The Perfomance Management and Delivery Unit (Pemandu), which is behind the Economic Tranformation Programme (ETP), today said that the target of 32 percent contribution from goverment-linked companies (GLC) is not unrealistic, as claimed by DAP Petaling Jaya Utara MP Tony Pua.

In fact, Pua’s deduction is flawed as he did not consider non-listed GLCs, the unit under the Prime Minister’s Department said in a statement today.

“Not all GLCs are listed and hence, the non-listed GLCs are not factored into the current market capitalisation. Key GLCs that are privately held today will be taken public over the next 10 years.

NONE “The listing of these strong flagship companies, particularly in oil and gas and plantations, will significantly expand the market capitalisation of GLCs listed on Bursa Malaysia,” it said.  

Yesterday, Pua ( right ) questioned how GLCs would manage to contribute RM454 billion over the next eight to nine years when their combined market capitalistion is about half that amount.

Worse still, he said, the companies held debts amounting to RM38.6 billion while their shareholder funds only reach RM140 billion.

In its presentation of the ETP last month, the government estimated that out of the total US$444 billion investments needed to make Malaysia a high-income nation by 2020, 32 percent will be contributed by GLCs, 60 percent is expected to come from the private sector, with the government providing the remaining eight percent.

GLCs will grow 15 percent annually

According to Pemandu, the market capitalistion of GLCs is expected to grow in tandem with the market, whereby Bursa Malaysia has grown at 10 percent per annum for the past nine years.

“By 2020, we expect the market capitalisation of Bursa Malaysia to grow from RM1.0 trillion in 2010 to RM3.9 trillion by 2020, equivalent to a compound annual growth rate (CAGR) of 15 percent,” the unit said.

It added that investment funding could also be sourced from the debt market, with the aim of developing a “deep, broad and liquid bond market”.

“We expect total outstanding private debt securities to grow from about RM270 billion in 2010 to about RM880 billion by 2020, with average yearly trading value increasing from RM64 billion in 2010 to RM618 billion by 2020 or CAGR of 23 percent.”