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The struggling GLCs may be operating within some of their key performance indicators, the well-known KPIs, but they are performing poorly with their extensive assets compared with their privately-controlled peers. THE STAR
MALAYSIANS are accustomed to “crony capitalism” in which some businessmen are perceived by the public as being favoured by the government for contracts, projects and licences. Change, while not inevitable, is in the air. Prime Minister-in-waiting Datuk Seri Najib Tun Razak would have noted the distressing experiences of the two prime ministers before him in “promoting” certain corporate executives and businessmen. Hence, Najib is expected to focus on economic policies rather than to count on the support of the businessmen-in-waiting. A prime minister should focus on the overall economy to which any single tycoon or business group is very small by comparison. Tun Dr Mahathir Mohamad found at the end of his long tenure that he was disappointed with the corporate executives to whom he entrusted to build upon such state assets as the North-South Expressway, Malaysia Airlines, property and media groups. One common cause of failure was their heavy loads of debt which caused a lot of problems not only to themselves but also the banking system. Their peers, who took decades to build their businesses, fared much better through the regional financial crisis of 1998. Prime Minister Datuk Seri Abdullah Ahmad Badawi found the public perception of a favoured few hounded him when he prepared to lead Barisan Nasional in the election campaign. Even so, Abdullah had placed more emphasis on government-linked companies (GLCs) to lead his economic programmes such as the development corridors. Some of GLCs have performed as well as their peers in the private sector while others are labouring with losses or are barely profitable while their privately-owned counterparts are still very profitable. The struggling GLCs may be operating within some of their key performance indicators, the well-known KPIs, but they are performing poorly with their extensive assets compared with their privately-controlled peers. Najib can liberalise further the relatively free market by ensuring conditions are conducive for the most competitive companies to emerge. This is the most effective means by which his economic programmes will be supported by competitive companies which, in the process of their growth, will provide the underpinning for his programmes. Granted, as a politician, Najib is expected to be engaged in party politics but there is no reason for him or the government to employ crony capitalism. His advisers, it is understood, have advised him to be seen to be steering clear of that. South Korea, under the late president Park Chung Hee, industrialised the economy through chaebols (business groups) which were supported with government-guaranteed financing. In the last decade, various South Korean presidents withdrew the favoured backing, especially after some of the chaebols were found to have committed corruption, fraudulent accounting and were recklessly leveraged. Chaebol chiefs were prosecuted, and in 1999, the Daewoo group was allowed to fall into bankruptcy and dismantled, although some of its businesses continue to operate. Some businessmen may have built large companies through the support of an earlier administration. These companies, a legacy of an earlier era, can continue to have a constructive role in the economy, but there is no reason for them to be showered with exclusive licences and other opportunities. Najib is expected to chart a course of economic development that will provide opportunities for the companies that produce the best results to sustainably expand their revenue and the economy they are in.
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