By Terence Gomez
A core issue in any Malaysia Plan is the table on equity distribution figures among ethnic groups. However, the latest available figures dated back to as far as 2008. Why has the table not been updated to reflect current figures, and why has it been omitted from the 11MP?
On May 27, 2015, The Star published a cartoon with the catchline “Most Malaysians are not aware of 11MP”. No truer statement had been made about the 11th Malaysia Plan (11MP), 2016-2020. This cartoon drew attention to a fundamental puzzle: why was there no public debate of the core issues that had to be incorporated into the 11MP? After all, this plan was to map the government’s path to fulfil the goals of Vision 2020 and the Government Transformation Programme (GTP) which outlined the primary objectives of Prime Minister Najib Abdul Razak’s National Transformation Plan (2010-2020).
When the 10th Malaysia Plan (10MP) was being prepared, there had been numerous roadshows to obtain public feedback about Najib’s proposed economic reforms and development agenda. As for the 11MP, even members of parliament were unaware of it. In the weeks before its release, I had asked members of the opposition if they were prepared to debate the plan. They either did not know that the 11MP was to be tabled or the significance of this plan. Evidently, there was no attempt by the government to solicit feedback from the opposition. This was imperative since the opposition now controls three state governments and what was to go into the 11MP also mattered in those states.
By not allowing for public participation in the planning of the 11MP, the government had not acted in a responsible manner. The 11MP, which will end in 2020, is far too important to be prepared in such a covert manner with input only through a process of selective consultation, with people allied to the government. Clearly, this does not augur well for Najib’s now longstanding desire to be “inclusive” when determining the socioeconomic direction that Malaysia should take. When the 11MP was released it became clear to me why details about this plan were so shrouded in secrecy. There were specific issues that the 11MP did not discuss and data it did not reveal.
Equity distribution figures
A core – and probably the most highly contentious – issue in a Malaysia Plan is the table outlining the corporate equity distribution figures among ethnic groups. The government’s equity distribution figures have been disputed in the past. In 2005, a major controversy erupted when a private think tank produced a report that suggested that the government’s equity distribution figures had been wrongly tabulated.
In this regard then, it is shocking that the 11MP did not present and review the most current equity distribution figures. The latest figures on this matter are indicated in the table below, obtained from the 10MP with data dating back to 2008!
Important questions arise about the 11MP when reviewing this table. Why was this table, which had been updated in all previous Malaysia Plans, being omitted here? Why does the 11MP persistently refer to the imperative need to attain the government’s longstanding target of 30% bumiputera equity ownership by 2020 but provides no feedback on the progress it has made on this front since 2008? Is this omission linked to the issue of poor levels of investment by domestic investors, a point alluded to in the 11MP?
Other important questions arise when reviewing this table which should have been discussed in the 11MP. There has been a perceptible fall in Chinese equity ownership figures, from its peak of 45.5% in 1990 to 34.9% in 2008, a decline of nearly 11 percentage points. This fall could not have been due to the implications of the 2008 global financial crisis as it led to a serious recession in Malaysia only in 2009. Have Chinese equity ownership figures fallen even further behind since 2008?
Interestingly, bumiputera equity ownership figures have increased by only about two percentage points since 1990. Even if we take into account that the government no longer attributes its ownership of government-linked companies to bumiputeras, why is that this figure has increased by only three percentage points since 2004? Since the Ninth and 10th Malaysia Plans had devoted a high volume of attention to nurturing a Bumiputera Economic Community (BEC), has this figure increased far more significantly? If it hasn’t, what does this say about the viability of the 11MP’s BEC agenda?
Indian equity ownership figures in 2008 stood at 1.6%, the highest rate ever achieved. How have Indians fared since 2010, since Najib’s government has reputedly devoted enormous attention to improving the economic plight of this ethnic group?
Ananda Krishnan
Since a breakdown of the Indian ownership figures are not provided, one can’t help but wonder if much of this equity is held by just two people, T. Ananda Krishnan and Tony Fernandes.
A disturbing trend that this table indicates is the growing ownership of domestic equity by foreigners. Foreign ownership of equity had massively fallen from its peak of 63.4% in 1970 to its lowest level of 25.4% in 1990. Since then, it has been on the ascendancy, peaking at 37.9% in 2008. Has foreign ownership of Malaysian equity increased even further since then, a probable scenario given how the government has courted investments from abroad? Crucially too, what does this suggest about the government’s support of the US-led Trans-Pacific Partnership, a deeply contentious issue that did not merit deep review in the 11MP?
Two core issues actively promoted by the 11MP are productivity and innovation. These issues, even by the government’s own admission, have been brought up in other Malaysia Plans. Productivity and innovation have not improved because of poor investments in research and development (R&D). Through R&D, the quality of products produced can improve, thereby enhancing the ability of domestic companies to compete, even in the global market. Once value is created through such production and companies realise income, this will lead to more R&D investments that engender innovation, a factor contributing to the growth of firms. This form of enterprise development was the main thrust of the 10MP. The most current equity ownership figures, which have not been released, will indicate if such patterns of company growth have occurred. If such growth has not occurred, does this not suggest that instead of harping yet again on productivity and innovation, an honest assessment should have been done of the factors that are hindering enterprise development?
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Terence Gomez is Professor of Political Economy at the Faculty of Economics & Administration, University of Malaya.
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