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Call on government to make public methodology and data on NEP equity ownership and distribution - six flaws and 10 examples why EPU has lost credibility and public confidence in its professionalism and integrity
________________ (Parliament, Monday) : Today we are coming to the end of 2006. We are already into the 9th Malaysia Plan.
The Economic Planning Unit (EPU) has been the sole unit responsible for planning and strategizing the nation’s growth. It is the department that generates the economic data and methodologies used in a wide spectrum of policies making decisions by the country. One of the major policies affecting every citizens of this country where the EPU data have been incorporated into the policy is the New Economic Policy (NEP).
Although the EPU methodologies impacted the lives of every Malaysians in every walk of life, none knows what the methodologies are. Are they fair? Are they outdated? Are they flawed? Nobody knows as it is shrouded in secrecy by the Official Secrets Act. They are told to accept it without question as the EPU is the wise know-all and be-all!
What we do know is that the same EPU methodology has been used for over 35 years starting from the 1970s with the launching of the NEP supposedly for the equitable distribution of wealth among all Malaysians. No other country in the world has a policy or would want to associate with a policy which is unchanged for almost two decades which can still claim to be relevant to its citizenry today.
The Failures of an Outdated NEP
While every Malaysians may be in the dark about EPU methodology, they can clearly see and feel the results of the NEP and the events unfolding in the country and the world in their daily lives.
From the 1970s to the present, the citizenry has seen a lot of changes: · The country has seen five changes of leadership. · The country has seen an internet revolution where information can be disseminated far and wide in just a few seconds and all information can be easily accessible by a click of the mouse. · Its citizenry is more educated, more informed and more critical about the current affairs of the country and the world. The citizenry now expects transparency and nothing less. · The citizenry has seen the widening of the gap been the ‘haves’ and ‘haves-not’ in spite of the NEP, National Development Plan (NDP) and the restoration of NEP which are supposed to close the gap. They have witnessed the inequities happening everyday of the rich cronies living their wanton lifestyles in big palatial mansions while the ‘haves-not’ have to egg out their meagre living among widespread crimes. They see a flawed system totally ineffective in redressing the widening disparity between wealth and poverty in the country! They see the rich gets richer while the poor gets poorer! · The citizenry has been told to tighten their belt while there are widespread corruption, wanton wastage, bailouts, corporate failures, mismanagement which are the by-products of the NEP system. They have seen the unfair discrimination been the politically connected and the ordinary folks. Everyday they feel the pain of the increased prices of petrol, land assessment, highway tolls, electricity tariffs, telephone rates, water rates and the ever increasing cost of living without corresponding increase of their income. They see a flawed system encouraging corruption and wastage! They see a flawed system where their hard earned monies go to help the politically connected and not put to good use like education, building roads, subsidizing the cost of petrol! · The citizenry has seen the nation’s economic wealth plundered without end by rich cronies who stash their wealth overseas. And yet they came back again and again seeking further handouts. They see a flawed system devoid of check and balance - a system so porous that it sprung widespread leakages! · The citizenry has seen the country is less peaceful now. They see more polarization of the country’s ethnic races than in the 1970s - they see polarization in schools, work places and every stratum of societies. They see racial discrimination in everyday life - the award of scholarships, examinations, jobs in Government departments, promotions, Government contracts and myriads of others! They see more squabbling and jealousy on of the awarding of lucrative contracts to the politically connected and their off-springs. And for them, more is never seem to be enough! They see a flawed system which divides rather than unites! · The citizenry can see that wealth is not limited to shares in companies but includes land, houses and bank savings. They see wealth comprising of shares, land, houses and large bank accounts concentrated in but a few percentage of the country’s population. They see wealth being siphoned overseas. They see shares in companies are privileges of the elite class. They failed to see the logic of how a methodology based on shares in companies is used by EPU to redress the maldistribution of wealth