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'Govt should be less involved in business'
Published on: Friday, September 14, 2018

Kuala Lumpur: Malaysia, which has suffered from misallocation of resources, should move towards having less government involvement through direct ownership in companies.

Zilzar Group chairman Datuk Dr Vaseehar Hassan (pic), former RHB Islamic Bank chairman, said in the last ten years there were a number of fictitious projects, overpriced transactions and inflated project prices.

"How can an economy survive and how long could it survive if we engaged in projects which have not been productive for the nation?" he questioned.

Drawing reference to the 1Malaysia Development Fund (1MDB) scandal, he said Malaysia may have misallocated its resources but the consequence has not been fully reflected.

"Impact is still not felt, thanks to the resource rich and economically well diversified country we live in, the impact has not affected us today. I think leaders in the government today know that sooner or later it is going to hit us because we are now having high debts, and servicing and repaying these debts is going to be a major challenge in the future," he explained.

Bulk of the investments made by the previous administration were made in a misallocated manner with exception of one or two projects, said Vaseehar while adding that "we have inherited a culture of corruption".

Terming the 100 days of Malaysia Baru as a mourning period for what has happened in the last decade, Vaseehar said Malaysia which has enjoyed an average growth of 6.2pc and seen negative growth only three times in 61 years of nationhood has gone back to basics.

He also expressed his disappointment on international rating agencies for not having flagged the dangers of projects such as the East Coast Rail Link.

Vaseehar was speaking at a panel session called "State Of Our Economy"at the ISI Corporate Governance Summit 2018 along with CIMB Group chief economist Dr Donald Hanna.

The session was moderated by Astro Awani executive editor Kamarul Baharin Haron.

"The idea of government in business should be reduced over time. Our leaders have always been saying that the government should not be in business," he said on the issue of government ownership.

Meanwhile, Vaseehar said government-linked companies should monitor their own efficiencies instead of having a sovereign wealth fund like Khazanah Nasional Bhd playing that role.

On another note, Hanna noted that Malaysian Incorporated (Malaysian Inc), which is being revived, may not necessarily need direct ownership from the government.

"The question of the role between the government and private sector in this second round probably doesn't need to involve direct government ownership, to the extent it did in the earlier edition," he said.

In saying that, Hanna noted that the government should instead focus on creating an environment and frameworks to enable companies to work and create basic level of services – which can be funded through tax regimes.

While portfolio investments for pension fund management is good, it does not require direct government ownership in banks or companies.

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