30% Corporate Equity: Umnoputera Versus Bumiputera?

30% Corporate Equity: Umnoputera Versus Bumiputera?
Wed Oct 18, 06 03:47:03 PM
Oleh Dr Dzulkifli Ahmad, PAS Research Centre
Granted, the Asian Strategic and Leadership Institute, Asli's Centre for Public Policy Studies (CPPS) may have made a mistake. I said with an emphatic may. So what? Does that justify the CPPS's Director, Dr Lim Teck Ghee to be 'criminalized'? After the barrage of disparaging attack from many corners, the last straw I thought was Asli president's retraction of the report, he voluntarily resigned. Kudos to Dr Lim for biting the bullet to the end!


For the record, Asli's CPPS was being commissioned as part of a larger study to prepare for a submission to the government for the 9th Malaysia Plan. Hence, its abrupt withdrawal, followed by its director resignation is at best worrying. Why?


The public is still in the dark and is yet to examine the pros and cons of the controversy. Besides, there are other equally pertinent issues in the report, like the marginalization of the Indian community. Even before we could understand, head has rolled reminiscent of the Nazi's Germany oppression of the intellectuals.


That CPPS had engaged a team of academics, made it all the more imperative for the report to be given a wider discourse. High-handedness of this sort affirms claim of stifling intellectual freedom in academia.


There are few pertinent issues that warrant our introspection.


Firstly on the controversial finding of 45% bumiputera’s equity.


Why are Umno leaders so vehemently opposed to and enraged by the findings. On the contrary, Umno should rejoice and be jubilant of their success, after 2 decades of NEP (1970-1990) followed by 10 years of the New Vision Policy (1991-2000).


As ironical as it was amusing, it was fortunate that they didn't brandish their unsheathed keris again!


Paradoxical though it may seem, Umno has shrewdly insisted that the 30% bumiputera corporate equity has not been achieved. It is not as claimed by Asli’s 45%, but insisted that they are still underachieving and hovering at 18.9%.


The disparity in numbers is understandable. If you based your calculation on a different methodology, you most likely are going to get different answers.


The government (EPU) numbers were said to have been based on 600,000 companies, while CPPS was based on public-listed firms. While the EPU based the calculation on par value or paid-up capital, the CPPS used market capitalization or market value of public listed companies. Alternatively, calculation of net asset attributable to the shareholders or shareholders funds could be also used for unlisted companies.


An economist has said it vigorously that relying on ownership of wealth based on par value is absolutely meaningless , because it doesn't reflect the current status of the company. I thought that was saying the obvious. A start-up company with a paid-up capital of RM1.0 million may now be worth RM100 million.


A more intriguing question would have to be, who calls the final shot? The EPU will have to listen to the political masters. But try doing a survey amongst the informed section of the society. Will they take it from the professionals and the academics or the politicians on an issue like this?


Since Umno is shrewdly adamant on her failures, the logical question is to ask the Umno leaders why they failed. Do they understand why? If they are still oblivious or unrepentant or cunningly in denial, what makes them think that given another 30 years, they will succeed?


As they say it 'genius learns from the mistakes of others, while fool learns from his own mistakes'. You may like to conclude that if Umno could not learn from their own mistakes, then we are in fact dealing with a totally different cattle of fish.


Please don't extend this logic to the perpetual supporters of the regime that has unfailingly and religiously, been putting them back in power in every election.


Umno leaders must now openly admit that their failures are due to their own misdoings - 'sins of omission and commission' i.e in the corrupt practices of crony capitalism or rent-seeking activities.


The two-pronged NEP objectives of eradication of poverty regardless of race and restructuring of society are in themselves commendable. Current statistics testify that to some extent this has been achieved. PAS endorses that without much qualm. However, it is the 30% peril that is contentious. Not in itself per se, but in its constant abuse and politicisation.


Under the rubric of 30% equity target, the political elites working with their business cohorts have had a field day in the boom time. With little thought for welfare implications for the people, literally everything profitable was privatized.


Not only was it not done through the open-tender system, on numerous occasion concessionaires hardly had track records to entitle them to such huge handouts of the government.


Having reaped of the early juice of privatization and later failed, they were benevolently bailed out. The story is dismal to say of the least, scandalous at worst. The list is a very long one.


Let us cite a few. I’ll go for the big one, notwithstanding others the like of handing out millions of preference shares for bumiputera (reads umnoputera). Remember the Minister and her son-in-law.


What was TRI when given the privatisation of MAS? A Telco with hardly any experience managing the airline industry. Under Tajudin’s leadership MAS had an accumulated debt of RM9.4 billion. The government bailed out Tajudin, paying RM 1.79 billion for a 29% stake, at a share price of RM8 per share, almost 50% above market price.


Has Halim Saad's UEM ever built roads before to be awarded the generous terms in the North South Highway concession? When Halim’s Renong Group collapsed, a massive bailout was necessary because the Renong group owed around RM 20-28 billion ie accounting for more than 5% of the loans by the Malaysian banking system .


This brings us to the crux of the issue. Which Malays are they helping? Politically-well connected Umnoputera or the general Malay-Bumiputera?


While all Umnoputera are Malay-Bumiputera (not sure though), not all Malay-Bumiputera are Umnoputera right? Right again. So you have indeed a Positive Discrimination within an Affirmative Action.


Thanks to the leaders of Umno! For how much longer could they hoodwink the Malay-Bumiputera? Or Should I say for how much longer would the Malays remain gullible? So in the final analysis, it's a Positive Discrimination for Umnoputera!


Malay-Bumiputera faces a very 'tilted playing field' within the ethnic Malay/Bumiputera, hence the logical observation that Malays suffer the greatest intra-ethnic disparity.


So much for Umno’s championing of Malay rights and supremacy. It is this unwritten policy that is the greatest stumbling block in the creation of genuine enterprising, competitive and ‘towering’ Malays.


Little wonder again, why the insistence of the astute economist, Prof Ungku Aziz to side-step the polemic of 30% equity and wanting us to focus on poverty eradication and restructuring society, the last time this polemic raised its ugly head.


If examples cited above were in the Tun Mahathir's reign, are we any better during the current premier’s 3 years in office? Hardly. The controversial merger of the ECM-Libra and Avenue Capital left a lot to be desired by way of transparency and accountability.


The AP issue is another. AP when first incepted, was intended to be a mechanism to redistribute wealth amongst the Malays-Bumiputera. But who are greatest beneficiaries? The AP Kingpins.


Imagine how the Malay-Bumiputera, nay the entire nation and every deserving citizen would have benefited from the RM 380 billion lost in 'corruption and crony practices' as estimated by the Morgan Stanley’s economist for the last 2 decades? A lot!


So we have indeed gone one complete cycle, a very vicious one indeed.


This brings me to my last point.


While I am not in denial of the ethnic fault lines that have always divided and dichotomized the Malaysian society, may we be reminded that its perpetuation could be fueled by our own misdoings.


I'm no prophet of doom, but judging by the spate of events of late, we are heading headlong into the dark alley of racial hatred and antagonism.


The greatest benefactors are the racial-based political parties in the Barisan Nasional, viz Umno et al. The greatest losers are the citizenry, the rakyat. To finger-point anyone or insinuating that it is the game-plan of some spin-doctors may be both unnecessary and presuming.


However, if this continues unabated especially under a very weak leadership, we are in for a rude awakening, perhaps a national disaster.


Call it what you may but that is the stark reality! - mr