More verdict on bumi equity issue

Terence Gomez is the research coordinator at United Nations Research Institute for Social Development (UNRISD). He wrote the following letter to Malaysiakini on Asli’s study showing bumi equity has already reached 45%, but which UKM Prof Shamsul Amri Baharuddin dismissed as a sinister motive by non-Malay researchers.

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There is no need to racialise this discussion on equity ownership. Prof Shamsul Amri Baharuddin has probably not read the report by Asli’s Centre for Policy Studies, which is why he has denigrated it as a document with a race-based agenda.

I and other scholars had the opportunity to contribute to this study and other parts of the report and can affirm that the document was written by academics genuinely interested in contributing to the discussion on policy planning for the 9th Malaysia Plan (9MP).

On the issue of corporate development, the report has made the important point that the government had played an effective role in helping redistribute wealth more equitably among all Malaysians.

Currently, government-linked companies (GLCs) are among the major holders of corporate equity. The prominent role of the GLCs in the corporate sector, in terms of ownership and control of business equity, brought into question the argument that the wealth attributable to the bumiputeras is less than 20%.

The report has, to my mind, rightly questioned the government's continuing fixation with figures like 30% for bumiputeras. One outcome of their increased ownership of corporate wealth, from 2.4% in 1970 to 18.9% in 2004, has been the creation of serious intra-ethnic class difference. The government appears unaware or unwilling to accede that ethnically-based corporate ownership figures 30% mean little or nothing in terms of ensuring equitable wealth distribution for all Malaysians.

On the issue of methodological weakness on the part of the government, I would like to highlight (drawing reference to the 9MP) a few points.

First, it is odd that even though the GLCs are majority shareholders of the largest companies quoted on the Bursa Malaysia, the non-bumiputeras are listed as owning more equity than the bumiputeras.

Second, who are the owners of nominee companies, which own a massive 8% of corporate equity, even more than bumiputera institutions which own only 2.2% of such wealth? If the government now claims to advocate a more open and transparent corporate system, why do they retain the practice of using nominee companies?

There is more reason to question these government figures if we look at the 9th Malaysia Plan. Individual bumiputeras and the government were said to own 51.7% and 31.2% respectively of privatised entities at the end of 2005, while non-bumiputeras owned only 8.9% of such equity, which would presumably include firms like Telekom Malaysia, Tenaga Nasional, and MISC.

Since the government holds this equity on behalf of bumiputeras, the total volume of privatised firms attributable to this community would amount to a colossal 82.9%. Yet, the 9MP also insists that the volume of corporate assets owned by bumiputeras has not increased from 19% between 2000 and 2004.

There is clearly some concern and differences of opinion about how the government tabulates equity ownership figures. I would suggest that academics collectively ask the government to release its methodology for tabulating these figures. I would also welcome the opportunity to work with other academics, including Shamsul, to analyse the impact of affirmative action on wealth distribution and the corporate sector in Malaysia.

I would also argue that we should then move on to encourage the government to promote policies that are universal in orientation, developed to help groups in need, regardless of race.

Like Prof Shamsul, I too entertain suspicions of sinister motives, but in my case, of the UMNO-led government.

But unlike Prof Shamsul I am not a learned academician, who should have exercised far greater discerning analytical responsibility based on professional assessment of the methodology and data presented by Asli.

Therefore, unlike the learned professor, I can't be accused of the most shameful and un-academic conduct.