GOVERNMENT-linked companies (GLCs) have been asked to play a bigger role in the country’s development and focus their resources on strengthening the economy.

       At the tabling of Budget 2022, the government has laid out a specific plan that GLCs should be taking. This includes GLCs having to invest at least RM30bil in areas such as renewable energy, supply chain modernisation and 5G infrastructure.

       The government is also proposing that GLCs should also assist local entrepreneurs, create new job opportunities and ensure that 40% of local procurement is awarded to bumiputra entrepreneurs.

       “GLCs and government-linked investment companies (GLICs) should increase their participation in the local economy to go even beyond the capital market, especially in the private sector development,” a fund manager says.

       GLCs have a huge presence in the local economy, accounting for 42% of the total market capitalisation of Bursa Malaysia. Meanwhile, GLICs own 25.9% of the total market capitalisation of the local bourse, representing RM440.4bil in assets under management.

       “GLCs are expected to further build resilience through various grants and funds to drive economic transformation and catalyses the growth of new high-value sectors,” Kumpulan Wang Persaraan (Diperbadankan) (KWAP) CEO Nik Amlizan Mohamed notes.

       Sunway University Business School professor of economics Dr Yeah Kim Leng says that the announcement by the government to get GLCs to play a complementary role in reviving the economy and assisting in social development through CSR is a welcome move.

       “GLCs should also take the lead in transforming the economy, especially in spearheading sectors and activities where there is under-investment by the private sector rather than in direct competition with the latter,” he reckons.

       However, he said while undertaking the social, employment creation and investment activities envisaged in the Budget 2022, GLCs would need to be mindful that these actions do not undermine their long term financial sustainability.

       Alliance Bank chief economist Manokaran Mottain points out that the government wants the private sector to share the burden in steering growth, especially at a time when the country is still recovering from the Covid-19 pandemic fallout.

       “It’s time for the GLCs to play a major role in the country’s development. They also have a lot of money,” he says.

       Economists are also suggesting that GLICs form partnerships with foreign investors to promote direct investments in the country.

       “We are living in an unprecedented time as the economy is recovering from the Covid-19 pandemic.

       “We are also at the tipping point for rapid technology advancement and addressing climate change issues,” says PwC Malaysia deals partner, economics and policy, Patrick Tay.

       “GLCs, the private sector and foreign multinationals must come together to steer the country’s economy.

       “The areas that the government highlighted in Budget 2022 are crucial for the country to move forward and improve its productivity,” he adds.

       The government points out that one example of GLC efforts towards rebuilding the local economy is the Impact Fund of RM6bil, created by Khazanah Nasional Bhd, which is to act as a catalyst for the growth of new high-value sectors.

       In addition, the government will introduce a specific initiative to assist companies listed on Bursa Malaysia that aims to help viable companies that were affected by the Covid-19 pandemic.

       Under this initiative, companies will get an injection of additional funds through a government-owned special-purpose vehicle in the form of equity instruments or other related instruments.

       For this purpose, Khazanah will be given the mandate to help the government in providing the infrastructure to manage the fund size of at least RM3bil.