Government policies to enhance Malay Bumiputera and other ethnic minority participation in commerce and industry are better achieved through capacity building efforts such as investment in human resource development and skills training rather than through forced equity restructuring.
Written by Dr. Lim Teck Ghee, CPI
More than five years have passed since the Asli corporate study report revealed that Bumiputera ownership of corporate equity in the Kuala Lumpur Stock Exchange had exceeded the 30 percent target.
The study's findings of a 45 percent Bumiputera share were based on a different method of measurement compared with the official one. Using market value as opposed to the par value valuation official method, and allocating the equity of GLCs according to racial share, the study noted that it was time to do away with the policy which had been implemented since the 1970s.
The study's findings raised a hue and cry not only because it challenged the official data on the share equity attained by the Malay community but more importantly because it challenged the official orthodoxy.
Strong reactions from various Umno leaders at that time indicated their fury -- and perhaps fear -- that the Asli study negated a long-held belief on how the Bumiputera corporate equity strategy was necessary for Bumiputera economic advancement and synonymous with the interests of the Malays.
Lost in the firestorm were the study's recommendations that encompassed a wide spectrum of issues. Those recommendations are reproduced below.
I hope they will be read more carefully by the present crop of policymakers and politicians that are trying to find their way out of what has correctly been referred to as the "bastardization of the NEP" - an assessment made by one of the nation's foremost bankers, Nazir Razak.
Corporate equity findings (from Centre for Public Policy Studies' Report)
* GLCs are leading shareholders of corporate equity. The GLCs' pattern of operation reflects little entrepreneurial and manufacturing capacity.
* Regulatory agencies ensure that 30% of the equity of quoted firms are owned by Bumiputera. These agencies do not, however, ensure that individual Bumputera allocated large volumes of publicly-listed equity, especially during IPOs, retain their ownership of this equity.
* Publicly-listed shares distributed to Bumiputera minority shareholders during IPOs should be done in a more equitable and transparent manner. Currently, an elite benefits from such IPOs, and these shares are quickly divested for huge profits.
* The continuous divestment by Bumiputera shareholders (partly as a means of asset diversification) has been mainly responsible for the so-called "under achievement" by Bumiputera in relation to the NEP corporate equity targets based on the official definition.
* Even if this divestment is not taken into account, Bumiputera share of corporate equity presently is well in excess of the target of 30 percent, if more objective methodologies of measurement are used.
* There is little intra-ethnic business cooperation among leading Chinese businessmen. There is growing evidence of inter-ethnic partnerships forged on a basis where the partners contribute equally to the development of an enterprise.
* Government regulation and policies, principally in the form of NEP measures, are stymieing entrepreneurial development and hindering domestic and foreign investment.
Corporate equity recommendations
* Enterprises owned by the GLCs must be managed by competent professionals with expertise in the business of the company under their charge. Senior management positions should not be determined on the basis of ethnic background but on merit and professional achievement.
* The government should cease allocating equity to individual Bumiputera during IPOs. The allocation of shares to Bumiputera before IPOs tend to promote Ali-Baba relationships that only serve to undermine investor confidence and foster ill-will.
* Bumiputera trust agencies, such as the ASN and ASB, should be the primary beneficiaries of IPOs allocated to this community. At the same time, there should be equal determination by the government to increase the share participation of the Indian and East Malaysian Bumiputera communities through similar community-based trust agencies.
* Government initiatives to promote enterprise development on the basis of affirmative action will undermine entrepreneurial endeavours, which have emerged primarily among SMEs, without state support.
* The government should focus its attention on promoting key economic sectors and SMEs as a means to develop Malaysia's economic potential. The government should particularly tap into the potential of the new middle class to create thriving enterprises and find means to support such endeavours.
* Racially oriented affirmative action and the promotion of Malay-owned businesses have created serious intra-ethnic Malay cleavages while also hindering the creation of a competitive economic environment. The government should not continue with the continued promotion of such policies.
* In calculating the respective ethnic shares of the corporate equity, there is need to apportion the share of GLCs as well as nominee companies according to the ethnic composition of the country. This will provide a fairer and more objective computation of the respective ethnic shares as compared with the current methodology.
