Bumiputera Corporate Equity - The Truth Beckons

The debate on the Bumiputera corporate equity ownership rages on with another set of analysis compiled by by Universiti Malaya academician Dr M Fazilah Abdul Samad.

She found that the bumiputera equity ownership hit the target set by the New Economic Policy in 1997, when it reached 33.7 percent. The research, published in 2002, was based on a 10-year analysis of bumiputera equity ownership between 1988 and 1997 of public listed companies on the Kuala Lumpur Stock Exchange (KLSE), now known as Bursa Malaysia.

However, the report did not cover the post-financial crisis period of 1997 and beyond. Nevertheless, Fazilah found that both bumiputera and non-bumiputera companies were dealt an equal blow by the crisis.

This scholarly report is another indication to the government to come clean on the real Bumiputera corporate equity figures. The lack of transparency and its insistence of continuing with the policy without any real justification is eroding the credibility of the ruling elites.

What is obvious is the income contraction of the poorest 40 percent of the society. They held only 13.5 percent of the total wealth.

Some highlights of the NEP outcome:

• Absolute poverty level at a mere 5.7 percent from a double digit figure when the policy was first introduced
• Household income for all communities has increased between 3.5 percent (Indian) to 9.4 percent (others). Chinese (3.6 percent) Bumiputera (4.9 percent).
• Income disparity between communities has reduced: Bumiputera:Chinese = 1:1.74 (1999) to 1:1.64 (2004), Bumi:Indians = 1:1.36 to 1:1.27
• Percentage of Bumiputera professionals is on the rise = averaging 39 percent of all sectors (accountant, architect, doctor, engineers, lawyers but does not include teachers and lecturers)
• Meaningful and substantial participation of Bumiputera in all important sectors of the economy: financial institutions, aviation, logistics, public transportation, tertiary education, public service, telecommunication services, media, agriculture, defence support, oil and gas and others.
• In the case of Malaysia, instead of creating a larger pool of middle class (bell shaped graph) we are creating a larger intra-ethnic disparity or a bigger difference between the richest and the poorest (bar-bell shaped). As a result, the gini-coefficient which measures the relative difference has increased for all communities (0.452 to 0.462) – Bumiputera (0.433 to 0.452).
• Top 20 percent of the society own 51.2 percent of total wealth (from 50.2% in 1999) and bottom 40 percent own a mere 13.5% (down from 14%).
• Inter-state poverty disparity is huge: Penang, Selangor and KL (0.3% to 1.5%) but Kelantan (10.6%), Trengganu (15.4%) and Sabah (24.2%).