Thursday 28 Mar 2024
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KUALA LUMPUR (Sept 19): The Institute for Democracy and Economic Affairs (IDEAS) has today proposed a review of Malaysian government-linked companies (GLCs) to form the basis of a divestment strategy, under which the government targets a gradual disposal of its shareholdings in GLCs to 10% of these companies' total market capitalisation by 2030.

IDEAS research director Laurence Todd said this today in light of the government’s high shareholding in publicly-listed companies, at over 40% of total market capitalisation with majority stakes in over 70 entities.

“This high government presence creates concerns over competition and the lack of liquidity in Malaysia’s capital markets. We believe that the time has come to transition from this model,” Todd said today at IDEAS' public forum ahead of Malaysia's Budget 2020 announcement on Oct 11 this year.

Today, IDEAS' Budget 2020 proposals include a new living wage tax credit, under which employers are incentivised, but not required, to increase wages up to a new monthly living wage of RM2,500 per employee.

To ensure that employees can share in the wealth of the country, IDEAS said the government could use the establishment of an employee equity scheme (EES). 

Under this scheme, employers will be incentivised to allocate shares to employees, who will be encouraged to hold on to these assets rather than sell them for easy cash.

“We propose both these policies to be introduced in the forthcoming budget and recommend they be paid for through rationalisation of existing investment incentives,” said Todd.

On a broader scale, IDEAS, in recognising the government's effort to reduce its budget deficit, said the government in the longer term, should introduce a capital gains tax at an initial rate of 5% with a tax-free allowance of RM50,000.

“The government should launch a consultation on the introduction of this new tax in Budget 2020,” he said.

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