The way forward

SOMETIMES the best way forward is to abandon the past.

This summarises the approach some experts say the unity government should take if it wants to avoid the pitfalls of the past to craft and execute a truly successful bumiputra economic agenda.

For instance, the first to go should be the obsession that bumiputras or bumi companies should hold 30% of all shares on the stock market, aka the bumi corporate equity target.

“The government can give me enough money to buy up 30% of all corporate equity,” says Ahmad Yazid Othman of the Malay Economic Action Council (MTEM), to illustrate the objective’s flaws.

“But does that improve the lot of the average bumi family or business? No. Because it just means one rich bumi owns all these shares. It does not even mean that the owner knows how to produce goods either.”

The problem with obsessing over the target, says economist Dr Lee Hwok Aun is that it diverts attention from developing real business acumen and capability.

“The National Economic Policy declared a lofty aspiration for the bumiputras to be ‘full partners’ in the economic life of the nation, but later on became consumed with achieving 30% equity ownership,” says Lee, who is with the ISEAS-YUSOF Ishak Institute.

“The priority shifted to accelerating acquisition rather than cultivating capability.

“Malaysia has also failed to distinguish the difference between the quantitative outcomes of increasing bumiputra access and participation, and the qualitative outcomes of promoting capability and competitiveness,” says Lee, the co-coordinator of the Malaysia Studies Programme at the institute.

At the upcoming Bumiputra Economic Congress, MTEM is proposing a meaningful goal: to increase the Gross Operating Surplus (GOS) of bumi enterprises, which in layperson terms is their ability and capacity to produce goods or provide services.

This is also goal of Teraju, that was set up in 2011 to streamline all of the government grants and programmes for bumi enterprises and uplift the household incomes of bumi households.

In Teraju’s Bumiputra Action Plan 2030, the aim is to increase bumi GOS so that they contribute 20% of all national economic output or GDP. This would mean boosting bumi businesses so that they can collectively produce Rm438bil for the economy by 2030.

But just helping entrepreneurs is not enough, says Yazid, as it must also be paired with a policy for living wages that will benefit everyone – not just bumiputras.

“We cannot just create big bumi capitalists. If a bumi business makes Rm1mil a year but all its workers are foreigners who earn slightly above minimum wage, how does that help other bumis or Malaysians? “Compared to a bumi business that employs 20 bumi and non-bumi staff but each worker earns RM50,000 a year. That is better for the economy and bumis as a whole.”

In MTEM’S diagnosis, the solution does not just mean creating competitive and capable bumi businesses but also complementing it with policies to make all businesses pay a living wage so that everyone, bumi and non-bumi, benefits.

Inclusive instead of exclusive

To do this, Teraju must function as more than an agency that doles out funds and training courses to aspiring bumiputra businesses, says Yazid.

“It must come up with overarching strategies on industrial sectors where bumiputra companies have a presence and can increase their presence so that they become integral parts of that sector’s supply chain. It must have the ability to plan strategy and the authority to execute those strategies.”

The obsession with equity targets must be replaced with a focus on scaling up the large number of bumiputra small and mirco businesses to medium enterprises and grooming competitive brands, says Lee.

The emphasis on quality must also undergird the policy of increasing the number of bumiputra professionals through higher education, he adds, but the criteria for admission must also change from being exclusively ethnic-based.

“Ethnicity, need and merit must not be viewed as mutual substitutes that it is a ‘race-based’ versus ‘need-based’ system. The solution is not about abolishing the ‘racial quota’ and replacing it entirely with ‘meritocracy’, but to incorporate all three considerations – merit-based, needs-based, identity-based,” says Lee.

Economist Dr Nungsari Ahmad Radhi echoed this point – the way that any new bumi economic agenda will work in an era where concepts such as inclusivity and Bangsa Malaysia are the norm is for it to stop being seen as a “bumi-only” policy.

“The bumi agenda is not exclusively about bumis, it is about national development that benefits the bumis. It should be inclusive not exclusive. It should be about safety nets for all, opportunities for all,” says Nungsari, a former executive director at sovereign wealth fund Khazanah Nasional Berhad.

“It should be about creating national businesses where bumis have significant real presence in them – as equity owners, as management and employees,” says Nungsari, who is also a former chairman of the Khazanah Research Institute Board of Trustees.

It was the exclusiveness of previous policies that actually stunted bumiputra entrepreneurs as it prevented them from reaching across communal lines to work with capable non-bumiputras to form sustainable ventures, says Nungsari.

“Social capital is about networks and relationships, key ingredients to any success. More so in business. Bumis suffer from a lack of social capital because policies have been exclusive. They live in a bumi world. But the real world is not a bumi world.

“The non-bumis are not the enemy but collaborators, potential partners. Sustainability and development of the bumi agenda is about being competitive regionally if not globally. It is the world, not the bumi world.”