PM hails GLC reforms, defends mergers
Malaysiakini.com
Dec 8, 2006

The government today hailed an ongoing overhaul of government-linked companies for improving competitiveness but denied further reforms, such as mergers, would squeeze out the private sector.

Prime Minister Abdullah Ahmad Badawi said changes over the past two and a half years had seen an increase in the market capitalisation of the top 20 listed GLC companies of RM59 billion.

Government officials said the figure was equivalent to one third of their value, taking their worth to RM203 billion.

Abdullah, who became premier three years ago, also said the changes had prompted private companies to improve, a result reflected in Malaysia's bourse.

"Since I took office, the total market capitalisation of Bursa Malaysia has increased to more than RM840 billion, an increase of about RM195 billion or 30 percent," he said in a speech to GLC chiefs and officials.

GLCs range from the highly profitable oil company Petronas, to loss-making national carmaker Proton as well as Malaysia Airlines, which recently turned in a profit after five consecutive quarters of losses.

Targeted for completion by 2015, officials have said the GLC reform process is on track, citing changes such as the introduction of performance indicators and the divestment of unprofitable businesses.

Changes have also seen several high-profile mergers, with more on the cards, including a consolidation of three GLC plantation companies expected to create the world's largest palm oil firm.

Level playing field

Abdullah acknowledged there was criticism that GLCs would "crowd out" the private sector but cited fair competition and said the companies would not be handed any favours.

"There is no preference given to the GLCs. Everyone competes on the same level playing field," Abdullah said.

"Inevitably, GLCs will be competing in all sectors, because you are talking of GLCs not as one company but many companies working together," he said.

"When you compete, the best will get it. And if a GLC happens to submit something that is the best, then they will get it."

The premier also ruled out any immediate sale of government stakes in GLCs.

"It is not for me to say when," he said, asked when the government would divest its holdings in companies.

"But I've always held the view that we don't have to have too high an equity (holding) in any company. When it is time for us to reduce that, we will reduce it," he added.

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