.02pm

Does Anwar have the marin of manoeurvre to implement these measures considering his coalition partner which has been responsible for the corruption, patronage …..?

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