Launched in August 2024 under the Ministry of Finance’s Madani economic framework, Gear-up has a dual mandate: raising the ceiling of Malaysia’s economic stature and raising the floor of the people’s quality of life.
Six core government-linked investment companies (GLICs) coordinate the programme: Khazanah Nasional, PNB, the Employees Provident Fund, the Retirement Fund (Incorporated) (KWAP), the Armed Forces Fund Board (LTAT) and the Pilgrims’ Fund Board. They are committing RM120bn in domestic direct investments over five years.
A further RM440bn in public investments targets sectors such as energy transition and advanced manufacturing, especially in semiconductors, as well as venture capital for mid-tier companies.
Official scorecard
On paper, the first-year numbers are impressive.
As of 30 June 2025, RM11bn had been deployed, forming part of RM22bn in domestic direct investments identified – achieving 88% of the RM25bn pledged by GLICs for year one.
Sectoral anchors: The six core GLICs channelled over RM800m into Malaysia’s semiconductor ecosystem. They kickstarted green industrial development across 3,000 acres in Kerian and Carey Island. And they backed over 50 Malaysian firms and funds through venture capital and private equity.
Social floor indicators: GLICs and their government-linked company (GLC) networks also awarded RM200m in scholarships and supported 8,000 youths from low-income households through job placement programmes. They also rolled out community investments benefiting over 700,000 people nationwide.
Living wage commitment: All six GLICs have collectively implemented the living wage policy for their permanent Malaysian employees. They have set the benchmark at about RM3,100 a month – well above the RM1,700 statutory minimum wage.
Commitments have also been secured from 34 GLICs and GLCs to extend this living wage to 153,000 employees.
Pipeline visibility: KWAP’s RM1bn Pioneer Fund has already deployed 50% of its capital. Its RM6bn Accelerator Fund (Dana Pemacu), finalised its 12 global general partners in June 2025. The fund is set to begin deploying capital across private equity, infrastructure and real estate over the next four to five years.
On the surface, these are credible early numbers, particularly given Malaysia’s historical tendency toward aspirational target-setting without follow-through.
Constraints
But behind the headline momentum, Gear-up inherits a range of deep and durable structural problems in Malaysia’s state-capital GLIC–GLC nexus. These are not mere bureaucratic frictions. They are embedded in the political economy.
The crowding-out paradox: While deploying RM120bn through state entities to stimulate the economy, the programme is at risk of suppressing the private investment it claims to catalyse.
The Asian Development Bank provides empirical evidence for this. When GLCs dominate an industry, investment by private firms is significantly negatively affected. But when GLCs do not dominate, this crowding-out effect disappears.
The mechanism is straightforward. GLCs invest at a higher rate than private companies by virtue of their superior reserves and political connections. This makes private firms reluctant to enter sectors they perceive as skewed against them.
This is not a new observation. As far back as 2010, the government acknowledged the crowding-out effects of GLCs in the New Economic Model. This model had called for divestment of non-strategic GLCs, less government interference in commercial sectors, and re-engineering GLCs to support rather than compete with the private sector.
Yet successive economic blueprints – the 10th and 11th Malaysia plans – repeated the same emphasis on private sector-led growth without structural realignment.
Gear-up risks perpetuating this pattern if the RM120bn simply deepens GLIC concentration in sectors where competitive private markets should instead be nurtured.
Governance and political appointments: The governance architecture underpinning Gear-up remains structurally fragile. No clear, enforceable law specifically governs political appointments to GLCs and GLICs.
The system operates through government policies, cabinet discretion and agency-specific rules, creating room for political interference. Board members with political connections have been known to put party interests ahead of organisational objectives, raising concerns about corruption, abuse of power and conflicts of interest (Sedar Institute).
Banker Nazir Razak once noted that the Pakatan Harapan government did not substantively change the pattern of political appointees occupying top GLC positions. Under the subsequent Perikatan Nasional government, those positions were filled largely by politicians themselves (Ideas).
