KUALA LUMPUR, Sept 15, 2015:
While bringing back profits made abroad by Malaysian firms is not a bad idea, there are several questions that need to be answered first.
Prime Minister Datuk Seri Najib Razak recently said profits from funds invested by Malaysian firms – both government-linked companies and private entities – should be reinvested locally in projects with high multiplier values which could create more jobs here and further boost the domestic economy.
Inter-Pacific Securities research head Pong Teng Siew said the available investments in the country might not be in line with what the companies were currently doing.
“Every company would want to get involved in something they are familiar with. The question here is whether there are suitable avenues domestically for companies that bring back the money to invest in,” he said.
He said by investing abroad, companies would have a steady stream of income and to simply bring back the profits to shore up the ringgit was not the right thing to do, adding that it was an unproductive use of foreign currencies.
Asian Strategy and Leadership Institute (Asli) director Tan Sri Dr Ramon Navaratnam said Malaysians had to recognise that they were in real trouble for having to urge companies to bring back profits from abroad.
He pointed out that Malaysian firms were receiving higher returns from their foreign investments.
“If the profits were to be brought back, in what will these firms invest in?
“Instead, what needs to be done is to raise the value of our economy. It must be prevented from declining further.
“There needs to be structural changes in the economy rather than ‘tinker with an old engine’. The dilemma faced is the change that needs to be done,” he said.
Navaratnam said the government needed to take more measures to prevent the economy from declining further and hoped that there would be more announcements in the near future on plans by the government to shore up the economy.
He said there was a need for real and transparent reforms to ensure the economy developed in a sustainable manner.
“Asking Government Linked Companies to bring back their profits is tantamount to interference,” he said, adding that this could set a bad precedent and in reality the government should not be involved in business.