From Malaysiakini
By Dzulkifli Ahmad
It doesn’t need a political pundit to tell the nation that the New Economic Policy (NEP) is the legitimating ideology for Umno’s hegemony and legitimacy – and that the party now has trouble weaning beneficiaries off it.
Paramount to Umno’s consideration is the issue of 30 percent ownership of the corporate equity, as opposed to the twin-prong objectives of eradicating poverty and eliminating identification of race with economic activities.
It is the 30 percent rule for bumiputera participation that has ended in the ‘affirmative action’ being perceived, rightly or wrongly, as a ‘zero-sum’ policy that is working at the expense of other races.
Although the NEP is premised on the projection of growth, the redistribution should not affect ownership held by different ethnic groups. But the reality does not reflect this.
Umno’s persistence of maintaining its own under-achievement, hovering at 18.9 percent corporate equity of the Malay-bumiputera – despite others claiming to the contrary – is mind-boggling and naturally smacks of their ‘sinister’ motive. The measurement, to make it worse, is shrouded in mystery, ending in endless dispute between advocates and critics.
The primary reason why the ‘redistribution strategy’ has failed is due to chronic inefficiencies, leakages, and unbridled crony capitalism and nepotism. Many bumiputera contractors are alleged to be mere rent-seekers (read cronies), spinning the contract out to non-bumiputeras in the infamous practice of the Ali-Baba partnership.
Time and again, the less eligible have been given huge privatisation contracts or concessions. Millions of ringgit have been wasted and billions more spent in bailing them out when they failed.
In a recent Debat Perdana programme, in which I took part, fellow-panelists Mukhriz Mahathir of Umno Youth and Muar parliamentarian Razali Ibrahim admitted as much.
So Umno has in fact bungled the opportunity to achieve the objective of 30 percent corporate equity.
Worst income disparity
The rent-seeking activities of a few politically well-connected Umnoputras have denied the rights of a bigger pool of genuinely deserving Malay entrepreneurs and corporate outfits, which have to compete in a tilted playing-field within the Malay community.
This is immensely regrettable and has become the greatest stumbling block in achieving the various targets of the NEP. The infamous case of AP kingpins stands as clear testimony to such subversion of an otherwise commendable ‘redistributive programme’. Reports of differential treatment based on political affiliation have been widely reported, as I exemplified during the debate.
It is common knowledge that bumiputera contractors have been given special preference (60 percent of the contracts) under the multi-billion ringgit Ninth Malaysia Plan. Some mega-projects have already been rolled out through direct negotiation, again sidelining the need for an open-tender system.
However, no such ‘affirmative policy’ is recommended in the Iskandar Development Region (IDR) in south Johor. Advisory council member Musa Hitam has, in fact, insisted on exemption from the ‘affirmative policy’ that favours bumiputeras in the hope of attracting foreign investors to the region. This has seen mixed response and anxiety in the Malay constituency.
Going by the UN Human Development Report of 2004 and after 37 years of NEP, Malaysia has become the worst country in income disparity between the rich and poor in Southeast Asia. The report shows that the richest 10 percent in Malaysia control 38.4 percent of economic income, against the poorest 10 percent controlling only 1.7 percent. The Malay suffers the greatest intra-ethnic income disparity.
Quite frankly, an approach in interventionist policy that doesn’t cut across the racial divide and is not premised on genuine need is fundamentally flawed.
Giving handouts and continuing rent-seeking activities to non-deserving entities, be they bumiputera or non-bumiputera cronies, and adding cost without increasing productivity in economic activities, can only spell doom for the nation’s future in the face of global competition.
Continuing the affirmative action for the ‘super rich Umnoputeras’ will eat badly into our national resources and produce deleterious knock-on effects on our nation’s integrity and competitiveness. Surely this cannot and must not be assumed forever.
The already capable Malays, after five decades of independence, must no longer be beholden to an ‘affirmative mindset’ that entraps them into an unrelenting ’crutch mentality’ and which prevents them from be truly competent, competitive and enterprising.
We must not repeat our mistakes. Otherwise, it will be ‘the Great March Backward’ for the nation.
DR DZULKIFLI AHMAD is director, PAS Research Centre.
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