How Malaysia can profit from selling off govt assets

Economists say it is good to diversify the sale of government assets to companies from different countries to avoid concentration in the hands of one foreign country.

An economist suggests outsourcing government services such as tax collection.

PETALING JAYA: The government should be transparent about the sale of state-owned assets while carefully measuring the benefit of such a move to the country beforehand, says economic analyst Hoo Ke Ping.

He said any country in financial distress would usually sell its assets to reduce its debts. “Nothing wrong with that,” he said.

The question was how much was to be sold, and at what price. “It has to be just right so that it benefits the country,” he told FMT in commenting on reported plans by Philippines commercial giant San Miguel to buy state-owned assets in Malaysia.

Nikkei Asian Review reported that Dr Mahathir Mohamad’s government was considering asset sales as it looked to trim the country’s debt.

It quoted San Miguel president and chief operating officer Ramon Ang as saying that he expected the Malaysian government to unload some of its assets following the new government’s claims of high national debt.

Mahathir had said last month that Malaysia’s debt was estimated to be equivalent to 65% of the GDP, higher than the 50.8% level at end-2017 as claimed by his predecessor Najib Razak.

Hoo said one way of selling assets was through initial public offering in the stock market (as is reportedly being considered for Petronas).

The government should also take into account the buyer’s background and choose reputable foreign buyers. Bank Negara and other stakeholders should have a say in the asset sale to ensure transparency.

Another way of trimming the debt was by outsourcing government services such as collection of taxes, he added.

“Outsource the service and let the company collect the taxes on behalf of the government just like what Kuala Lumpur City Hall did for clamping of cars,” he said.

He said the selling of assets or outsourcing of services should not burden the country.

Sell to companies from various countries

Sunway University Business School professor Yeah Kim Leng said the government should diversify the sale of assets to companies from different countries.

He said this was to avoid concentration and monopoly of any one country investing in Malaysia.

He said Malaysians were uncomfortable with Chinese investments because of the experiences of other countries like the Maldives in dealing with the superpower.

It was reported that 80% of the Maldives’ foreign debt was now owed to China.

Yeah said the various firms could invest in sectors like medical tourism, plantation and services. He said Malaysia stood to benefit with more reputable companies from different countries investing.

“Diversity is good. It would also attract other international companies to invest in Malaysia,” he said. -FMT

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