Malaysians are fooled; Economically

In the recent UMNO General Assembly, Tan Sri Muhyidin Yassin proposed a new National Economy Policy (not to be confused with New Economy Policy 1970) to catalyse the realisation of the success of the Bumiputera Agenda. In his speech, he stressed that the Bumiputeras are still left out in getting a bigger share of the economy. As a remedy, he spoke about the dire need of this new policy to achieve the Bumiputera Agenda. He, however, missed the entire point or perhaps, did so deliberately.

The policy that he suggests seems to have the same,old aspirations of the NEP of 1970. NEP was crafted after the 1969 racial riot with two prongs; alleviate poverty and redistribute wealth among the diverse races of Malaysia. Whilst poverty reduction has seen the success desired although the figures could be disputed, wealth re-distribution is never so. Under NEP, the Bumiputeras were expected to hold 30% of the corporate equity by 1990 as it was only at 1.9% in 1970. The sad news is, to date, this 30% benchmark is yet to be achieved. However, non-governmental researches have indicated that this 30% corporate equity share have long been achieved; it is only understated by the BN government through its disputable methodology. Examples of questionable way of calculating the corporate equity holding include the use of par value instead of the commonly acceptable market value to quantify market capitalization and the refusal of the government to divide the government’s equity in corporate companies according to the proportion of the racial composition in Malaysia. The latter is important as the Malaysian government owns huge shares in the top companies in Malaysia in terms of market capitalisation.

Currently, the Bumiputeras’ corporate equity stands at approximately 24%. But even if the status quo is 30%, it does not necessarily means that the Bumiputeras are better off compared to other races in Malaysia. Why is it so?

Bumiputeras real economic condition

In terms of Gini coefficient which measures income inequality, the Bumiputera group has inequality of 0.421 in 2012. A Gini coefficient of 0 shows income inequality spread equally in a community, with 1 showing an unequal distribution of income. While in 2012, the Gini coefficient of the Bumiputeras were the lowest in comparison to the Malaysian Chinese’s and Indians’, in 2009, the Bumiputeras had the highest. Not only that, merely 1.3% of eligible Bumiputeras hold 75% of the shares of Amanah Saham Bumiputera and the vast majority own around RM500 worth shares, according to a research by KS Jomo, a famous Malaysian economist. Besides that, within the Amanah Saham Bumiputera (ASB) which is the largest unit trust fund in Malaysia and serves only for the Bumiputeras (hence the name), the Gini inequality is 0.836 and this shows that the 83.6% of the invested amount of ASB is concentrated in the hands of few.

Taking a bigger macroeconomic picture, the bottom 40% of the Malaysian population’s monthly mean household income is merely RM1,847. In contrast, the top 20% has monthly mean household income of RM12,159. This is the state of Malaysia’s inequality. If we focus on the Bumiputera group, 75.5% of them are located within this bottom 40%. In the Malaysian workforce, 64.3% Bumiputera have only SPM qualification.

It is mind boggling that after all the efforts taken to improve the economic conditions of the Bumiputeras, the inequality within the community has remained the same, if not worsen. This is where the BN government has gone wrong.

New Economic Model; same old mantra

Now, that Najib Razak has gone back on his promise to repeal the Sedition Act, it is worth to note that this is not the first time he had done so. When the New Economic Model (NEM) was introduced in March 2010, only Part 1 was tabled in the august Parliament and Part 2 is to be introduced together with the 10^th Malaysia Plan. NEM is supposed to be the country’s long-run framework for economic and social development from 2011 till 2020. NEM was promised to re-create Malaysian public policy on the basis of meritocracy and no longer race-based. Whilst this created overwhelming response from all fraternities, the introduction of NEM’s Part 2 brought back only disappointments.

The Part 2 was not released together with the 10^th Malaysia Plan, instead only on December 2010. Interestingly, merely 10 days before 10^th Malaysia Plan and Part 2 of NEM were supposed to be revealed, at the Malay Consultative Council Congress, Perkasa head, the Malay supremacist, Ibrahim Ali has said that the “Malays have rejected the NEM”. And in the 10^th Malaysia Plan, key race-based policies were retained and as expected, in the Part 2 of NEM, race-based policies in support of the Bumiputeras were mentioned and highlighted. This is clear showing of lack of political will and Mr. Najib dancing to the tunes of Malay supremacists.

Malaysians are fooled

Malays have been constantly fed with the idea that the non-Malays, in particular the Malaysian Chinese, have been stealing “their” economy. This story has been around since even before the 1969 incident until now. But, the bare fact is, before the introduction of NEP, the economy was “stolen” from the Malays by the foreigners who own vast Malaysian wealth and corporate shares. And now after NEP, it is the Malays whom “stole” the economy from the other Malays. Confused? The figures aforementioned are the proofs. Policies under the NEP have created a new layer of Malay elites that controls the Malays’ wealth. While individuals like Mirzan Mahathir, Mokhzani Mahathir, Syed Mokhtar al-Bukhari are feverishly increasing the wealth annually, the ordinary Abu, Ali and Ahmad are still in deplorable economic conditions.

