Saturday, September 23, 2006

HAS 30 PERCENT BUMIPUTRA EQUITY TARGET ACHIEVED

One of the aspiration of the New Economic Policy was to achieve a target of 30 percent bumiputra corporate equity ownership. There is currently a conflicting report that claims that it has gone beyond 30% as targeted but the government figures show a stagnant figure of 18.9%, and due to this, the government had extended its implementation for a further 15 years, to year 2020. The New Economic Policy was initiated after the racial riots of 1969 and was aimed at bridging the socio-economic disparities between the races in Malaysia, particularly to uplift the bumiputra participation (then found to be inadequate) to at least 30 percent and its target to achieve this goal was set by 1990.

A recent study conducted by Asian Strategy and Leadership Institute (ASLI), reveals that the true estimated figure should be around 45 percent and their basis in arrived at this figure is derived from the statitics of September 2005 available from Bursa Malaysia. The study - entitled 'Corporate Equity Distribution: Past Trends and Future Policy' - had estimated that 70 percent ownership of government-linked companies (GLCs) was attributable to bumiputeras. While basing on a 2005 report from UBS Equity Research Malaysia, the study revealed that GLCs made up about one-third of total market value at the time. ASLI’s Centre for Public Policy Studies director, Dr Lim Teck Gee told from the UBS report, the top-10 GLCs alone - which include Tenaga Nasional, Telekom Malaysia, Maybank Bhd - approximately made up about one-third of the market value in 2005. “Our study was established based on the best available information and informed opinion. The government does not make such data available easily to the public,” he quoted when met recently. Dr. Lim further illustrated that ASLI’s study was aimed at providing updated facts to support their argument that the NEP’s 30-percent target had been achieved. “I and many other experts believe that the 30 percent bumiputera corporate equity requirement should either be removed or reformed,” he quoted. “Firstly, it was part of the larger NEP programme which was supposed to end in 1990. It is now more than 15 years. “The NEP programme has already long achieved its objective of nurturing a dynamic Malay business community and strong Malay wealthy and middle class,” he added. Lim warned that if such ‘crutches’ continued, it would only encourage rent-seeking and induce other distortions and inefficiencies that would hurt our national interests. Dr Lim proposed that instead of encouraging race-based corporate equity ownership, it would be better if the government encouraged efficiency, competition and productivity of our economy. In the light of the facts revealed, Lim hoped the government would exercise more transparency and publicise the methodology used by the government in providing its own figures. ASLI’s forecast and proposal was published in February this year, was meant for various government agencies, but it was also distributed to various groups including a number of Members of Parliament.

So has the 30% bumiputra target achieved? Only you can judge for yourselves.