HAVE MALAYSIA’S SOCIALLY-FOCUSED GLCS DELIVERED ON THEIR PROMISE OF UPLIFTING THE POOR?

Abstract

The practice of using of government-linked companies (GLCs) to help the government achieve specified goals has existed since the post-World War II period. In Southeast Asia, it is a popular strategy used by countries like Malaysia and Singapore. In Malaysia’s case, GLCs constituted about 42% of the total market captalisation of all listed companies on the Bursa Malaysia in 2013. The GLCs analysed in this paper – FGV Holdings Berhad (FGV) and Lembaga Tabung Haji (TH) – occupy a unique space in the system as they are sociallyfocused. Since their inception, have these GLCs served their purpose and uplifted the socioeconomic status of the poor? To answer this question, this paper undertakes an analysis of the actions of the two GLCs and the controversies that they have been involved in to identify a deviance away from the social goals that led to their creation. The hypothesis is that these GLCs have instead orientated themselves towards corporatisation. The frameworks used to explain these trends are agency theory using the empire-building problem and internationalisation theory. Based on the empirical evidence, this paper will then show that FGV and TH have indeed strayed away from their social goals in the pursuit of earnings due to corporatisation. Though there have been remedial steps towards reorientating the GLCs, much more needs to be done to realign FGV and TH towards the goal of uplifting the socioeconomic status of the poor.