It is true that race-based policies will only create an elite line within a society and will never reach effectives. In Thomas Sowell’s “Affirmative Action Around the World: An Empirical Study” which focuses on Nigeria, Malaysia, Sri Lanka, India and the US, it is deduced that

·         Affirmative actions encourage non-preferred groups to re-designate themselves as members of preferred groups to take advantage of group preference policies;

·         They tend to benefit primarily the most fortunate among the preferred group (e.g. Black millionaires), often to the detriment of the least fortunate among the non-preferred groups (e.g., poor Whites);

·         They reduce the incentives of both the preferred and non-preferred to perform at their best — the former because doing so is unnecessary and the latter because it can prove futile — thereby resulting in net losses for society as a whole.

All three scenarios are evident in Malaysia through the implementation of race-based policies. Many individuals want to be recognised as Bumiputeras such as certain Indian-Muslim groups, wanting them to be labelled as Bumiputeras to enjoy the policies helping the Bumiputeras. The second scenario is, only small fractions of Bumiputera individuals are receiving the positive impacts of NEP and they form the elite group of Bumiputeras. And lastly, race-based policies have restricted non-Bumis growth, both socially and economically (Industrial Coordination Act 1975 required firms with annual turnover of RM2.5 million and 75 workers to allocate 30% ownership to Bumiputeras, scholarships preference for the Bumis, etc). This has also created negative impacts within the Bumiputera community as many individuals have resorted to become “Ali-Babas” to earn instant profit. Race-based affirmative actions have created rent-seeking Bumiputera community, Tun Abdullah Badawi has even stated that 85.37% of projects dished out to the Bumiputeras end up being sub-contracted to non-Bumis.

 It is said that after dismantling the Apartheid Law in South Africa and the enfranchisement of the blacks, late Nelson Mandela introduced race-based affirmative actions to empower the blacks by emulating Malaysia’s model. While this sounds positive, it is most disheartening to see most blacks are struggling from economic inequality. A group of black elites have formed within the larger society and is reaping the most benefits from the affirmative actions, while the poorer sections are left unattended.

Orang Asli

Tracing back to the early history of Malaya, the indigenous groups of the Peninsular are the earliest settlers of Malaya. Currently, there are 18 ethnic groups within the Orang Asli’s larger grouping, with three main classifications; Senoi, Negrito and Proto-Malay. These indigenous people are not recognised in the Federal Constitution to receive the special positions as per Article 153, albeit the fact that they are the rightfully indigenous human beings in Malaya.

As Malaysia’s economic policies are skewed towards the empowerment of Bumiputeras (read: Malays), the Orang Asli groups are severely left out. The fact is, despite the government proudly claiming that abject poverty has been reduced to 0.2%, 50% of the Orang Asli households or half of the 30,000 households is living under the poverty line. While it is true that some members of Orang Asli have become important figures of the Malaysian community, the truth remains that most of them are still living under deplorable means.

Malaysian Indians

The Malaysian Indians are also left out in Malaysia’s economic planning, despite several attempts to “help” this community. The major drawback of this community is, they are clumped together with the Malaysian Chinese in the form of non-Bumiputeras. Thus, very often than not, Malaysian Indians are seen well off than the Bumiputeras or precisely, the Malays.

Even before NEP was formulated, Malaysian Indians’ equity share was only 0.9% when the Malays’ was 1.9%. At that moment, the Malaysian Indians’ share in professional and management group was merely 4.3% whereas the Malays are at 12%. Similarly, the percentage of lndians in the technical and supervisory category was only 6.1 percent compared to 20 percent of Malays. Taking a second look, it seems like the Malaysian Indians needed affirmative actions more than the Malays. Fewer actions have been taken to increase their corporate equity share.

MIC’s first economic seminar in 1974 projected for ambitious 10% share of corporate equity by 1990. By 1980, this was again revised to 6%. But, MIC’s plans and projections for the community were never listened by the UMNO-led government. Now, after 44 years of NEP introduction, the Malaysian Indians’ corporate equity stands at dismal 1.6%. Not only that, their Gini coefficient in 2012 has increased to 0.443 compared to 0.424 in 2009. Now, that’s an achievement.

Malaysian Chinese

It is a pity that this community has always been viewed with negative perceptions. They are often labelled pejoratively as capitalists and controllers of the domestic economy. However, government regulations that were introduced under the pretext of helping the Bumiputeras, have restricted their capacity to grow economically and socially. This has indeed been proven by many studies.

Special Positions

Malay supremacists have often claimed that their special rights cannot be questioned by any other non-Malays. But the very fact shows us that as enshrined in Article 153, it is not “rights” but rather, “special positions”. In the deliberation process of drafting our Federal Constitution, it was earlier suggested that these special positions are to be reviewed after 15 years of independence. However, with the recommendations from Tun Dr.Ismail in the Tripartite Working Group, this 15 years requirement was removed, however, it is accepted that the special positions will be removed once the Malays are capable “to stand by themselves without crutches”. Tun Dr Ismail has noted this in his writings that the special positions are not meant to be forever.

Conclusion

Malaysia has to move away from race-based economic policies to put ourselves on the right track and compete internationally. The government needs to help individuals without preference to race and importance should be given to meritocracy. Remember, race-based policies do not only affect the non-Bumis, but also the intended group, Bumiputeras themselves. It’s now or never.