* Government policies to enhance Malay Bumiputera and other ethnic minority participation in commerce and industry are better achieved through capacity building efforts such as investment in human resource development and skills training rather than through forced equity restructuring.
written by OrangKaya, September 05, 2010 06:46:36
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written by red1, September 05, 2010 05:10:20
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written by onnetline, September 04, 2010 23:27:35
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written by pemerhati setia, September 04, 2010 21:37:25
sorry...must add this: if tak cukup 30% can get berjaya, YTL, SP Setia, country height and other to do charity...derma and dilute a bit share to bumi hahahhahaah. I remember that someone so generous to derma before but lupa la......let all bumiputra dapat durian runtuh..... Good idea tu.....
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written by pemerhati setia, September 04, 2010 21:32:29
. Perhaps could be manifesto for PR. if taking Putrajaya: Transparent study to be done to determine actual percentage. Can let PWC,KPMG or DKC bid for this.
...See PKFZ....no cover up...can credit Ong T Keat also for this hahahah...it is where the immunity of once untouchable old man is on the rock... Actual figure result could change Bill Gates ranking in the world....who know? 1 man owned 50% of malaysia wealth....richest man in the world =made in Malaysia...
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written by Better My, September 04, 2010 18:16:36
The country feels very much like these artificial unconstiutional Bumi's share being reached, or/and exceeded to a much higher rate, many years ago already. The NGOs , like Dr. Lim Teck Ghee, CPI, must continue to put their arguments on the continuity of these very shameful Malay grab for $share, irrespective whether the report messsages are listened to.
For these mob to grab the chinese wealth, earned from their sheer sweat and tears today, is unforgiveable It is total black mark of utter disgusting shame on the malay daylight robbery theives.
The good malay must come forwad to restore the pride to themselves. Will more join in?
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written by casper, September 04, 2010 17:22:28
I never tire to cite and retell the success story of one Oliva Lum - Taiping born girl who was abandon by her parents, effectively rendered an orphan but still went on to carve a niche for herself south of the border. Having spent her formative years in Convent, Taiping, Olivia ventured into the Lion City, put herself through school while holding down temporary employment.
All that perseverance paid off when taking the chance to venture into the business world, Olivia raised seed capital of some SD$14,000 to form Hyflux. Here, with pleasure I share with all footnotes from The London Times, to serve as inspiration :
GREEN RANKING FOR 2009
Ranking: 84=
Worth: £220m
Green investment: Clean energy
[[ Olivia Lum founded the Singapore water firm Hyflux in 1989 with $14,000. An orphan and former chemist, she learned to weld so she could personally help build the company’s first water treatment projects. Hyflux’s technological strength has enabled it to identify niche applications in several sectors beyond water — moving into the field of clean energy in environmental applications such as the recycling of used oil, processing of bio-ethanol as well as in the production of bio-based materials such as lactic acid. The company floated on the Singapore Stock Exchange in 2001. Though the shares have fallen recently, Lum’s stake and share sales take her to a £220m fortune. ]]
It is a crying shame when I ponder how many more Olivia Lum's we could have produce and not have gone missing - from the children of Malay, Chinese, Indian, son's of the soil from East M'sia - had MahaSial/UMNO not infected our curriculum with the vile seeds of entitlement that is divisive. I'm in no doubt UMNO's success in this sinister scheme would have Hilter applauding from the grave.
Now, if anything, perhaps high time for all of Malaysian, chiefly the Bumi community wake up and smell the roses, and hopefully realise that UMNO has them basking in failure. UMNO selling the notion of "entitlement" has effectively place many in the Malay community in a "cycle of poverty" that will eventually leave vast numbers caught in a "poverty trap".
For now, the severity of this failure goes unnoticed but the pain is not far from the horizon and soon to visit. Malays at large had better come to their senses in quick time. As an entity, M'sia would soon be "effectively bankrupt" when petrol income dries up.
From now till the time we venture to the polls, may all M'sians (esp Bumi's) acknowledge a vast fortune has fed UMNO and associates (Sultans too) for two generations. The lot of them 'champions of the race' getting fat for no toil is all but a sham.
We are all on the same boat, will have to endure and work doubly hard to make up the missing billions of ringgit, already plundered by MahaCuri & Co. Time for all to say MAMPUS to UMNO, our destinies to be determine by each individual and certainly don't need UMNO help 'to curi duit rakyat' to feed a select few.
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