Experts suggest ways to raise revenue

KUALA LUMPUR: Raising money should be on top of the Government’s agenda as it figures out how to repay the mammoth RM1 trillion worth of debt that it has uncovered since winning the 14th General Election.

Experts have suggested ways for the government to raise additional revenue.

One suggestion is for government linked investment companies (GLICs) to pare down their stakes in government linked companies (GLCs).

GLICs stakes in these companies, that range from banks, conglomerates and healthcare companies, are worth billions of ringgit. Selling a small portion and divvying that up to the government could provide some relief.

Alliance Bank chief economist Manokaran Mottain said this has to be done with care.

“It has to be done very carefully without any adverse effect on the GLICs and GLCs concerned.”

Divesting such stakes have been done before. For instance, Khazanah Nasional Bhd, solely owned by the Ministry of Finance, sold some 90.52mil shares in CIMB Group Holdings Bhd last year. The sovereign wealth fund paid a dividend to the government of around RM1bil in 2017 from RM650mil in 2016.

It also owns 40.46% in the world’s largest listed healthcare group, IHH Healthcare Bhd, valued at RM20.1bil, as well as 26.2% in Telekom Malaysia valued at RM 3.8bil as of June 8. Another suggestion was to sell overseas assets owned by the government.

Rakuten Trade head of research Kenny Yee said: “If you ask me, we can still breathe. It doesn’t mean we are drowning. But of course if the situation arises, then overseas assets should be considered to be divested.”

However, the timing of any such divestments is not now, according to fund manager Scott Lim.

“This is not the right time to start talking about selling assets. We still do not have a final picture of the financial position of the government’s budget.

“Selling now will mean you are selling in desperation and this will naturally mean you will not get the best price for your assets,” he pointed out.

Instead, efforts should be focused on “stopping the leakages in time” and to “rationalise the debt”.

The cancellation of projects will reduce about 20% of government debt, according to Manokaran.

Another asset is the form of telecom spectrum. Radiowaves can be sold to telecom operators, which have given governments around the world billions of dollars.

In 2015, the Thai government earned US$6.5bil by auctioning off 20Mhz of its 900Mhz spectrum.

The British government sold its 3G spectrum for a whopping £2.5bil in 2000.

According to Manokaran, Malaysia’s 700Mhz spectrum is expected to be worth about RM3.9bil.