Saturday, October 07, 2006What is real stake of bumis in KL market?
Govt and think-tank differ on whether 30% target has been reached
By Carolyn Hong
The Straits Times
THE issue of how large an equity stake bumiputeras have in the country is back to the fore.
This follows a study by a think-tank which concludes that the bumiputeras own 45 per cent of the business equity in Malaysia.
Prime Minister Abdullah Badawi rejected the independent study on Thursday, calling it irresponsible and saying Malays are still far behind.
'Such findings will only create negative reactions, raise all sorts of questions and accusations,' he said.
If the study's conclusions are true, it would mean the bumiputeras are well ahead of the government's target of 30 per cent Malay ownership by 2020. In other words, it would mean the government's affirmative action policy has achieved its aim.
The study was conducted by the Asian Strategy and Leadership Institute (Asli) as input for the Ninth Malaysia Plan, a development blueprint launched in March.
It reported that the Malays owned 45 per cent of the shares in the stock market, while official statistics have put the stake at 18.9 per cent for the past 20 years.
This data is crucial to the continuation of a government policy that helps Malays get a larger share of the economic pie. This goal was first articulated as the New Economic Policy in 1970, and restated in the Ninth Malaysia Plan this year.
The exact level of bumiputera ownership has long been questioned.
Last year, former Cabinet minister Chua Jui Meng questioned the accuracy of official data and called for an independent review.
The Asli study is the first to provide an alternative to official figures. The difference in findings boils down to different methods of calculation.
Asli surveyed 1,000 companies on the stock exchange, including government-linked companies (GLCs). By counting the GLCs, which are massive in size and value, the data changed dramatically.
Asli estimated that bumiputeras own 70 per cent of the shares in GLCs, which make up a third of the market value of the stock exchange.
They include utility companies such as Tenaga Nasional and Telekom Malaysia, and Malaysia's biggest bank, Maybank.
Asli also did its sums using the market values of the shares, rather than the par or nominal values, for the simple reason that it is market value that actually denotes the value of a company.
Mr Khoo Kay Peng, a policy analyst for think-tank Sedar, said more than 90 per cent of the companies in Malaysia would fall into the classification small or medium.
There is no one-to-one correspondence between their shares and those of giant companies like the GLCs.
But Datuk Seri Abdullah disagreed. He said the Economic Planning Unit's method was more accurate because it surveyed the 600,000 companies registered in Malaysia, excluding GLCs, and did its calculations using the par value of the shares.
He said it was not right to include the GLCs.
'The revenues reaped by GLCs will be handed over to the government to be saved in funds for use by the people and the country,' he said.
Tan Sri Ramon Navaratnam, who was previously the deputy secretary-general of the Treasury but now heads the Asli Centre for Public Policy, said the institute is prepared to defend its methodology.
'The whole purpose is to improve the methodology because it will increase public confidence,' he told The Straits Times.
He said the government's methodology has been in use since the 1970s, when the GLCs were not as significant as they are today.
He stressed that Asli's intention is not to challenge affirmative action, but to improve its implementation.
Mr Khoo, from Sedar, said the Asli data showed that the policy had not helped the majority of bumiputeras, but had concentrated wealth in the hands of a few.
'Who controls the majority of the wealth attributed to the bumiputera community?' he asked in an article on news portal Malaysiakini.
This is a much-debated issue, and it is unlikely to be resolved any time soon.
Government's calculation
THE Economic Planning Unit's method took in the 600,000 companies registered in Malaysia, excluding GLCs, and did its calculations using the par value of the shares.
Datuk Seri Abdullah Badawi said it was not right to include the GLCs as their revenues will be handed over to the government to be saved for use by the people and the country.
Think-tank's calculation
ASLI surveyed 1,000 companies on the stock exchange, including government-linked companies (GLCs).
By counting the GLCs, the data changed dramatically.
It also used the market values of the shares, rather than the par or nominal values, for the simple reason that it is market value that actually denotes the value of a company.
