Still in search of its North Star
Sunday Star reviews the much talked-about Bumiputra Economic congress, which concluded last weekend. While some encouragingly serious stocktaking took place, the way ahead was not clearly set out, according to experts and analysts.
CAN more of the same lead to better, different results?
This is what economists and experts are asking following the Bumiputra Economic Congress (BEC) last week which was touted as part of the unity government’s attempt to improve the community’s economic standing.
The congress and the bumiputra agenda that it aimed to produce is the latest effort after more than 50 years of similar programmes and money invested that have produced mixed results when it comes to putting the bumiputra community on par with others.
Sunday Star spoke to experts, who had studied and been part of previous bumiputra economic plans, about their expectations ahead of the congress, which took place from Feb 29 to March 2 (“Why another bumi economic agenda?” Sunday Star, Feb 18; online at tinyurl.com/2kumr2ac).
After the dust on the event settled, the three experts, Dr Nungsari Ahmad Radhi, Dr Lee Hwok Aun, and Ahmad Yazid Othman, have again given their views on whether the congress lived up to its promise of helping to forge a bumiputra agenda that could succeed where those before have come up short.
Many at the congress spoke of the need for an immediate paradigm shift since the community and Malaysia as a whole is dealing with a world economy that is vastly different from what it was in 1965, when the first bumiputra congress was held.
But while congress participants – business leaders, senior civil servants, economists and ministers – did deliberate on what ails the community and shared their prescriptions for the problems, the experts feel that they only talked about shifts along the same paradigm.
“There was some serious stocktaking but by and large within the same perspective used previously,” says Nungsari, an economist and former executive director of sovereign wealth fund Khazanah Nasional Berhad.
Ahmad Yazid is uncertain how the proposals from the congress, in the form of resolutions from its 10 discussion clusters, will have any impact on plans to empower the community
“Some of these measures are quite normal, such as allocating funds that will be distributed by Tekun [Tabung Ekonomi Kumpulan Usaha Niaga] and Agrobank. But it’s not clear how effective they will be because in our experience, they might not reach enough people in a way that matters,” says Ahmad Yazid, who is with the Malay Economic Action Council (MTEM) which is connected to the Malay Chambers of Commerce and Industry.
Serious stocktaking
Discussions during the congress encompassed 10 subject areas, and a common highlight was how they presented sobering statistics on the state of the bumiputra community even after 50 years of programmes meant to empower it.
Among these was the revelation that despite increasing numbers of bumiputra engineers, doctors and dentists, the average median wage of a bumiputra worker was 45% lower than that of a Chinese worker as at September last year.
Also, even after all the loans and grants to help build successful bumiputra businesses, 82% of all such enterprises are microsized, earning less than RM300,000 a year. And only one of the 97 companies that were listed on Bursa Malaysia in the past three years was bumiputraowned and controlled.
Lee, of the Iseas-yusof Ishak Institute, says the BEC did well to highlight specific topics and issues, although there should have been more details in areas such as prioritising education and skills, and dynamic, competitive enterprises.
He also praises the emphasis on checking corruption, rentseeking behaviour, and malfeasance, and the commitment to aiding bumiputras from all social classes and regions.
Lee, who is co-coordinator of the Malaysia Studies Programme at the Singaporean institute, says another positive is that specific clusters were dedicated to assessing policies and programmes for subgroups that had been overlooked in previous initiatives – the Orang Asli and bumiputras in Sabah and Sarawak, for instance.
Other noteworthy signals from the congress were, “Upholding inclusiveness, aspiring for equitable opportunities and fairness, and for the policy to benefit all Malaysians, with non-bumiputras present on the panels and in the audience,” Lee says.
Deeper instead of wider
Although the clusters produced close to 100 resolutions among them, there is a feeling that these aims lacked concreteness.
Lee says there was not enough analysis of the lessons learned from past policies, especially since they also focused on skills development entrepreneurship and equitable distribution.
“The congress omitted more candid and critical discussions of policy benchmarks and chief objectives and goals. While there seems to be a commitment to shift away from the 30% bumiputra equity target, the congress did not decisively set up a new, more productive set of goals to drive the agenda,” Lee notes.
MTEM’S Ahmad Yazid feels the congress should have set up clearer key performance indicators and agreed on a clear “true north”, referring to a goal that best assesses true bumiputra economic capability.
MTEM has argued that the 30% corporate equity goal is ineffective despite being used by previous governments from as long ago as the Third Malaysia Plan (1976-1980) to measure whether the community has attained a significant stake in the economy.
This is since ownership of shares on the stock market does not mean a community or individual is capable of running a business, Ahmad Yazid had explained in the previous Sunday Star article.
“A true north would give the community a cohesive strategy that would ensure that we achieve the outcome that we want. If not it would be more of the same output-based practices rather than being outcomebased.
“We spend more money and do more programmes but we don’t know where we want to go, so I think that [establishing a proper goal] should be our focus.”
MTEM said that an effective goal for achieving actual bumiputra commercial clout, would be to increase the Gross Operating Surplus (GOS) of bumiputra enterprises; in layperson terms, this is the ability and capacity to produce goods or provide services. Bumiputra GOS should be increased so that it can contribute 20% of all national economic output or GDP; or in other words, Rm438bil by 2030.
National over communal
Nungsari argues that the whole perspective of the congress and a new bumiputra agenda should have been different from the start or it risked being treated as exclusionary, which he believes is a big reason why previous plans came up short.
“The perspective should be a national one. The country needs a national strategy to ensure its economic security, and the nation needs to be unified in that process.
“The bumi agenda should be located within that perspective, not apart from it. It should be about developing Malaysia’s competitiveness and ensuring that everyone, bumi included, has meaningful roles in that, as owners, managers and even as customers.”
Because the stocktaking used the same communal blinkers, he fears that the solutions will also follow the same view.
To break from the failures of past bumiputra policies what is needed is a unequivocal commitment for future programmes and grants to be needs-based.
The distribution of benefits has been skewed towards a small elite who then monopolise them for their immediate circle, says Nungsari.
“It tends to also be multiple generations. The parents benefiting tend to also make the children benefit, which means the poor will be excluded. Programmes should be means tested, by need.”
Ahmad Yazid echoes this point, saying that a commitment to need-based programmes to increase wages for all Malaysians would benefit the bumiputra community.
“This alone would ensure that bumis would have the ability to invest more and spend more and have a direct impact on the health of the economy, so that hastobepartoftheplan.”
Nungsari believes that any new bumiputra agenda has to produce companies that require skilled workers who can be paid higher wages.
“Improve the quality of schools, colleges and universities. Encourage creativity and innovation for new firms to emerge. Punish anti-competitive behaviour.
“Focus on new SMES and not large firms in the same old sectors: plantation, property, oil and gas. Incentivise other than these.
“Broaden markets to include neighbouring markets. Improve market access and ability to meet standards. Locate the bumi agenda within the national agenda,” he says.