of all stratum of society. The fishermen in Kelantan, the farmers in Kedah, the ordinary indigenious Ibans in Sarawak and the Kadazandusuns in Sabah don’t invest in shares. The people are baffled and intrigued why the national statistics can show a drop to 18.9% for bumiputra equity in spite of more than 35 years of progress when they can clearly see the majestic Petronas Twin Towers, the ultra-modern KLIA, a state-of-the-art Putrajaya, just to name a few, soared up the sky-line. They suspect a flawed methodology used to manipulate the data for a particular agenda! · The economic landscape has also changed rapidly – globalization has invaded into the economic coffers of every country and the FDI has been slowly but surely moving away from Malaysia to more competitive countries because of the 30% racial tax for partners who do not bring any benefit to the table. They see a flawed system doomed for globalization. They see a system where Malaysia will be left behind! · The citizenry is also aware when the NEP was introduced in the 1970s, the GDP per capita of our neighbors viz. Singapore, Hong Kong, Taiwan and South Korea were all about the same as ours. After 36 years, Singapore and HK are three times, Taiwan is 2.5 times and South Korea is two times our GDP per capita. The differential gaps between Malaysia and these countries are getting wider and wider as time goes by. We are growing slower than our neighbors despite the fact that we have the fossil fuel, palm oil, rubber and other natural resources which they do not have. They see a flawed system which retards the economic growth of the country!
No where else is it more evident than this 35-year-old policy which is so outdated, so ineffective, so flawed and so counter-productive that it is still being used to plan the nation’s growth and redress the distribution of wealth in the country!
How can the Government expect its citizenry be so blind not to see the inherent flaws and the break-down in the system everywhere they go? The Government should at least review why the NEP policy is so ineffective in meeting its objectives a long time ago. At the very least, it should have dumped or revised the policy when the new Abdullah administration took over the leadership and started the 9th Malaysia Plan. It is incomprehensible how the present administration is going to continue the policy to the year 2020 when the NEP has proven to be so ineffective and counter-productive. If the end results are so clearly flawed for the people to see, it stands to reason that there must be numerous flaws in the methodologies used by the EPU. This Government can no longer continue to hide the methodologies used by the EPU from its citizenry any longer. So far, from the grudging admissions by the Prime Minister, we only know that the EPU methodologies:
All of the above observations are clear indication that the NEP derived from using EPU’s data and methodology is flawed and every citizen is very unhappy that such an important policy which impacts on greatly on their lives is being concealed from them for so long. If these observations are not enough reason for the present Government to cause a review of the EPU outdated methodologies, I’ll demonstrate below with simplified examples to mathematically prove beyond a shadow of doubt why the EPU methodologies are so seriously flawed:
FLAWS OF EPU METHODOLOGIES
Explanation of Par Value
Let me first explain what par value is.
It’s very normal for a company to start with a paid up capital based on par value and remains so for a long time. It doesn’t need to increase the paid capital (as long as the company is not short of new capital injection) because the accounting and business fraternities value the shares on market value.
Par value of shares has little significance except for an archaic company law disclosure requirement.
For example, a company starts with a paid up (par value) capital of RM1 million in 2006, and is awarded a 10-year contract to build a bridge. Say, it makes a profit of RM10 million for the duration of 10 years and keeps the profits intact. The market value of the company in 2016 is RM11 million but its par value still remains intact at RM1 million.
The shareholders of the company can extract the profits through directors’ emoluments, dividends, management services, etc, but the par value of its shares remains intact.
Par value accounting has its inherent flaws. Par value is never used by the accounting profession anywhere in the world to value a company’s worth. In fact, if a company uses par value to value a company in the private sector, it would tantamount to a scam – i.e. it is a deceitful means to undervalue or overvalue the actual worth of a company!
Based on generally accepted accounting principles and present accounting norms, EPU’s apparent methodology is seriously flawed as demonstrated below.
Flaw No 1 – EPU Methodology ignores relative Wealth
Example 1 :
Ali owns 100 Tenaga shares. Par value RM100 (RM1 per share). Market value RM$1,000 (RM10 per share).
