Efficiency performance of Malaysian Listed Government Linked Companies (GLCs) : a stochastic frontier analysis / Norhana Salamudin, Rosita Suhaimi and Jennifer Tunga Janang

When the government launched the Government Linked Companies Transformation (GLCT) Programme in May 2004, the main thrust, amongst others, was to improve the firms' operational performance. Since these government-controlled firms are the frontrunners in their respective industries, their performance should gradually converge with the international standard. This preliminary study on GLCs performance attempts to gauge the technical efficiency of GLCs and benchmarks the result with top foreign owned firms listed in Bursa Malaysia The study uses an unbalanced panel dataset of 31 existing GLCs over a period of 9 years (2000-2008) using the stochastic frontier model. The findings show mean technical efficiency of GLCs is gradually moving towards the frontier but it still relatively low compared to the benchmarked firms that represent international standard. The trend even declined drastically at the later period showing a wider gap against the international benchmark, hence, questioning its sustainability in the wake of global trade competitiveness and economic challenges. The PCG monitored GLCs do not show significant variation from the other GLCs and this should spark further study as to why transformation has not much improved the performance of these firms. The findings hope to contribute to the growing literature on firms' efficiency focusing on privatized firms in developing countries.