The elusive 30% Bumi equity is a statistical charade

The prime minister’s statement that “the government’s target to raise Bumiputera equity ownership to 30% has yet to be achieved” sounds like a broken record from the 1980s. And after 50 years of the New Economic Policy (NEP), the never-ending policy, he has come out with a new measure to plug leakages:

“To ensure sustainable equity holdings by Bumiputeras, an equity safety net will be introduced to ensure that sales of shares or Bumiputera firms will only be sold to Bumiputera companies, consortiums or individuals.”

He also announced more Bumiputeras-only funds, namely, the Bumiputera Prosperity Fund (Dana Kemakmuran Bumiputera) and the Express Contract Financing Scheme (Skim Pembiayaan Kontrak Ekspres) under Mara to assist companies and contractors.

There will be more financial assistance. Guidance and mentoring by financial institutions would also be expanded to support Bumiputera entrepreneurs, including Bumiputera home-ownership quotas. There will be wakaf (Islamic endowment) to diversify financial resources to finance businesses and increase Bumiputera equity.

The Bumiputera elite and their statistical charade

Supposedly introduced to eradicate poverty regardless of ethnicity and to correct the “racial imbalance” relating to wealth-holding in the country in 1971, all the NEP statistics relating to ethnic proportions ever since have been consistently obfuscating.

During the 1980s, it was pointed out that by lumping the holdings of Bumiputera and government agencies in nominee and locally-controlled companies under “Other Malaysian residents”, it was not surprising that the “Bumiputera” stake would be understated.

It was estimated then that the Bumiputera stake under “Other Malaysian residents” accounted for at least another 12 percentage points. Hence, there would have been no further justification to prolong the NEP beyond 1990.

Nevertheless, the perversion of statistics on ownership of capital according to ethnicity in Malaysia was again highlighted when Lim Teck Ghee resigned as the research director of the Asian Strategy and Leadership Institute’s (ASLI) Centre for Public Policy Studies in 2006 over the report which concluded that Bumiputera corporate equity ownership was much higher than the figures presented in government statistics.

Lim maintained that Bumiputera corporate equity ownership could be as high as 45%, or RM325.08 billion, out of the market capitalisation of RM715 billion. (The Sun, 11.10.2006)

His research indicated that if the Bumiputeras had not sold off their shares, their equity stake would easily have been higher than the 45%. An estimated 40% of the preferential shares given to Bumiputeras were sold by them for quick profits.

The ASLI report had concluded that the NEP target of 30% Bumiputera equity ownership had already been exceeded, and said the official methodology inherited from the 1970s to measure corporate equity distribution was too narrowly based.

Lim’s resignation followed after Mirzan Mahathir, Mahathir’s son and president of ASLI, issued a statement saying that the report was flawed in its methodology and assumptions, and its conclusions could not be “vigorously justified”. Lim happened to be a former United Nations regional adviser and World Bank senior political scientist, and the recipient of many international academic awards.

The controversy over how government-linked companies (GLCs) should be categorised seems elementary to any economics student. It does not take a genius to see that Petronas, to name but one example, is certainly not a “non-Bumiputera” corporate entity.

Equity share by race

This whole notion of equity share by race is ridiculed by the very people for whom it is purportedly meant to benefit as Bumiputeras can sell their shares for cash as soon as they have received their allocation and restore the status quo ante ad nauseum!

With the latest “Bumiputera equity safety net”, Bumiputeras could resort to nominee accounts to transact their shares in the open market at higher prices instead of having to sell to other Bumiputeras. Bumiputera investors themselves would complain that it is not fair to the Bumiputera individuals who have invested earlier in hopes of getting a better return on their investment.

Now, while earlier Malaysia Plans used to provide statistics with ethnic breakdown (how else can we correct the “racial imbalance”?), the later Plans no longer did so.

The authorities justified this practice by quoting Standing Orders 23(2) of the Malaysian Parliament, that is that they were “likely to promote feelings of ill-will or hostility between the different communities”.

When I was in Parliament during the 1990s, my questions relating to proportion of scholarships and loans that were given to the Bumiputera poor; the numbers and proportion of Malay, Chinese and Indian waged labour and their respective earnings and others were similarly disqualified under Standing Orders 23(2).

Yet without such figures, are we meant to take on trust that there is a need for further steps to correct racial imbalance? The need for a Freedom of Information Act has never been more urgent.

Without such a racially discriminatory policy, the Malay ruling elite would not only lose their unfair privilege, but they would also lose their “Malay-centric” ideology designed to win Malay votes and sustain the fruits of political power. Therefore, the NEP has had to be prolonged under a different guise – the “National Development Policy” and the newest “Shared Prosperity Vision”.

As a local academic has already pointed out: “The measure, together with others highlighted in the 12th Malaysia Plan, is meant to ensure the Malays and Bumiputeras continue to support BN, especially Umno, in the upcoming general election.”

The NEP of 1971 has led to a carte blanche for the Umno ruling class to control the commanding heights of the Malaysian economy, including banks, plantations, oil & gas, properties, and other sectors. Furthermore, several of these Bumiputera-controlled sectors are monopolies. This itself makes the elusive 30% Bumiputera equity secondary.

A stated goal of the NEP was a 30% Bumiputera equity share target by 1990. Even though that has clearly been reached, there seems to be no end to a policy that allows the Malay elite to continue reaping the benefits of the policy. Besides being on to a good thing, such a discriminatory policy has a populist appeal to win over the Malay vote by portraying the non-Malays as “immigrants” who cannot enjoy these “special privileges”.

Clearly, affirmative action on an ethnic basis can only be justified for groups that are essentially marginalised and undifferentiated by class. The Orang Asli is such a group par excellence, but they enjoy no such privilege.