Ahmad owns 1,000 Farlim shares. Par value RM1,000 (RM1 per share). Market value RM430 (RM0.43 per share).
EPU Methodology :
On par value, Ahmad is 10 times richer than Ali. Therefore, Ali needs more help than Ahmad. Flaw: Par value has no relation to the actual value of shares. In fact, Ali (shares worth RM1,000) is richer than Ahmad (shares worth RM430).
This is the most fundamental flaw of EPU methodology. If EPU does not take relative wealth into the equation, how does it know who to help to redress the unequal distribution of wealth?
Obviously, as this case shows, EPU may be helping the wrong guy!
Comments :
Does this methodology sound intelligent to anyone? With this kind of methodology will the NEP be ever able to redress the growing inequality of wealth in the country?
How could the EPU come up with such a ridiculous methodology in the first place not to mention that this shallow methodology has been used for over 35 years and it appears that it is going to continue to be used indefinitely.
With this shallow methodology, it’s no wonder that the citizenry is beginning to question the intelligence of the think-tank in the EPU and the validity of the data it has generated and used for wealth restructuring. The citizenry is wondering if the EPU’s methodology is wrong, then its other plans, figures, assumptions and premises could also be wrong too. Consequently, the Government’s many plans could be wrongly focused and our resources wrongly deployed. It is no wonder that so many segments of the populace have complained that they have not been helped or have not received anything.
Flaw No 2 – EPU Methodology recognises Malaysian shares at one point of time but ignores other important assets
Example 2 :
Zakaria owns the following assets registered in his name: a) RM2 par value capital in Zakaria Sdn. Bhd. worth RM10 million b) A palatial 4-storey mansion in Bukit Damansara worth RM10 million c) RM20 million cash in a Bank Account in Switzerland
EPU Methodology : Zakaria total asset is only RM2. Therefore, Zakaria is poor and needs help
Example 3 :
Ali owns 100% of Ali Berhad. 5 years ago, he sold off 90% of Ali Berhad at RM100 million. He bought a property in London for RM30 million and a property in Malaysia at RM10 million after 7% discount; Invested in shares in Africa RM20 million ; Spent son's wedding RM10 million; Gave his first wife alimony RM30 million after marrying his 2nd wife. Nobody knows anything about his foreign assets although his personal marital affairs became hot news in Utusan Malaysia.
EPU Methodology :
Ali is holding only 10% share in Ali Berhad now. Ali is marginalized because other races have 90% share. He should be given an additional 20% to make 30%. . Flaws of Examples 2 and 3:
In example 3, Ali was originally given 100% share but he divested his shares and converted his proceeds into foreign and other assets. Ali’s landed properties, foreign shares and extravagant spending are not captured by EPU. From the statistics now, it will show that he only owns 10% share. The actual bumiputra equity percentage would only be correctly reflected if Ali were to invest 100% of his proceeds into shares of a Malaysian company. Comments : This methodology can be likened to a big sieve trying to hold water – it is sprouting leakages everywhere. There is no mechanism to check a person, after having been given shares, from selling his shares, convert it into other assets, stash it overseas and coming back asking for more hand-outs. Does the EPU assume everyone that it had helped is honest? Are these cronies are honest? Who have not heard of the cronies who plundered many companies both public and private, and who today wallow in lives of luxury? Many of their assets are stashed overseas, all away from prying eyes and creditors. Until and unless these leakages are plugged, there can be no justification, whether moral, political and economic, for the continuation of the NEP. The NEP can never succeed other than to enrich the cronies, for if more monies are pumped into the economy on the top they will leak out at the bottom.
Flaw No 3 – EPU treatment of GLCs bumiputera equity as zero is flawed
Example 4 :
Ali owns 100% of Ali Berhad. He sells off 90% of Ali Berhad to a GLC controlled by UMNO
EPU Methodology :
Ali Berhad is no longer a Bumputera company since GLC is not counted as a Bumiputera company. Ali’s share is 10%. Since the GLC doesn't want to sell down its shares, Ali should be given another 20% in another company, Ah Chong Berhad to make 30%.
