Malaysia economic plan: Old wine, new bottle
By Anil NettoPENANG, Malaysia - This country's Ninth Economic Plan would have been another ho-hum affair if not for one key ingredient that raised eyebrows. In Malaysia's race-fixated society, it inevitably centered on another extension of ethnic-based affirmative-action policies that favor the ethnic Malays and other indigenous Malaysians, known collectively as the bumiputeras.
Affirmative action was first incorporated into economic policy in 1971, when the New Economy Policy (NEP) was introduced in the wake of anti-Chinese race riots. To ease racial tensions and
promote national unity, the policy had two main aims: to alleviate poverty and to restructure society so that occupations were not defined by race. Among the targets to be achieved - which has since become a larger-than-life obsession - was for bumiputeras to own 30% of all corporate equity by 1990.
The NEP was supposed to expire in 1990 but it was extended under a new guise because, according to official figures, the bumiputeras, who now make up some 60% of the population, had not yet reached the 30% target. Under the Seventh Malaysia Plan, the NEP was refashioned as the National Development Policy (NDP) and extended a further 10 years until the year 2000.
In 2004, official figures showed that bumiputera equity ownership, including through government trust agencies and government-linked firms, had hardly budged at 18.7% in recent years. So it was extended yet again. The Ninth Plan's decision to extend the period of affirmative action further, until 2020, was in a sense a fulfillment of calls made last year at the assembly of the United Malays National Organization (UMNO), the dominant party in the ruling coalition. Key UMNO leaders had called for a "New National Agenda" to advance the "unfinished Malay agenda" for a further 15 years.
Still, there is some contention over whether the 18.7% achieved so far is an accurate reflection of actual bumiputera wealth. Some have pointed out that the figures are calculated based on the par value of shares and not the market value. A 1990 study carried out by political economist Edmund Terence Gomez into corporate equity owned by politicians and political parties, including UMNO, revealed that many use nominee companies, which now own 8% of total equity, to conceal their ownership from public scrutiny.
The 30% target might have been met if shares awarded to bumiputeras during initial public offerings (IPOs) and then quickly sold for a profit were taken into account. Moreover, most of the top 10 firms by market capitalization in the country are government-linked corporations (GLCs). If the equity these GLCs own - regarded as bumiputera private-sector investments - and the ownership of privatized firms are taken into account, a different picture emerges.
Undoubtedly, the NEP has raised the living standards of the bumiputeras through the creation of a new middle class and greater participation across a wide range of occupations. But the obsession with share capital ownership as a measure of bumiputera participation masks a deeper problem: the yawning wealth and income gap within the bumiputera community itself. The bumiputeras who take up IPO shares are frequently the middle and upper classes.
"In truth, a tiny minority [of bumiputeras] hold the bulk of the shares, and they are the ones salivating at the thought of the 30%," political analyst Philip Khoo said last year.
The Ninth Plan's answer to broadening the group's participation is to widen the benchmark to include not just bumiputera equity ownership, but also to promote their ownership of residential and commercial urban property, intellectual property rights and small and medium enterprises (SMEs). New foundations, trust funds and an SME Bank will be established in the future to achieve this end.
In addition to racial inequality, the urban-rural income gap has widened, with the poverty rate in Sabah province 30 times that in the capital, Kuala Lumpur. As one political economist, G Lim, pointed out, "The disparity between states has been more or less consistently growing since 1970, while ethnic disparities have been significantly reduced."
The poorest rural states - Kelantan, Perlis, Sabah, Sarawak and Terengganu - tend to be dominated by bumiputeras. This has contributed to Malaysia being one of the most unequal societies in Asia.
While the government says it wants to reduce regional imbalances, state spending plans in the new economic program do not seem to reflect this as a priority. Heavily developed Kuala Lumpur alone has been allocated RM31 billion (US$8.4 billion), while less developed Sabah and Sarawak in North Borneo - together covering an area much larger than peninsular Malaysia - have been allocated only RM29 billion.
The Ninth Plan envisages RM200 billion of government spending over the next five years. Another RM20 billion will be expended through private finance initiatives (PFIs). The plan also envisages transforming traditional farming into large-scale commercial farming ventures. Some RM32 billion will be spent on highways, airports, railways and urban transport projects, and a further RM22 billion on energy and public-utility projects. That poses a problem of leakages. Funds could gush out from the system, as even industry insiders admit the construction sector is plagued with corruption in all stages from the awarding of contracts to collection of payment.
In the past, there has been very little transparency in the way contracts and shares have been awarded. Large privatization projects have in many cases benefited a small group of well-connected firms - and many have failed.
"Why has privatization [proved] to be such a dismal failure?" asked Gomez, a University of Malaya political economist temporarily with the UN Research Institute for Social Development in Geneva. "For example, the renationalization of Proton, Malaysia Airlines [MAS] and [sewage disposal firm] IWK indicates that this policy needs a thorough review before being continued to be promoted ... Why has no one been charged for running MAS into the ground?"
The real test will be whether contracts under the Ninth Plan will be awarded on an open-tender basis or whether a handful of privileged firms will once again dominate major infrastructure and privatized projects with little transparency or regulation.
Former deputy premier Anwar Ibrahim is one of the few high-profile ethnic Malays who have openly called for the NEP to be scrapped. "We're not going to sacrifice Malay interests, we're going to help them as we are going to help those deserving irrespective of race," he said in November.
Another Malaysia-based political economist, who declined to be identified, agrees with that assessment: "If they really wanted to extend the NEP, then it should have been fully non-ethnic and only favoring the genuinely poor."
Last week, Anwar pointed out that there has not been much transparency in how the wealth of the national oil corporation, Petronas, has been used. Anwar, a former finance minister, insisted that Prime Minister Abdullah Badawi should explain what had happened to Petronas' Legacy Fund (Tabung Warisan), which he said was set up to provide for the day when the country turns into a net importer of oil. "Annually, a sum from Petronas revenue is contributed to the Tabung Warisan. It has been 20 years, and what is the amount?" he asked.
To its credit, the government recognizes that Malaysia badly needs to upgrade its human resources to meet the annual 6% gross domestic product growth target over the next five years. A huge chunk - RM50 billion - is to be set aside for education and training as the Ninth Plan recognizes the importance of enhancing the national capacity for knowledge and innovation and nurturing citizens with "first-class mentality".
But qualitative issues - rather than funding - are likely to prove crucial: how to promote critical thinking in a climate where dissent and alternative viewpoints are not encouraged, where meritocracy is the exception rather than the rule, where stifling laws remain in place, and where universities and the government are burdened by a culture of mediocrity. With this restrictive environment likely to remain unchanged, the Ninth Economic Plan, framed along ethnic lines that do little to foster national unity, will find it difficult to unleash the full potential of Malaysians.
Anil Netto is a freelance writer based in Penang, Malaysia.
http://www.atimes.com/atimes/Southeast_Asia/HD06Ae04.html
posted by che'GuBard @ 10:15 PM
1 Comments:
Bad,
Mengapa kau jadi agen Anwar Ibrahim ni?
Tak faham abang.
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