Hajiji Flags Possible Closures for Loss-Making GLCs
In a recent policy briefing, Hajiji Noor, the chief minister, signaled a hard line on Government-Linked Companies (GLCs) and statutory bodies that fail to deliver on financial performance. He announced that non-performing entities with no credible turnaround prospects could be shuttered to preserve state finances and protect taxpayers’ interests. The remarks come as the government intensifies oversight of state-owned enterprises across the federation, aiming to strengthen corporate governance and ensure value for money.
Dividend Policy Tied to Profit After Tax
Hajiji reiterated that all state GLCs and statutory bodies must adhere to a minimum dividend payment rate of 10% of profit after tax (PAT). The rule is designed to create a baseline return to the state from publicly owned entities while encouraging disciplined profit retention and reinvestment strategies. Entities that struggle to meet this target may face intensified scrutiny, audits, and potential restructuring measures.
Five-Year Performance Review as a Threshold
The chief minister specified a five-year consecutive period of underperformance as a critical trigger. GLCs that fail to demonstrate meaningful improvement over this span are to be placed under review. This framework shifts the onus to the leadership of the entities, requiring clear roadmaps for profitability, efficiency gains, and strategic alignment with state development goals.
Implications for Governance and Stakeholders
Analysts say the move could tighten governance across the public sector’s corporate arm. For investors and employees within state-owned entities, the policy signals a potential path to rationalization — including restructurings, leadership changes, or even closure in extreme cases. The approach underscores a broader trend of accountability, where public investment is expected to translate into sustainable financial performance and service delivery.
Balancing Social Impact and Fiscal Responsibility
While the emphasis on financial metrics is clear, policymakers acknowledge the social dimension of GLCs, which often include essential public services, regional development roles, and employment considerations. Experts advise that any closure or consolidation plan should incorporate social safety nets and transition strategies for workers while ensuring continuity of critical services to citizens.
What Comes Next?
The government is likely to roll out a detailed framework outlining criteria for turnaround plans, performance dashboards, and milestones for each GLC under review. Communication will be essential to manage expectations among stakeholders, including state legislators, employees, customers, and suppliers. If implemented effectively, the policy could set a high bar for accountability while encouraging a healthier balance between profitability and public service obligations.
Context and Regional Impacts
As public sector reform continues to gain momentum, state governments are increasingly scrutinizing GLC portfolios to weed out consistently loss-making units. The move aligns with broader fiscal responsibility measures and could influence how other states approach governance of government-linked entities in Malaysia and beyond. Countries with similar GLC structures may watch closely as benchmarks for performance-based funding and structural reform.
Note: This article reflects statements reported regarding Hajiji’s policy position on GLCs and dividend expectations. Specific timelines and implementation details will be outlined in forthcoming official releases.
