Restoring The New Economic Policy (NEP) Will Only Widen Income Disparity Between The Rich And Poor, Benefiting UMNOputras And Cronies Of BN Without Uplifting The Living Standards Of The Poor

Press Conference Statement
By Lim Guan Eng

(Melaka, Thursday): UMNO Youth President Datuk Seri Hishamuddin Tun Hussein should be ashamed for trying to frighten Malaysians and improve his standing amongst Malays by holding loft a Malay keris in the UMNO Youth General Assembly. Weapons of war such as a keris should not be displayed openly in an orderly meeting to demonstrate of his commitment to champion the Malay race. After all who is threatening the Malay race? Such violent gestures will be the enduring image of UMNO Youth contrary to the messages of peace and social justice that UMNO gives out to all Malaysian voters during general elections.

DAP opposes the suggestion by UMNO Youth President Datuk Seri Hishamuddin Tun Hussein to restore the NEP in the National Development Policy as backward, divisive, irresponsible and not in the national economic interest of the country. Hishamuddin had said that the NEP’s “growth by distribution” strategy should be pursued to:

• ensure the 30% bumi share of corporate stock ownership.
• ensure Malay property ownership in selected sectors such as biotechnology, plantations, agriculture, halal food, telecommunication, aerospace, petroleum and gas, banking and finance, automotive, services and tourism.
• increase financial allocation and planning for the rural areas, with more capital injection to curb the migration of rural folks to the city.
• instruct all parties, including government servants, who have been entrusted to distribute government tenders to realise the Malay agenda
• increase access, equity and quality of education for Malay students for instance at the higher education level, the number of Malay students in critical courses must be balanced with those of the non-Malays to reflect the composition of the Malaysian populace.

The NEP’s stated goal of eradication of poverty and economic restructuring so as to eliminate the identification of ethnicity with economic function. However its discriminatory quotas in housing, ownership of public company stock, government contracts, university places and government scholarships, has not only failed to achieve these twin objectives but deeply divided Malaysians between bumis and non-bumis.

Eradication of poverty has succeeded only in absolute terms. Relative poverty persists and is particularly evident in urban areas. How NEP has failed can be shown by the latest United Nations Human Development (UNHDP) Report 2004 that shows Malaysia has the worst income disparity between the rich and poor in South East Asia. The UNHDP Report 2004 shows the richest 10% in Malaysia controls 38.4% of our economic income as compared to our poorest 10% controlling only 1.7%. 

Bumi Equity Ownership Would Have Reached 30% Target If Nominee Companies’ Shares Were Included And That They Had Not Sold Their Shares To Realise Profits.

The reason for such a great income gap between the rich and the poor is that leakages from corruption and inefficiencies in the economy deprive the poor of their economic rights. Such corruption and inefficiencies resulted in the false claim of the failure to achieve the target of economic ownership from a 2.4:33:63 ratios of Bumiputra, Other Malaysian, and Foreigner ownership to a 30:40:30 ratios by 2000.

In fact redistribution of wealth to increase the ownership of enterprise by Bumiputras from the then 2.4% to 30% of the share of national wealth have largely succeeded by 2002. In 1970 bumi equity accounted for 2.4% or RM 477 million, 19.3% or RM 20.9 billion in 1990 and 18.7% or RM 73.2 billion in 2002. Even though bumi equity declined from 19.3% in 1990 to 18.7% in 2002, the 30% target had been largely achieved if we include shares held by nominee companies 9.2% of RM 36 billion. Nominee companies are mainly bumi in nature, totalling the bumi equity ownership share to 27.9% or RM 109.2 billion in shares value at the KLSE.

Further if bumi shareholders had held on to their stake and not taken advantage of the opportunity to realise short-term capital gains by selling their shares, their stake would easily exceed 40%. For instance a recent study showed that the sale of shares in privatised companies between 1983 and 1990 has shown a dilution of Bumiputra equity from 65 per cent to 38 per cent of total paid up capital on the KLSE.

For Hishamuddin to claim that the bumi equity ownership target of 30% has not been achieved in not only deluding others, but also deceiving oneself. Such deceit is evident when Hishamuddin demands property ownership for the Malays in plantations, agriculture, telecommunication, aerospace, petroleum and banking when they are already dominated by Malays. How many banks in Malaysia remain Chinese-owned?
 

The NEP Has Bred Corruption, Malpractices And Cronyism

The reason why ordinary Malays do not benefit is that the distribution of this bumi equity is not fair or equitable is due to corruption and inefficiencies as it is concentrated only amongst the few Malays or Umnoputras. The NEP has been exploited to breed corruption, malpractice and cronyism. This is shown by the issuance of millions of ringgit of shares to son-in-laws and sons of Ministers and Deputy Ministers.

The recent AP controversy exposed by former Prime Minister Tun Dr Mahathir Mohamad where 12,600 Approved Permits(APs) were given to 82 companies but 54,600 APs to only 20 “selected” companies is another example of malpractice and abuse of power. By asking for the full 30% ownership equity, only the few rich Malays benefit from such cronyism and government patronage.

We should not forget that this bumi equity ownership is basically Malay dominated and neglects bumis from Sabah, Sarawak and orang Asli. Stressing on a Malay agenda ignores the reality that bumis from Sabah, Sarawak and orang Asli are marginalized and do not have any equity ownership.
 

Allocative efficiency requires competition and merit rather than ownership in ensuring wealth creation and and a fair distribution of wealth.

Another example of such distortion is reflected by the high number of Indians professionals in proportion to their population but hides the large number of Indian poor. Indians hold only 1.5% of equity ownerhip or RM 3.2 billion. By stressing on race, the government also ignored the plight of non-bumi lower class and poor, in particular the Indians who were completely marginalized. Such neglect breeds resentment as shown by the violence and high incidence of crime involving the poor Indians.

As Education Minister, Hishamuddin should know that there is no substitute for excellence and meritocracy. If Hishamuddin intends to deny deserving students of their university places because of the colour of their skin, then not only will innocent young Malaysians be victimized but the country’s international standards and economy will lose out. The government should learn that as far as allocative efficiency is concerned, competition and merit rather than ownership is the crucial issue in ensuring wealth creation and a fair distribution of wealth.

Why does Hishamuddin fight only for social justice for the rich Malays and not for all Malaysians whether poor bumis, poor Malays, poor Chinese, poor Kadazans, poor Ibans and poor orang Aslis? Instead of stressing on a Malay agenda, which is racist and divisive, DAP calls on Hishamuddin should be stressing on a Malaysian agenda to benefit and unite all regardless of race and religion.

(21/07/2005)