Flaws :
Example 5:
GLC Berhad has 80% bumiputera shareholders, employs 80% bumiputera employees and awards 80% of its contracts to bumiputera contractors.
Ah Chong Berhad has 30% bumiputera shareholders, employs 30% bumiputera employees and awards 30% of its contracts to bumiputera contractors
EPU Methodology :
GLC Berhad is considered as 0% bumiputera company. Therefore Ah Chong Berhad has more bumiputera percentage equity than GLC Berhad.
Flaw :
GLC Berhad enriches the wealth of 80% bumiputera shareholders through dividends and market value of shares; enriches the wealth of 80% bumiputera employees through salaries, bonuses, benefits-in-kind and enriches the wealth of 80% bumiputera contractors through the award of contracts.
How could GLC Berhad not be considered as a bumiputera company?
Comments :
In the above example, even if 80% of wealth flows to the shareholders, employees and contractors who are all bumiputeras, it is not a bumiputera company? Not even 1% bumiputera?
But had it be a normal Sdn. Bhd. or any company other than a GLC, won’t it be considered as bumiputera company?
This defies logic and reason!
Flaw No 4 – EPU Methodology ignores multiple hand-outs and has no mechanism to plug leakages
Example 6 :
Ali is given 30% share (30 million shares) in Muthu Berhad at an IPO price of RM1.50 per share for a total sum of RM45 million. After 1 year Ali sold off all his shares in Muthu Berhad at RM10 per share for RM300 million. He made a cool profit of RM255 million which he keeps in the bank.
EPU Methodology :
Since he does not now own any share, he is entitled to another bumi portion (30%) of IPO in Ah Chong Berhad at RM1.50 in the 2nd year. Ali proceeded to buy Peter Berhad, Ranjit Berhad, Sayonara Berhad, etc, .... in the 3rd, 4th, 5th year.....using the same modus operandi. All these years the bumi equity had never exceeded 30%!
Flaw :
It doesn't take into account how many times Ali applies for an IPO as long as he had sold off his shares before applying for another IPO or if he had used the name of his nominees.
This obviously results in double (triple, quadruple…etc) handouts as long as he keeps his money out of the system of calculation (e.g. in the bank, purchased properties, foreign investments, etc).
Comments :
This example illustrates the ample opportunities for leakages (triple, quadruple, etc, handouts) without even disturbing the 30% equity barometer.
Worst still, there has been no mechanism and there is no attempt to plug the leakages.
Flaw No 5 – EPU’s calculation of Bumi % Equity based on par value is incorrect and misleading
Example 7 :
Ali forms a RM2 company called Ali Sdn. Bhd. in year 1. He found an ingenious way to sell a piece of paper for an enormous amount of money and made RM200 million a year. In the 5th year his RM2 company company is worth RM1 Billion (in cash).
Ahmad forms a RM2 company called Ahmad Sdn. Bhd. in year 1. He has been given a huge number of taxi permits and made a reasonable profit of RM10 million a year which he drew out as salary each year. In year 5 his company is still RM2 but he had earned RM50 million in salaries.
Aziz is a rich man but involved in a risky business where he feared creditors going after him. On the advice of his accounting firm, he transfered all his assets worth RM500 million into an Investment holding company called Aziz & Sons Sdn. Bhd. controlled by his nominee for RM250 Ordinary shares and the rest in Preference Shares in year 1. His investment company earns RM20 million a year in rental and dividends but in year 5 his company’s share is still RM250.
Muthusamy forms a company called Muthusamy Sdn. Bhd. In year 1, he borrowed RM1,000 from his relative, put this money into his company as capital and started a business selling "kacang putih" peddling his wares around Chow Kit road on a motorbike which his company bought on hire purchase. He made RM1,000 a year and re-invest RM100 a year into his company as capital. In year five his capital has risen to RM1,400.
