“PM’s bumi measures lack foresight”

By Samantha Joseph

Economists say that the measures announced over the weekend by Prime Minister Najib Razak to push bumiputera economic empowerment lacks foresight and does not tackle the root problems facing the bumiputera and especially the Malay middle and poorer classes.

“Some of the steps are good, like the Amanah Saham Bumiputera 2 and the MARA initiatives,” said a chief economist with a financial agency. “But I don’t think they’re really addressing some of the fundamental issues.”

The economist pointed out that those who took advantage of the economic and investment opportunities open to bumiputras were those who came from high-income families.

“You see, when you are poor, you don’t have the money to invest. You don’t have money to invest in education, you have a less conducive family environment, less information on financial issues,” he points out, outlining a circle of economic disadvantage that he says has yet to be managed.

Chairman of the Federation of Malaysian Manufacturers Kedah and Perlis Branch, Dr Haminnuddin Hamid echoes this statement. “The rich will remain rich, and the poor will remain poor.” He believes that the programmes will not really benefit bumiputeras, especially the entrepreneurs.

The programmes included expansions in the training and upskilling areas like the existing 1Malaysia Training Scheme, Graduate Employability Management Scheme and Skills Steering Programme, and the Professional Leadership Programmes under the Bumiputera Education Steering Foundation (YPPB). Other measures announced by the prime minister include directing government-linked companies (GLCs) and government-linked investment companies (GLICs) to favour development of bumiputera properties.

Entrepreneurial efforts include the government developing a group of bumiputera entrepreneurs through GLCs and GLICs in manufacturing, and the Bumiputra New Entrepreneurs Starting Scheme where an allocation of RM100 million will be provided for a three-year period.

“There have been plenty of institutes,” points out Dr Haminnuddin of the plan to form the National Entrepreneurship Institute and the Bumiputera New Entrepreneurs Start-Up Scheme under Teraju. “But where has all the money gone? How many entrepreneurs have they actually helped? It is mostly talk.”

The chief economist also added that the government is not addressing the issue of discrimination. “We have a problem with labour market discrimination,” he says. “There have been recent studies that show that bumiputera graduates are discriminated against in the private sector. That’s what should be addressed, rather than getting the bumiputera workers hired by the government or GLCs.

What we really need is a level playing field.”

Chief Economist of RAM Holdings Yeah Kim Leng agrees, but he says that government programmes should focus more on intra-ethnic inequality.

Yeah Kim Leng

“That means from within the bumiputra group, the programmes should focus more on closing the gap between the rich and the poor, as well as similar programmes for the other communities,” he says, adding that there is a need to be in line with the New Economic Policy (NEM) and shift to a more needs-based approach.

If the programmes are successful, then it is likely that it will help the bumiputeras reach a 30% corporate equity stake. Right now, Yeah says that the bumiputera stake is at 23%, and the remaining 7% is within reach. The challenge here is to have an equitable distribution approach.

As a solution for the wealth inequality among the bumiputera, Yeah admits that it is not a permanent one, citing that more effort is needed for education and skills training before the group can be empowered.

While the long-term beneficial impact of the agenda is a doubtful one, it appears that the policies and programmes are not expected to have much impact on the economy overall.

“The concern here is that some of these policies, especially those that have a quota requirement, are implemented too stringently at a micro level,and it may affect efficiency and competitiveness which may deter investments,” says Yeah.

“As long as the government continues to liberalise the economy and ensure that all these policies do not dampen investor confidence, then the impact is minimal.”