JJ’s RM2bil fortune and the weakness in wealth redistribution

It shows the difficulty of being powerful and wealthy, and yet having empathy

THE suit on former minister Tan Sri Jamaluddin Jarjis’ ( pic) RM2.08bil estate is more than the problem of division of wealth among family members.

It underlines the critical flaw in the redistribution of wealth among the bumiputras under the previous affirmative policies. The immediate question that has cropped up in the minds of most is the concentration of wealth in the hands of a well-connected individual.

The mother of the late Jamaluddin is only aware of the RM2.08bil estate. What about the other assets that are not known to her?

As much as former Prime Minister Datuk Seri Najib Tun Razak defends Jamaluddin’s wealth, it’s only valid for questions to be raised on the sheer amount of riches accumulated.

The late Jamaluddin is known more as a politician and close aide of the former Prime Minister rather than a businessman.

Before he became a Member of Parliament (MP) in 1990, the only known asset under Jamaluddin was EPE Power Bhd that was eventually listed and subsequently taken over by Time Engineering Bhd.

Apart from EPE Power, the other companies associated with Jamaluddin – a 10% stake in Nadi Corp that is an investor in Malindo Air and a power plant in Kulim -were part of his wealth only after he became an MP and was active in mainstream politicis.

More intriguing is the fact that Jamaluddin is only one of the many MPs and leaders of Barisan Nasional (BN). What about the wealth accumulated by other political leaders, especially from BN which was in power for 61 years?

Economic Affairs Minister, Datuk Seri Azmin Ali, wants to change the way wealth is distributed under a new affirmative plan. In relation to this, a Bumiputra Economic Congress was held last week to gather feedback on the new affirmative policy.

The rhetoric from the congress was the same old message – that the new economic policy should be needs-based and not racebased. It should help the poor irrespective of race.

Since the bumiputra community makes up 70% of the population, they would benefit in whatever policies that the government comes up with. It would be foolish for any government to neglect 70% of the population.

However, those drawing up the policy must have empathy to understand what is really wealth for the poor.

One thing is for sure – equity participation in the corporate sector is certainly not a measure of wealth.

Under the old affirmative policy drawn up in the 1970s, the target was to see that bumiputras owned 30% equity in the corporate sector by 2020. As of 2011, which was 40 years later, the bumiputra equity ownership was 23.5%.

Over the next few years, the bumiputra equity ownership may grow. However, owning equity in the corporate sector does not translate to the distribution and accumulation of wealth.

In fact, if the ownership of equity in the corporate sector is equated to ownership of wealth, then the bumiputras would not have seen any wealth created in the four years from 2013.

This is based on the market capitalisation of Bursa Malaysia, which is a measure of wealth created in the corporate sector.

The market capitalisation of Bursa Malaysia hovered between RM1.65 trillion and RM1.7 trillion between 2013 and 2016. Only last year did it jump to RM1.91 trillion (see chart).

This year, based on the performance of the stock market so far, the market capitalisation of Bursa Malaysia stocks could go back to the RM1.7 trillion level again.

The distribution of wealth through the ownership of corporate equity is clearly not the solution to ensure that money is not concentrated in the hands of a few well-connected individuals.

Moreover, it is impossible for any economic policy to turn large segments of the people into millionaires or billionaires.

However, affirmative policies can enrich people by improving their quality of life. Simple matters such as providing a cheap and efficient mode of transportation is some form of wealth-creation for the poor.

Housing and education are two other areas that matter to the people who need affirmative policies to help uplift their standards in life.

For such policies to be effective, the people drawing them up must have empathy. This will be the most difficult part as the new plan is drawn up.

Those charting the details probably do not use public transport anymore or live in a normal housing estate in the city or suburbs.

The new government is responsible for crafting the new plan. Considering that they are in power, it would not be surprising if the new leaders are courted by people who are already wealthy with access to millions or billions.

It is difficult to be in power, surrounded by the wealthy and yet have empathy. The leaders in the old government fell into the trap. Their opinion shapers were millionaires and billionaires who could afford to live their lives in isolation. For some leaders in the old government, money could buy almost anything.

They didn’t need to live in a place where they had to mingle with members of the neighbourhood. They didn’t use the public transportation system.

To be really emphatic, one has to spend time with the masses. They have to mingle with people outside their socio-economic circle. Policymakers who are in power for a long time would not be able to do that.

However, it is possible for those heading the government in the new Malaysia.

They have been in power for less than four months and should still be able to understand what wealth really means for the poor.

The poor don’t aspire to be millionaires or billionaires. They only want a decent income and quality of life with opportunities for those prepared to walk the extra mile.

The challenge in the new economic model is to provide such an environment for the masses. For that, you need policymakers with empathy.