CENTRE FOR PUBLIC POLICY STUDIES

PRESS STATEMENT FOR IMMEDIATE RELEASE

CPPS Response to Comments in Malaysiakini on
Corporate Equity Distribution Study
The CPPS would like to take the opportunity to respond to various comments on
its recent study on the Corporate Equity Issue.
Firstly, the study was undertaken by a multi-racial group of scholars and
consultants as part of work in connection with the Ninth Malaysia Plan. It was
submitted to the Prime Minister, Cabinet Ministers and other government leaders
in February 2006 as part of a bigger report which included findings of studies on
education, the civil service, low-income communities and Penan. Following initial
release of the report to the Government, the report was made widely available to
various political, social and economic bodies in the country.
The corporate equity study was based on a combination of primary and
secondary research. The study found that the official methodology for
computation of corporate equity distribution first used in the 70s and continued
till today - is narrowly based, unrealistic and has resulted in an underestimation
of the true volume and value of Bumiputera equity. Using alternative
methodologies, the study has estimated that the Bumiputera corporate share is
considerably higher than the official figure of 18.9 % in 2004 in fact it may be as
high as 45%. This is because, besides the original listing requirement of 30%, the
Bumiputera share has been considerably augmented by that held by GLCs which
are among the major holders of equity in Corporate Malaysia.
Other findings of the study are that the government has played an effective role
in redistributing wealth more equitably among all Malaysians. The study also
provides evidence of one important new development, that is, the emergence of
business partnerships forged along inter-ethnic lines. A number of these
partnerships comprise Bumiputera from the new middle class, created through
their access to human development opportunities that has provided them with
skills in the corporate sector.
The emergence of such inter-ethnic partnerships, most of which started as small
and medium-scale enterprises (SMEs), was not fostered through government
directive. These partnerships were based on the coming together of business
people in endeavors where each partner has contributed to the development of
the new enterprise. The rise of such inter-ethnic partnerships augurs well for the
promotion of national unity in Malaysia.
The study concludes that the focus of the government on racially based
affirmative action programs to redistribute wealth is misplaced and is jeopardizing
economic growth. It is clear that selective patronage has resulted in serious intra-
ethnic Malay cleavages, while also undermining inter-ethnic social cohesion and
equitable socio-economic development for the country as a whole. The focus of
CENTRE FOR PUBLIC POLICY STUDIES
the government should be on policies that transcend a racial dimension and
which address issues from a structural perspective. The study recommended that
for the Ninth Malaysia Plan, the Government should focus on promoting the
development of SMEs, where genuine entrepreneurial capacity is to be found
and encouraged.
The Centre welcomes the opportunity to discuss its findings with other non-
partisan bodies and individuals. The Centre also hopes that the findings of the
study and the larger report (several chapters focus on marginalized Malaysian
communities) can generate thoughtful and rational discussion on the countrys
social and economic development strategies. In this connection, we would like to
point out that casting aspersions and questioning motives based on race is not
helpful. In particular, we are concerned with the comments attributed to Prof.
Shamsul Amri Baharuddin. Using his own logic which questions the ethnicity of
those involved in the study, it would appear that all government data/studies (and
his too) cannot be taken seriously because they are undertaken by a Malay
bureaucracy or academics to promote a particular Malay agenda.
Dr. Lim Teck Ghee Kuala Lumpur
Director, Centre for Public Policy Studies 28 Sept 2006