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Radio Singapore International - Newsline

October 18, 2006

A Malaysian think-tank, the Asian Strategy and Leadership Institute or ASLI recently released a report that put the estimated Bumiputra equity ownership in public listed companies in Malaysia at 45%.

In contrast, the Malaysian government’s Economic Planning Unit’s more exhaustive study showed that the Bumiputra corporate ownership was at a much lower 18.9%.

ASLI subsequently retracted its original figure after admitting that its methodology was in arriving at the figure was flawed and its director of the Centre for Public Policy Studies, Dr Lim Teck Ghee resigned in protest over the retraction.

Why has there been a strong reaction to the ASLI report on the Bumiputra equity ownership figures?

Loretta Foo put this question to Mr Muhammad Sha'Ani Bin Abdullah, Secretary General of the Federation of Malaysia Consumer Associations.

MS: They could be misunderstood that the party questioning the basis of calculating the equity participation as questioning the policy itself. We feel that the two parties are using two different methodologies and this actually gave different results. As such, the experts actually are the ones who questioned the policies. There is a basis such that the relevant authorities should actually clarify the actual situation. The basis for the government to base their policies has to be very clear and transparent so that the people do not misunderstand the policies of the government.

Why was there a large disparity between the ASLI report’s estimate of Bumiputra equity ownership at 45% and the government’s estimate at 18.9%?

MS: GLCs are actually government linked companies such as the Tenaga Nasional or Telecom Malaysia. They are actually controlled by the government. Under the ASLI’s report, they actually assume the GLCs’ component is actually lumped as a Bumiputra equity whereas in government methodology, they do not include the GLCs assets as bumpitras’ assets.

In your opinion, which of the figures would reflect the current reality more accurately?

MS: In the equity market, the current value will reflect the real value of the asset. That’s what ASLI is doing but the government is based on the par value. They have their own reasons and basis for that because the government cannot inflate too much based on assumptions so they take a safer way of calculating their policies. So we cannot say that either one is wrong. We have to explain the basis and clarify the situation. That should be our intention, not to create more uncertainties and conflicts.

The issue of Bumiputra corporate equity has been said to be very critical to Malaysia. Why has this issue generated such debate?

MS: Wealth actually is a very, very important part of socio-development and from the beginning, our occupations and also the wealth are very distinct between different ethnic groups. So this creates a lot of dissatisfaction such that the New Economic Policy was formulated to overcome these disparities. As we know, the Bumiputra community is lagging behind in their equity participation so these special programmes and policies are in place to improve the situation so that the Bumiputra community can become on par with the other communities. If there is actually any effort or suggestion to do away with this, of course we’ll have a very serious opposition to it. This is actually social re-engineering so we need to actually understand and compromise so that we can improve or correct the earlier disparities.

How have the Malaysians on the ground reacted to this case?

MS: There is a strong stand by the people that there should be a clarification of this. This has been actually understood by the authorities and we feel that they are actually working programmes to clarify what is the difference between the two methodologies.

Mr Muhammad Sha'Ani Bin Abdullah, Secretary General of the Federation of Malaysia Consumer Associations.