KUALA LUMPUR: The financial woes of the Federal Land Development Authority (Felda) and PR1MA Corporation Malaysia (PR1MA) highlight the need for the government to stay away from business, says an anti-corruption and good governance consultant.
K. Sudhagaran Stanley said the Auditor-General's 2022 report on Felda and PR1MA serves as a "wake-up call" and signals the "urgent need" for a departure from past practices.
"In both cases, the message is unmistakably clear: the government's involvement in business ventures should come to an end," he told the New Straits Times.
Yesterday, the Auditor General raised concerns over the financial health of the Felda and PR1MA, citing their level of debt and reliance on government assistance.
For the year 2022, Felda's net loss rose to RM1billion while PR1MA recorded a net loss of RM257 million.
The former Center to Combat Corruption and Cronyism (C4) deputy chief executive said it cannot be denied that Felda once garnered international acclaim for its remarkable success in land development and poverty alleviation.
"(But) its long-term viability has come under scrutiny. Sustained political interference has precipitated significant financial losses."
"The pertinent question arises, how much taxpayer funds must be injected to salvage such ventures each time they flounder?"
He said the government should look to reduce involvement in business gradually and focus on fostering a conducive business environment.
Professor of Economics, Geoffrey Williams from the Malaysian University of Science and Technology also said the Auditor-General's report highlighted the problem of government interference in business and the market.
"When state-linked entities are run on bureaucratic lines rather than commercial or corporate lines they will tend to underperform," he told the New Straits Times.
He said this was because bureaucrats have different aims and styles to corporate managers.
They are also not personally liable for the results and the company will likely be bailed out if it fails, he said.
"Looking at the boards of federal agencies they are dominated by bureaucrats and former politicians. All are unaccountable and most are unknown to most stakeholders.
"From a governance perspective, it would make more sense to put current high-profile politicians on the board, they are not anonymous and face public scrutiny daily."
Williams also said experts from the private sector should also be included on the board because of their ability to deliver.
He added that in the case of Felda and PR1MA, a panel of independent experts should be established to provide fresh insights and solutions.