Question

answer the following questions:

1- Discribe FOUR (4) impacts of the establishment of the Government-Linked
Companies (GLCs) on Malaysia.

2- Explain the definition of Government-Linked Companies (GLC).

Answer 1

A) IMPACTS-

1). IMPACT ON PRIVATE COMPANIES:-GLC THEY GET PREFERENCE IN GOVERNMENT CONTACTS AND THEY GET FAVORABLE GOVERNMENT REGULATIONS. THEY COULD ALSO ENJOY MANY OTHER BENEFITS LIKE- SUBSIDIES, EXEMPTIONS, GUARANTEES, CONCESSIONARY FINANCING AND MANY MORE. IT IS EASY FOR GLCs  AND MORE PROFITABLE TO INCREASE INVESTMENT IN SECTORS. OTHER SIDE THE PRIVATE FIRMS MAY BE UNWILLING TO INVEST IN SECTORS WHERE GLCs ARE DEALING WITH. THIS LEADS TO NEGATIVE RELATION BETWEEN GLDs AND THE INVESTMENTS MADE BY PRIVATE FIRMS.

2). IMPACT ON GOVERNANCE:- GLCs SERVES AS INSTRUMENT OF GOVERNMENT POLICY, PROVIDED THE EXPLICIT ROLE THAT THEY HAVE TO PLAY IN PAST AND PRESENCE, OF REDISTRIBUTING WEALTH. THE NEW ECONOMY POLICY RELATED TO THIS PROGRAM WAS BASED ON STOCK RATHER THAN FLOW MEASURES, THAT IS REDISTRIBUTION OF WEALTH RATHER THAN INCOME.

3). IMPACT ON INEQUALITY:- WITH RISE OF SIZE AND REACH, THE SUSTAINABILITY ALSO RISES WITH THE IMPACT ON THE TARGETED POPULATION AFTER ACCOUNTING FOR INDIRECT IMPACT OPERATING BY CHANGES IN FISCAL BALANCE, IN THE WAY OF RISING COSTS AND INTEREST RATE.

4). IMPACT ON GOVERNMENT REVENUES:- THE FEDERAL GOVERNMENT'S FISCAL DEFICIT HAS REDUCED AND THE PUBLIC SECTOR'S OVERALL DEFICIT HAS INCREASED DUE TO RISING DEVELOPMENT EXPENDITURE BY THE GOVERNMENT AND GLCs.

B) DEFINITION:-

GLCs ARE THE COMPANIES CONTROLLED BY THE MALAYSIAN GOVERNMENT THROUGH FEDERAL GOVERNMENT LINKED INVESTMENT COMPANIES. THESE COMPANIES HAVE PRIVATE COMMERCIAL OBJECTIVES AND THE MALAYSIAN GOVERNMENT HAVE DIRECT CONTROL ON THEM.