The RM470 billion budget tabled on Oct 6 had earmarked RM50.8 billion for investments through government-linked investment companies (GLICs), public-private partnerships, statutory bodies, and the Ministry of Finance Inc.
A further RM30 billion was allocated to the GEAR-Up initiative, aimed at boosting domestic investment through GLICs.
The approach was described by economist Geoffrey Williams as a “pragmatic evolution” in economic management.
“There is a shift from pushing higher gross domestic product (GDP) through spending to pushing growth through investment, and this is positive because real growth comes from raising the supply-side potential of the economy,” he told FMT.
Williams said allocating part of development expenditure through GLICs balances fiscal prudence with market efficiency, helping to reduce the deficit while delivering potential returns to contributors through annual dividends.
“The GEAR-Up initiative could provide tangible benefits for the people if it helps to deliver good dividends each year, forming part of their long-term investment strategy and should not disturb what they were doing before too much,” he added.
However, economists cautioned that excessive state involvement could limit private sector dynamism.
Carmelo Ferlito, CEO of the Center for Market Education, said Malaysia must now focus on “crowding in” private investment rather than crowding it out.
“If we’re talking about strategic and long-term sustainable investments, the initiative should be market-led rather than government-led,” he said.
“To boost investor confidence, we should see a government withdrawing from direct economic initiatives and working to build a bigger and safer space for private investments.”
Williams noted that GLIC-driven programmes like GEAR-Up would only succeed if they mobilised private participation.
“If it can crowd in private players through partnerships, suppliers, and investment returns, including MyCIF, it will be more positive,” he said.
To achieve an economy less dependent on GLICs, Ferlito pointed to initiatives such as enterprise networks, where small and medium-sized enterprises join forces in collaborative arrangements to share resources, pursue joint projects, and strengthen market presence.
He said such initiatives, supported by fiscal incentives, would help Malaysian firms grow competitively “without sacrificing entrepreneurial independence”.