EPU Methodology :
1. Year 1
Since the methodology counts only ordinary shares at its par value, the bumiputer equity is only 20% (254/(254 + 1000) x 100 = 20%) while Muthusamy has 80%. Therefore Ali, Ahmad and Aziz all need help and should be continued to be given assistance until the equity reaches 30%.
2. Year 5
Since the methodology counts only ordinary shares at its par value, the bumiputera equity is reduced from 20% to 15% (254/(254 + 1400) x 100 = 15%) compared to Muthusamy equity of 85%. Ali, Ahmad and Aziz performances have deteriorated. Muthusamy’s equity has increased at the expense of Ali, Ahmad and Aziz. Muthusamy must share his knowledge with Ali, Ahmad and Aziz. In the meantime, Ali Ahmad and Aziz needs help badly and must be continued with assistance indefinitely until the equity reaches 30%.
Flaws : Here we see the biggest flaws of using par value to account for computation of percentages of equity ownership: 1. Ali, Ahmad and Aziz are way, way richer than Muthusamy in wealth but using the par value methodology shows that Muthusamy is way ahead of them by 80:20 2. Ali, Ahmad and Aziz Sdn Bhds. could continue to receive enormous contracts without even increasing 0.01 % of their equity. 3. Ali, Ahmad and Aziz could increase their personal wealth (through market value of shares and profits extractions by way of dividends, salaries, management fees, etc) without increasing even 0.01% of their equity. 4. It’s even mind-bogging that Ali, Ahmad and Aziz Sdn Bhds. can even continued to receive enormous contracts and increased their wealth beyond their wildest dreams and yet register a drop in their % equity - in this case, a drop from 20% to 15%! Comments : The use of a flawed methodology could be one of the reasons why the actual bumiputera equity has dropped to 18.9% apart from the reason that some bumiputeras have sold off their shares. Even the Gerakan president and Minister for Energy, Water and Communications, Dr Lim Keng Yaik is doubtful of EPU methodology and requested the government to reveal the methodology it used to arrive at the figure of 18.9%. In fact, no reasonable-minded person could ever fathom or believe how the EPU figure shows a decline in the bumiputera equity to 18.9% when they see around them mega structures like Petronas Twin Towers, the ultra modern KLIA, the majestic Putrajaya, the North-South and East-West Highways , APs, taxi permits, hospitals, mosques, computers, palatial mansions and billions of dollars of contracts from the Second t Malaysia Plan to the present Ninth Malaysia Plans which have been largely awarded to bumiputera companies or contractors since the 1970s. Several studies have been done that showed that the 18.9% bumiputera equity is not accurate but they have been dismissed outright as “rubbish” even without any in-depth study or intellectual discussion. The ASLI report is one study that the 18.9% equity figure is questionable. Another report, an University Malaya research study entitled “Bumiputeras in the Corporate Sector – Three decades of performance 1970-2000”, by Dr. M. Fazilah Abdul Samad, head of department of finance and banking in the Faculty of Business and Accountancy, which was completed in 2002 found that the 30 percent bumiputera equity ownership as targeted under the government’s NEP had already been achieved about a decade ago when it hit 33.7 percent in 1997. Fazilah’s study is the first publication of the inaugural Research Reports Series of the Centre for Economic Development and Ethnic Relations (CEDER), University of Malaya, involving a team of researchers from the Faculty of Economics and Administration and Faculty of Business and Accountancy in a research project started in early 2000 to study the implications of the New Economic Policy on the Bumiputera community. These studies illustrate the classic example of the use or rather, misuse of statistics for “lies, lies and more lies”
Flaw No 6 – EPU Methodology has static & optional defects in the usage of par value
Example 8 :
The par value capital of Ali Sdn. Bhd. is RM2 in 2006. Ali Sdn. Bhd. is awarded a long term contract to the year 2020 worth RM100 million. Ali Sdn. Bhd. does not want to increase its par value capital for this duration of 14 years.
