KUALA LUMPUR (Feb 23): The federal government has been urged to strengthen oversight of government-linked companies after dozens of profitable entities failed to declare dividends in 2022 and 2023.
The National Audit Department recommended clearer dividend frameworks, better operational efficiency, and active corporate governance to ensure public investment generates tangible returns in the latest Auditor General’s Report.
The lack of mandatory dividend distribution policies, except under the 2024 Minister of Finance (Inc) Dividend Guidelines, has created gaps in accountability and reduces predictability of returns to the federal government, the report said.
In 2023, 145 companies limited by shares paid out dividends totalling RM77.7 billion in 2023, out of which 16 paid dividends directly to the federal government. Petroliam Nasional Bhd, Malaysia’s national oil and gas company also known as PETRONAS, was the single-largest contributor.
However, 13 companies and their subsidiaries did not declare dividends despite recording profits in 2022 and 2023, having enough assets to pay off their current liabilities, and accumulated retained earnings, the audit found.
While state-owned enterprises are not mandated to pay dividends, the report underscored the need for ministries to ensure companies balance reinvestment with shareholder returns, particularly when public funds are involved.
Auditors also highlighted that clearer dividend frameworks could also incentivise companies to enhance operational efficiency and cost management, which could further increase profitability and, by extension, dividends to the government.
For government-linked companies, the approach would align financial performance with public accountability, ensuring taxpayers’ investments deliver measurable outcomes, the report said.
Supervising ministries are encouraged to implement policies, according to the report, that allow for reinvestment and ensure that profitable entities provide fair returns to the federal government, reinforcing government-linked companies as both business and public-sector instruments.
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