Study: 30% bumi equity target exceeded
Malaysiakini
Sep 23, 2006
Andrew Ong

The New Economic Policy (NEP) target of 30 percent bumiputera corporate equity ownership has been well exceeded but the method is an inefficient barometer of Malay wealth, suggested a new study.

The study, by the Asian Strategy and Leadership Institute (Asli), estimated that the rightful figure should be around 45 percent, when based on September 2005 Bursa Malaysia figures.

In making that estimation, the study - titled 'Corporate Equity Distribution: Past Trends and Future Policy' - estimated that 70 percent ownership of government-linked companies (GLCs) was attributable to bumiputeras.

Based on a 2005 report by UBS Equity Research Malaysia, the study said GLCs made up about one-third of total market value at the time.

Met recently, Asli’s Centre for Public Policy Studies director Dr Lim Teck Ghee said from the UBS report, the top-10 GLCs alone - which include Tenaga Nasional, Telekom Malaysia, Maybank Bhd - roughly made up around one-third of the market value in 2005.

Asked to substantiate the 70 percent estimation, he said: “Our study was established based on the best available information and informed opinion. The government does not make data available easily (to the public).”

Wrong priorities

According to Lim, Asli’s study was aimed at providing updated facts to support the 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 said.

“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.

Instead of encouraging race-based corporate equity ownership, he said it would be better if the government encouraged efficiency, competition and productivity of our economy.

Transparency needed

In view of the study’s findings, Lim hoped the government would exercise more transparency and publicise the methodology used by the government in providing its own figures.

Asli’s proposal was published in February this year meant for various government agencies, but it was also distributed to various groups including a number of members of parliament.

The NEP was born after the 1969 racial riots and was aimed at bridging socio-economic disparities between the races.

The Ninth Malaysia Plan had revised yet again the 30 percent target until the year 2020, and stated that between 2000 and 2004, bumiputera equity ownership remained stagnant at 18.9 percent.