KUALA LUMPUR: Lowering the stamp duty rate for shares traded on Bursa Malaysia Securities, as announced by Prime Minister Datuk Seri Anwar Ibrahim, will have very little impact on the stock market as structural problems persist in listed companies, says an economist.
Malaysia University of Science and Technology Research and Innovation provost Prof Geoffrey Williams said any reduction in transaction costs will be welcomed by investors, but the simple fact is that companies on Bursa Malaysia are “not attractive”.
He said this is because they are underperforming relative to alternative investment opportunities in other countries and the liquidity remains low with very few opportunities for investors to get a good position, owing to closely-held shares and a dominance of government-linked investment companies (GLICs) compensating for lack of other investors.
Prof Williams said corporate governance along with the environmental, social and governance (ESG) risk is too high for many overseas investors.
He said most big business activities in Malaysia are done by GLCs (government-linked companies) that are mostly owned by the government and the GLICs.
“So, there is very little room for private companies because they are crowded out of the big-ticket projects by government interference.
“This is why many of the GLCs should be reformed, starting with the responsible privatisation of the tens of thousands of subsidiary companies they own,” Prof Williams said.
Economist and former Treasury deputy secretary-general Tan Sri Ramon Navaratnam said the new measures are small and technical in nature.
“We hope they reflect the new era of bigger changes and more significant reforms, making us more competitive, especially in equity ownership.
“Also, the proof of the pudding is in the eating! The success of the new measures will depend on integrity and proper implementation," he said.
