Positive steps to strengthen confidence
I REFER to “All eyes on Felda, LTH-linked stocks” ( StarBiz, Dec 10) about Khazanah Nasional Bhd’s disposal of its stake in IHH Healthcare Bhd to a foreign corporation, Japan’s Mitsui Co Ltd, and wish to add that it is a positive step that will help to further strengthen investor confidence in the economy. It will be viewed in the private sector as concrete evidence that Malaysia is opening up its economy and moving up on the global stage, encouraging more investors to look at it as an attractive place for business, leisure and stay.
The peaceful rally to protest the ratification of the United Nations International Convention on the Elimination of all Forms of Racial Discrimination (Icerd) last Saturday provides additional assurance that Malaysian democracy has matured and that all is not lost on human rights because there is consensus among civil society organisations to keep working on informing the public on the importance of Malaysia joining the world community on the shared values of justice and fairness for its citizens. The closer we are to the world community, the better our image as a progressive country for business.
According to media reports, the FDI inflows into Malaysia have shown higher levels in the first nine months of this year compared to the whole of last year. Exports in October have shown an upward surge, which is encouraging for the balance of payments and the country’s external reserves.
Although the ringgit and the stock market remain weak compared to the strong economic fundamentals, we should see an improvement if the international trade disputes are resolved in the next few months.
While the external factors are beyond our control, we can keep the renewed investor interest going by adopting domestic policies that will promote private sector confidence on the future stability of the country based on good governance, human rights and rule of law.
Khazanah’s divestment policy will add another dimension to the business-friendly stance of the new government. It should be noted that while the Khazanah-owned government-linked companies (GLC) are well managed in terms of corporate governance and financial transparency, the other GLCs owned by statutory bodies at both federal and state levels are poorly run because of too much political and ministerial interference.
The government should take firm measures to depoliticise the boards and privatise the GLCs owned by statutory bodies. Many of them are not bankable because banks worry about the moral hazard of lending to politically-linked GLCs. Nothing demoralises the spirit of entrepreneurship in the economy more than seeing state-owned enterprises having easy access to public funds while privately-owned businesses have to show performance before banks will lend to them.
State governments in particular should get out of business before their GLCs drive them into insolvency. It is well known that when state governments face financial problems, they sell forest reserve lands, orang asli reserves, cemetery plots and heritage sites to cover their financial deficits. Some run to Putrajaya pleading for emergency financial help from the federal government. This should not be allowed as it will be seen by analysts as a failure in managing the country’s financial resources.