Guardrails needed on use of GLCs, GLICs for govt spending, say ex-Umno leaders

Malaysia requires clear governance rules to prevent future leaders from relying on government-linked companies (GLCs) and GLICs to supplement national budgets, according to two former Umno leaders. Shahril Hamdan, former Umno information chief, and Khairy Jamaluddin, former health minister, argued that the relationship between Putrajaya and these entities needs better definition and oversight.

Former health minister Khairy Jamaluddin emphasized that while GLCs and GLICs should have a developmental role, clear governance rules and safeguards are essential to curb the temptation for future prime ministers and finance ministers to tap into these funds. He referenced Omar Mustapha Ong's two-books concept, which includes the federal budget and government-controlled companies and funds like Petronas and Khazanah Nasional Berhad.

Former prime minister Najib Razak's administration is credited with initiating the practice of using GLCs and special purpose vehicles to meet government spending needs. Prior to Najib, former prime ministers Abdullah Ahmad Badawi and Dr Mahathir Mohamad relied more on conventional federal budgeting.

Khairy Jamaluddin also noted that a falling federal budget deficit does not fully reflect the government's financial commitments. The 2027 budget includes major investment commitments by GLCs and investment institutions, such as KWAP's RM750 million investment in student housing at six universities, and the EPF, Armed Forces Fund Board, and Sime Darby Property's RM1.25 billion fund for data centers and industrial logistics assets.

Khazanah Nasional Berhad and KWAP are also set to invest RM1.2 billion to assist local semiconductor companies in higher-value segments.