Just as all Malaysians deserve transparency and accuracy regarding the statistics around the Covid-19 pandemic, such transparency is crucially needed to enable accurate strategies to raise the Malaysian “keluarga” to the aspiration of high-income status.

Truth must be identified from fairy tales. Future writers of Malaysian fairy tales will no doubt deride the NEP very much like we lampoon the emperor’s new clothes.

sos

In the end...
Bumi ini milik sapa...

too long.

It a moving goal post, anytime they achieve it they move it so more and more discriminative policy can be introduced on the name of equality.

Considering the GLCs in Malaysia we have long passed the 30% but they want to keep the policy going as long possible because they can use it to get themselves filthy rich and also can be used as a tool to keep themselves in power.

30% kroni, yg lain pi mampus

TLDR is rakyat stay poor

biasa la, any kind of "leader" also will claim action done based on "data".. yup data they "massage" themselves. what kind of stuff u want to see also can.

The problem with these policies is they are stuck in a primitive Malaysia centric bumi vs non bumi mentality for a share of the local pie. The world has moved on from the 1970s today the competition is against Indonesia, the Philippines, Cambodia and many other countries for a share of the global pie. If bumi companies can’t even compete with local companies what chance do they have on a global stage, and the modern economy requires you to compete globally. That’s why these policies will always end in failure.

As a non, I fully support Bumiputras having a bigger share of the pie as long as they help grow the pie.

Awesome writeup. But I fear its useless when you have people like seriosekitt3h who believes marginalizing certain groups of malaysian citizens based on race is essential in the name of "fairness". Who believes "racial/religious unity" is achieved not by fair & equitable treatment but by discriminating certain segments of population. Who believes affirmative action policies should be community based and granted to everyone in that particular community irrespective rich or poor.

aiya no worries la.. nowadays, if wanna go big, just move headquarter to singapore or indonesia or thailand only, problem solved.. what's with this bumi shit, not like this world only malaysia can do business. want do business also do global business la, malaysia market so small only.. not like now is 1980.

This post has been edited by brkli: Sep 30 2021, 01:41 PM

It has long been exceeded. Oren kito continuously lie to you whether knowing or without knowing it. The truth is they don't want 30%, they want it all. See the 51% case.

Many don't know this but

1) The government measure the percentage using par value, and not market value. As an example, both Berjaya and TNB have par value of RM1.00 per share, but their market value of shares aren't the same. Today, Berjaya is RM0.26 per share but TNB is RM9.75 per share. Tell me - do you still think 1 share of Berjaya is equal to 1 share of TNB? According to the government they're equal, but let's see if anyone would trade 100 shares of Berjaya with 100 shares of TNB.

2) A chunk, I repeat, a big fucking chunk of Malaysian share ownership is held by trust solely for the benefit of Malays. As an example, by far the LARGEST fund management in the country is PNB which is formed solely for the benefit of Bumiputeras as part of NEP. This government conveniently ignores this in their calculation. Can you imagine that some Bumis still dare to say they don't benefit anything? Bruh. Amanah Saham Bumiputera exists and Bumi still say they don't get any benefit of being a Bumi.

Look at this article 13 years ago by a Malay woman professor in UM. Surprisingly according to her studies, NEP achieved 30% back in 1997 DESPITE using PAR VALUE. Imagine if we used market value, can you imagine how much fucking higher Bumi share ownership is?







https://www.malaysiakini.com/news/58885

This post has been edited by trojandude: Sep 30 2021, 01:55 PM

Yes this. Ffs, help grow the pie together la, not just "gimme 51%". Somemore that oso only benefitting the already rich elites and with cables

With policies like this, Singapore bertepuk tangan celebrate property for many years to come.

Why work when can get it free?

Taking is better than creating.

many malaysian (regardless race) will still believe it not achieve.. reason is because they look at "themselves" and/or thier fellow malays. forgetting the fact that 1 elite malay can own a lot of equities. of course we achieved of 30% bumi share target, by having 1-10 bumis owning that "30%" shares.. and this is the direction we are moving towards..

as always "statistic" and "numbers" just for the "leaders" to manipulate the people. in actual, what we need is reduce the gap between the rich and the poor, but using other segment (race) as data presentation of "part of the picture", the elite has earn big bucks for the last 20 years..

This post has been edited by brkli: Sep 30 2021, 01:58 PM

I think the gap between "rich and poor" among Malays is being overblown. If anything, it's the Chinese that is having "rich and poor" gap.

Here's a table. Notice that Chinese is top heavy. Also not that the total income share is proportional to the ratio of ethnicities in Malaysia. Where's the illusion that Chinese control wealth?


Median income among all races. Do you see significant difference between a T20 Malay and a T20 Chinese? No. Same applies M40 and B40. The only reason Malays are SLIGHTLY lower is simply because they're lesser in urban areas.



So why do people keep saying Malays are poor? By median income they're not. By equity ownership they're not. Almost every one of the largest X thing in Malaysia is held by either Government or Trust by Malays. As an example, the largest property developer, SP Setia, is owned by PNB which is for Bumis.

The only thing you could point out is most people in poverty are Bumis. Well no shit, 2/3 of the country are Bumis.

This post has been edited by trojandude: Sep 30 2021, 02:08 PM

this equity % is kind of stupid
The moment I reach 30% , i sell it so it will always be below30%

I want to ask what happens when 30% is reached? do they stop the NEP? Bumi can sell their equity right? what if next year drop to 29%? introduce again? are they going to keep introduce and abolish the policy?They can keep the percentage below 30% and keep the NEP forever?