The Madani administration has stated that GLICs and GLCs are strictly adhering to directives. Yet boards still lack any legal insulation from political capture.
The LTAT problem: LTAT, one of the six anchor GLICs, represents, to many observers, the system’s most visible unresolved problem.
The LTAT’s portfolio of GLCs, including BPlant, Boustead Naval Shipyards and Pharmaniaga, deepened its financial difficulties through mismanagement.
Successive chief executives undertook asset sales and divestments to pay down debts. One such effort – BPlant’s proposed sale to Kuala Lumpur Kepong – was scrapped at the last minute, in part deterred by ethnic optics (East Asia Forum).
An institution engaged in rehabilitating its own balance sheet makes an improbable anchor for transformative national investment.
Mandate overload: Gear-up asks GLICs to simultaneously:
- Maximise returns – to protect pension and savings obligations
- Invest in high-risk frontier sectors like semiconductors and green industrial parks
- Deliver social programmes such as placements and scholarships for youth from low-income households
- Implement living wages across the ecosystem
- Act as counter-cyclical economic stabilisers
Asking a single institution to serve pensioners, advance bumiputra equity, build frontier industries and anchor wage reform all at once is a bit too much. Strategic incoherence is almost inevitable, whatever the progress reports say.
Clear mandates for state-owned enterprises are essential to balance commercial and non-commercial objectives and to avoid burdening individual enterprises with too many policy demands.
The bumiputra policy constraint: Perhaps the most structurally intractable constraint is the absence of clearly bounded parameters for bumiputra preferences within the GLC-GLIC universe.
The cycle of propping up underperforming entities and avoiding reforms that appear hostile to bumiputra interests may continue.
Yet disciplining the careless use and abuse of the concept would itself serve the empowerment agenda it claims to advance.
Gear-up’s Putera 35 component, which directs GLICs and GLCs towards bumiputra business investments and vendor development, is of real importance.
But it risks reproducing the same rent-seeking dynamics that have historically undermined bumiputra policy without delivering durable productive capacity.
The accountability gap: The auditor general’s expanded remit to monitor GLCs and GLICs may be a step forward. But the oversight ecosystem remains thin relative to the scale of funds being deployed.
RM120bn in domestic direct investment over five years is being directed at private equity, infrastructure, real estate, semiconductors and green industrial parks.
This kind of spending requires robust independent performance benchmarking, transparent deal disclosure and accountability for returns, not just deployment rates.
The current reporting framework, as reflected in the June 2025 MoF press release, remains heavily output-oriented – counting hectares activated, scholars funded and employees covered – without detailed disclosure of expected risk-adjusted returns or independent assessment of value for money.
Systemic implications: If these problems go unaddressed, Gear-up risks ending up as developmental statism (state-led development) without the development: capital deployed, projects announced, commitments made but the structural transformation still out of reach.
The International Monetary Fund’s 2025 Article IV consultation put it plainly: favourable conditions have opened a window for structural reform, but risks to growth in productivity remain tilted to the downside.
At its best, Gear-uP is a pragmatic instrument for deploying accumulated GLIC wealth towards national industrial priorities at a time when private investment remains structurally below potential.
At its worst, it is a rationalisation for continued state dominance of capital allocation, dressed in the language of ecosystem development and social equity.
The central tension is hard to escape. Gear‑up’s promise to raise the floor is undercut by the very system that made the floor so low in the first place.
The living wage commitment remains confined to the GLIC-GLC perimeter. It is not a substitute for structural wage-setting reforms, collective bargaining rights and competitive labour market conditions that would raise wages across the broader economy. The ceiling will only genuinely rise when GLICs make room for private innovators and risk-takers rather than edging them out. So far, this remains more aspiration than reality.
The views expressed in Aliran’s media statements and the NGO statements we have endorsed reflect Aliran’s official stand. Views and opinions expressed in other pieces published here do not necessarily reflect Aliran’s official position.
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