EPU Methodology : The par value of Ali Sdn. Bhd. is RM2 in 2006 and is still RM2 in 2020. Ali Sdn. Bhd. has not progressed for the duration of 14 years. Therefore, Ali Sdn. Bhd. needs more assistance.
Flaws :
The example shows that, in spite of having progressed rapidly, the par value capital of Ali Sdn. Bhd. is unchanged from 2006 through 2020. If Ali Sdn. Bhd. doesn’t want to increase the par value capital, how can the 30% bumiputera target be ever reached?
Comments : How does one term such a scheme? A sham? A scam? The EPU methodology is used not to measure progress but to conceal progress! The EPU methodology is used not to set an achievable target but to say “wait till I have had enough!” Both statements combined goes to say that the NEP is a sham or a scam. It conceals the actual progress of the bumiputerass and the set target of 30% can never be achieved! It conceals the actual progress to the non-bumiputeras so that a small section of the UMNOputras can have the NEP continued indefinitely and they could continue to enrich themselves. Not only the non-bumiputeras, it also conceals the actual progress to the poor and average Malay masses so that they would not question their leaders where the monies had gone. If the statistics show Malays had achieved 45% equity stake and the poor and average Malays have not benefited a single sen from this NEP target, then where have all the monies gone to? The answer is obvious – to a small section of politically connected people, their off-springs and cronies, the Umno putras who have become NEPputras. Instead, by keeping the percentages low, they could use the non-bumiputeras as bogeymen and blame them for having hijacked the wealth from them! By telling such lies to the Malay masses, they can continue to elect the leaders and UMNO into power perpetually.
Flaw No 7 – EPU Methodology distorts the true picture of the company and the Nation
Example 9 :
Ali started a shipping business called Ali Baba Sdn. Bhd. five years ago in 2000 with a par value capital of RM2. Shortly after, it was awarded several long term contracts by the major GLCs to ship their produce throughout the world. In the same year, Ali also incorporated a company in Panama called Ali Baba & Sons (Panama) Ltd. to provide all shipping maintenance, advisory and logistic services to Ali Baba Sdn. Bhd. With its political connection, Ali Baba Sdn. Bhd. was able to secure a RM500 million loan from Bank Islam in 2000. In 2006, Ali Baba Sdn. Bhd made a huge loss of RM500 million while Ali Baba & Sons (Panama) Ltd. managed to make a profit of RM200 million through deliberate transfer pricing policy. Unable to repay its bank loans and continue business, Ali Baba Sdn. Bhd. was folded up in 2006. This RM500 million loan debt was fully written off as bad debt in Bank Islam. Bank Islam, adversely affected by this bad debt along with accumulated bad debts from other companies, was forced to seek a bailout of RM2 billion from the Government to prevent itself being folded up. Meanwhile, Ali was relatively unscathed by these events because his company’s bank loan of RM500 million was in effect paid by the Malaysian citizens through the bailout of Bank Islam.
EPU Methodology : Using a par value methodology, the capital of Ali Baba Sdn. Bhd. was RM2 in 2000 and extinguished to RM0 in 2006. Ali Baba Sdn. Bhd. had lost RM2. The company should be given special assistance to help it stand up on its feet again. After Ali Baba Sdn. Bhd. was folded up, Ali set up another company called Ali Nominees Sdn. Bhd. (using part of the monies from Ali Baba & Sons (Panama) Ltd.). It was awarded several long term contracts under a special scheme for companies affected by the financial crisis. It employed the same modus operandi and starts the process all over again, except that this time, it obtained a RM500 million loan from Bank Rakyat.....
Flaws :
In fact, the true situation is much dire than the RM2 par value loss. It conceals a RM500 million loss by Ali Baba Sdn. Bhd. and another RM2 billion bailout of Bank Islam using tax payer monies of all races!
