Reversing the transformation

THE transformation of government-linked companies (GLCs) has been hailed a success.

Profit by the grouping has grown over the years and on Khazanah Nasional Bhd’s website, financial highlights show how the company has performed when it comes to a matrix of different numbers.

Khazanah highlighted just how its realisable asset value and net worth adjusted has grown over the years, driven by policies that aimed to transform the group of GLCs under its umbrella and raise their profits.

Those numbers were borne through a transformation process that aimed to free GLCs from focusing more on national service and instead look to make a good profit.

In that aspect, the transformation accentuated the problems of the private sector. They growled at how GLCs, with their size and market access, were crowding out smaller and non-government companies. But an interesting development might just take place if close attention is paid to what leaders of the new government are saying.

The Finance Minister in a recent interview said that GLCs must not look at purely making more profit. He suggested they should look at strategic investments instead of competing with the private sector.

Khazanah under Tun Dr Mahathir Mohamad when he was Prime Minister the first time around looked at that. Profit was not the main objective and GLCs did get involved in strategic investments that aimed to add depth and breadth to the economy but were not always profitable. Investments in agriculture and wafer fabrication plants didn’t make money, but were seen to be important in the greater scheme of things.

Some are expecting a return to the past policy, where GLCs will look at furthering national agendas in terms of starting new businesses that do not compete with the private sector but have a bigger national connotation.

Risk-taking investments are also important in trail-blazing industries in Malaysia, where there is a need for large capital to get those businesses off the ground. The difference between then and now is that GLCs, such as Khazanah, can afford to undertake such investments, given how its finances have been built up over the years. It’s about investing in Malaysia rather than overseas and not everything is about making a profit above all.