Asli responds to comments on bumi equity study
Malaysiakini
Sep 28, 2006
Dr Lim Teck Ghee

Malaysiakini’s news reports on the corporate equity ownership study conducted by think-tank Asian Strategy and Leadership Institute (Asli) drew comments and responses from various sectors.

Some even questioned the mechanism and the purpose of the study, which was conducted by Asli’s Centre for Public Policy Studies (CPPS).

Today, the centre's director Dr Lim Teck Ghee responded to the various comments made about the study. Below is the reproduction of his response in full:

CPPS response to comments in malaysiakini on corporate equity distribution study

The CPPS would like to take the opportunity to respond to various comments on its recent study on the corporate equity issue.

Firstly, the study was undertaken by a multi-racial group of scholars and consultants as part of work in connection with the Ninth Malaysia Plan. It was submitted to the prime minister, cabinet ministers and other government leaders in February 2006 as part of a bigger report which included findings of studies on education, the civil service, low-income communities and Penan.

Following initial release of the report to the government, the report was made widely available to various political, social and economic bodies in the country.

The corporate equity study was based on a combination of primary and secondary research. The study found that the official methodology for computation of corporate equity distribution – first used in the 70s and continued till today - is narrowly based, unrealistic and has resulted in an underestimation of the true volume and value of bumiputera equity.

Using alternative methodologies, the study has estimated that the bumiputera corporate share is considerably higher than the official figure of 18.9 percent in 2004 – in fact it may be as high as 45 percent. This is because, besides the original listing requirement of 30 percent, the bumiputera share has been considerably augmented by that held by government-linked companies (GLCs), which are among the major holders of equity in corporate Malaysia.

Other findings of the study are that the government has played an effective role in redistributing wealth more equitably among all Malaysians. The study also provides evidence of one important new development, that is, the emergence of business partnerships forged along inter-ethnic lines.

A number of these partnerships comprise bumiputera from the new middle-class, created through their access to human development opportunities that has provided them with skills in the corporate sector.

The emergence of such inter-ethnic partnerships, most of which started as small and medium-scale enterprises (SMEs), was not fostered through government directive. These partnerships were based on the coming together of business people in endeavours where each partner has contributed to the development of the new enterprise. The rise of such inter-ethnic partnerships augurs well for the promotion of national unity in Malaysia.

The study concludes that the focus of the government on racially-based affirmative action programmes to redistribute wealth is misplaced and is jeopardising economic growth. It is clear that selective patronage has resulted in serious intra-ethnic Malay cleavages, while also undermining inter-ethnic social cohesion and equitable socio-economic development for the country as a whole.

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The focus of the government should be on policies that transcend a racial dimension and which address issues from a structural perspective. The study recommended that for the Ninth Malaysia Plan, the government should focus on promoting the development of SMEs, where genuine entrepreneurial capacity is to be found and encouraged.

The centre welcomes the opportunity to discuss its findings with other non-partisan bodies and individuals. The centre also hopes that the findings of the study and the larger report (several chapters focus on marginalised Malaysian communities) can generate thoughtful and rational discussion on the country’s social and economic development strategies.

In this connection, we would like to point out that casting aspersions and questioning motives based on race is not helpful. In particular, we are concerned with the comments attributed to Prof Shamsul Amri Baharuddin.

Using his own logic which questions the ethnicity of those involved in the study, it would appear that all government data/studies (and his too) cannot be taken seriously because they are undertaken by a Malay bureaucracy or academics to promote a particular Malay agenda.

Dr Lim Teck Ghee
Director, Centre for Public Policy Studies