Comments : By ignoring the true situation, the EPU methodology provides fertile ground for cover-ups and mismanagement without any accountability. If there are any lessons to be learnt or any remedial actions to be taken, it can only be done by seeing the true picture. The uninformed citizenry would be floored if only they could add up the gargantuan losses to the country of all the mismanagement and bailouts since the 1970s - the Bumiputera Finance Scandal, the Maminco London tin-buying scandal, the EPF-Makuwasa scandal, the Bank Negara currency trading losses, Perwaja Steel, MAS, MISC, Bank Bumiputras, Bank Islam, just to name a few. It is untenable that the Government should continue to help those bumiputera cronies who have lost monies as a result of the financial crisis. Many of them, in spite of being bankrupted or loss suffered, they lead lives of luxury as many of them have already stashed their monies overseas away from prying eyes and creditors. Should a person whose wealth before the crisis was RM500 million and if he lost RM400 million, be helped instead of the poor farmers or fishermen? Is anybody suggesting that Tajuddin, Amin Shah, Daim or the likes of these people need help again?
Flaw No 8 – EPU Flawed Sampling Methodology
Example 10 :
The wealth of all Malaysians whether in the form of entities or persons can be categorized as follows:
A. Wealth of entities or persons which is skewed towards Bumiputeras
B. Wealth of entities or persons not skewed towards any particular race
C. Wealth of entities or persons skewed towards Non-Bumiputeras
EPU Methodology : Out of the above wide spectrum of entities and persons, EPU only study a sample of 600,000 companies in category C1 above. For unexplained reason, it has excluded in its study the wealth of all those entities and persons in categories A, B and C2 above.
Flaws :
In addition, wealth (properties, shares, bank savings, etc) can also be owned by private individuals through acquisition or inheritance. Wealth can be located in the country and outside the country. Therefore, EPU study of only category C1 with the exclusion of A, B and C2 is seriously flawed as it does not represent the whole spectrum of wealth of the entire population of Malaysia. Concentration of wealth in the categories of A, B and C2 are very substantial and collectively may even exceed the wealth of category C1. But why are they excluded?
Its land value is humongous in relation to the quantification of wealth. Yet ridiculously enough, the wealth of FELDA (world’s largest planted acreage) and huge bumiputera-controlled plantation GLCs such as Guthrie, Boustead, Sime Darby, etc have been left out in the EPU methodology. Collectively, this group represents the majority of the plantation acreage and the wealth in Malaysia. On the other hand, smaller non-bumiputera plantation companies such as Unico, Tanamas, Harn Len, Far East and many others may have been roped into the calculation!
Time to Disclose the EPU Methodologies and Revamp the NEP In summarizing the 10 simplified examples above, we can conclude that the NEP is outdated and relies on a methodology which:
· Does not even evaluate relative wealth in determining who deserves to be helped and who doesn’t; · Uses only data derived from one section of shares in Malaysian companies while ignoring other important sections of assets to make decisions across the board for all Malaysians from all walk of life; · Has sprung widespread leakages with no mechanism to plug them; · Is a sham when measuring actual progress and target setting; · Distorts the true picture of the company and the nation; · Results in the calculation of bumiputera percentage of equity which is incorrect and misleading; and · Is derived from an incorrect and biased sampling method.
It is no wonder that the NEP has been so ineffective, even to the extent of being counter-productive, in redressing the inequalities of wealth in the country. Instead, it helps to perpetuate corruption, cover-ups, wastage, inefficiencies, cause brain drains and drag down the nation’s competitiveness in attracting FDIs. It becomes embarrassingly clear that the NEP has catered specifically to certain sections and groups of people who are politically connected to the ruling party. The question is – do we still want to continue to use such an ineffective and counter-productive policy for another 14 years to the peril of the ordinary citizens and the country? In view of these six flaws and ten examples which I have enumerated, the EPU, has lost credibility and public confidence in its independence, integrity and professionalism in the methodology and data it has used for making important decisions for the country. Malaysians want the elected Government to reveal the methodology and data used by EPU to compute ethnic breakdowns of NEP equity ownership and distribution and to engage them in an intellectual discourse to come up with a better and more effective methodology to redress the unequal distribution of wealth for its people.
(06/11/2006) * Lim Kit Siang, |