Retraction of Asli report – victory of unreason over reason and major setback for National Mission to create “first class mentality” raising fundamental question whether Vision 2020 to be a fully developed nation is condemned to failure

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Media Statement
by Lim Kit Siang  
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(Paliament, Wednesday) :  The retraction of Centre for Public Policy Studies (CPPS) report “Corporate Equity Distribution: Past Trends and Future Policy” by the Asian Strategy and Leadership Institute (Asli) is a victory of reason over unreason, the triumph of  brawn over brain and a major setback for the 15-year National Mission to create “first class mentality”, raising the fundamental question whether Vision 2020 to be a fully developed nation is condemned to failure.

Is the retraction by Asli President, Mirzan Mahathir of the CPPS report the collective stand of all the Asli and CPPS directors and the multi-racial group of scholars and consultants who prepared the report or a personal and unilateral one?

In repudiating the CPPS report, Mirzan has not explained how the methodology of the CPPS report  on the 45%  bumiputra equity ownership based on the 1,011 companies listed on the Bursa Saham is flawed.

He has also failed to prove that the methodology adopted by the Economic Planning Unit (EPU) using 600,000 companies registered with  the Registry of Companies to come out with the official figure of 18.9% bumiputra equity ownership is valid.

A lot of heat has been generated in the controversy, particularly by Umno leaders and heavyweights, throwing no new  light whatsoever on the question of ethnic equity ownership in Corporate Malaysia.

The Prime Minister, Datuk Seri Abdullah Ahmad Badawi should now intervene to direct the EPU to make public the methodology it had used to arrive at the official figure of 18.9% bumiputra equity ownership in keeping with his commitment of openness, accountability and transparency.

Otherwise, we will have a very sad situation where the Asli report of 45% bumiputra equity ownership  would have more credibility in the country than the official 18.9% figure of EPU.

In retracting the CPPS report, is Mirzan saying that Asli has also withdrawn all its seven key recommendations, viz:

1. Enterprises owned by the GLCs must be managed by competent professionals with expertise in the business of the company under their charge. Senior management positions cannot be determined on the basis of ethnic background.
2. The government should cease allocating equity to individual Bumiputra during IPOs, unless a mechanism can be introduced to ensure that the beneficiaries play a prominent role in the management of these companies. The allocation of shares to Bumiputras before IPOs tend to promote Ali-Baba relationships that only serve to undermine investor confidence and foster ill-will.
3. Bumiputra trust agencies, such as the ASN and ASB, should be the primary beneficiaries of IPOs allocated to this community. At the same time, there should be equal determination by the Government to increase the share  participation of the Indian and East Malaysian Bumiputra communities through similar community-based trust agencies.
4. Government initiatives to promote enterprise development on the basis of affirmative action will undermine entrepreneurial endeavours, which have emerged primarily among SMEs, without state support. The government should focus its attention on promoting key economic sectors and SMEs as a means to develop Malaysia’s economic potential.  The government should particularly tap into the potential of the new middle class to create thriving enterprises and find means to support such endeavours.
5. Affirmative action and the promotion of Malay-owned businesses have created serious intra-ethnic Malay cleavages whiled also hindering the creation of a competitive economic environment.  The government should not continue with the continued promotion of such policies.
6. In calculating the respective ethnic shares of the corporate equity, there is a need to apportion the share of GLCs as well as nominee companies according to the ethnic composition of the country. This will provide a fairer and more objective composition of the respective ethnic shares as compared with the current methodology.
7. Government policies to enhance Malay Bumiputra and other ethnic minority participation in commerce and industry are better achieved through capacity building efforts such as investment in human resource development and skills training rather than through forced equity restructuring.
    

(11/10/2006)