3 overlooked questions on 12MP and the Bumiputera agenda

The uproar over Bumiputera equity policies featured in the Prime Minister’s 12th Malaysia Plan speech has simmered down this week, but three issues have been overlooked.

The 12MP’s Priority Area D, “Achieving an Equitable Outcome for Bumiputera”, within Chapter 5, “Addressing poverty and building an inclusive society”, outlines the “Bumiputera Agenda”. The section provides a commendably frank assessment of shortcomings, most saliently the community’s high concentration in low-skilled occupational categories and involvement in micro low valued-added business.

The 12MP extends the 11MP’s focus on effective control rather than passive ownership; both plans resolve to divest government-owned equity to “genuine” (11MP) and “qualified” (12MP) Bumiputera entrepreneurs. The 12MP criticises the continual dependency of Bumiputera MSMEs (micro, small and medium enterprises) on government grants and loans, and commits to formulating “a clear exit policy… to encourage successful Bumiputera MSMEs to be more independent and resilient.”

I have no doubt that the intent is real and earnest. Indeed, the focus on skills, productivity and competitiveness leads us to the first question.

1. Why does the agenda still hinge on 30% Bumiputera equity?

By the 12MP’s valuation of Bumiputera agenda items, human capital and entrepreneurship outrank equity ownership in importance (italics added):

• “Human capital development will be the main focus in uplifting Bumiputera socioeconomic position”;

• “Increasing the resilience and sustainability of Bumiputera businesses will be the main focus in strengthening entrepreneurship culture.”

Bumiputera socioeconomic development covers vast ground, from higher education to employment, entrepreneurship and ownership. Of these, human capital development – which operates primarily through higher education, high-skilled occupations and enterprise development – is declared as “the main focus”. All objectives are intertwined and all Malaysia Plans mention everything under the sun, but policy statements, and especially the political will expressed in PM’s 12MP speech, determine which policies will lead, and which ones follow. Clearly, equity ownership is the driving objective.

In light of the plan’s own declared priorities, though, shouldn’t education and MSME development have pride of place, with equity ownership in a supplementary role?
Instead of fixating on 30% Bumiputera equity, Malaysia will do better to galvanise the community toward the fundamental goals of cultivating skills, developing capability and talent, and energising enterprise.

Formally, policy targets for Bumiputera skills development and MSME growth should take utmost priority. The 12MP sets an employment target of 65% of Bumiputeras in skilled jobs in 2025. This is superficial, generalised, and utterly lacking in ambition. On Bumiputera educational attainment, the 12MP presents scant data and projects no meaningful goal. On Bumiputera enterprise growth, the 12MP proposes a welcome new target of raising their contribution to 15% of GDP, but this potential new rallying point gets overshadowed by equity ownership. The 12MP reports how a staggeringly high 83% of Bumiputera MSMEs are classified as micro, but refrains from targeting growth in the share of small and especially medium enterprises.

2. Why demarcate the Bumiputera agenda based on agencies – omitting established Bumiputera programmes and Sabah-Sarawak vs peninsula disparities?

The 12MP has inherited a template from the 11MP, which in turn built on the 10MP. There has been some progress along the way; Bumiputera programmes are merged into one distinct segment, whereas in the past the coverage was more diffused.

However, there is a conceptual flaw: this template demarcates the Bumiputera agenda based on government agencies (Mara, Teraju, PUNB, Ekuinas, etc), instead of comprehensively outlining all the policies and other agencies that promote Bumiputera development, some of which entail quotas for different ethnic groups. The 12MP continually omits a host of other programmes that are instrumental in Bumiputera socioeconomic development, most saliently, matriculation colleges and university admissions, public sector and GLC employment, and government procurement.

Matriculation colleges and pre-university programmes, higher education and skills training, including UiTM, are pivotal to Bumiputera human capital development, and should be mandated to cultivate talent in vigorous and accountable ways. Likewise, government procurement plays a key role in Bumiputera company development, and much more can and should be done. These may be established and staid programmes that Teraju, the policy coordinating agency, lacks enthusiasm for, but their outreach especially to B40 and M40 are vast and thus their deficiencies also hold back the community.

The 12MP’s affirmation of legislation to oversee “identification of the beneficial owner” of companies is a major step toward curbing abuses to government procurement which undermine Bumiputera contractor development. These elements should be integrated into Bumiputera development.

The 12MP’s neglect of disparities within the Bumiputera population replicates recent practice; data differentiating Malay and non-Malay Bumiputera that used to be reported have vanished in the past decade, and such inequalities are neither monitored nor targeted. This attention vacuum stands strikingly in contrast to the unprecedented inclusion of a full chapter on Sabah and Sarawak.

Then again, Chapter 7 on “Enhancing Socioeconomic Development in Sabah and Sarawak” addresses regional economic development from helicopter height, with only a slight descent onto policies targeting Anak Negeri Sabah and Bumiputera Sarawak. Unfortunately, the planning is disconnected from the vast programmes designated for all Bumiputeras. The 12MP’s articulation of Bumiputera policy in Chapter 5 excludes equitable distribution of benefits between Bumiputera-status populations of East and West Malaysia.

3. Surely we can ask more of the Bumiputera T20?

The 12MP would like to “encourage” the Bumiputera T20 (richest 20%) to “actively contribute back to the Bumiputera community”. And that’s all: one sentence in 530 pages.
In 1971, the New Economic Policy aspired for Bumiputeras to be “full partners” in the economy; in 1991, Vision 2020 envisaged a “fully competitive Bumiputeras”. In 2021, we hear no articulation of an ultimate aim.

We can gather from the 12MP, and the Shared Prosperity Vision 2030 embedded within, whispers of recognition that the Bumiputera agenda culminates in the beneficiaries graduating or exiting – to be clear, this means those who have received special treatment, by choice or compulsion, stop receiving special treatment in the form of quotas, discounts, contracts, loans, and so on. They stand on their own feet.

Who are best poised to lead in the essential, though undeniably difficult, endeavour of graduating out of special treatment? The Bumiputera, especially Malay, T20 (perhaps the upper M40 too).

The philosophical, moral and logical thrust of the agenda unshakeably holds: those who have gained the most upward mobility – undeniably through their own hard work, but typically through receiving scholarships, employment, contracts, or loans – should be the first in line to let go of those privileges.

The psychological benefits on the community also spring from such measures being clearly demonstrated and presented as proof of empowerment. In other words, foregoing special treatment is not to be done discreetly, but visibly – as a statement.

We can draw up a list of (im)possibilities, but one already enjoys broad support: the property discount, particularly for expensive homes. Among pro-Bumiputera interventions, it is one of the least morally and philosophically justifiable. The notion of removing the discount should not be controversial. BN’s 2018 election manifesto promised it; public figures like Daim Zainuddin and Umno communications chief Shahril Hamdan advocate it.

In practice, of course, the idea is greeted with eye-rolling and loud groaning. We get into a vicious cycle: beneficiaries are made to feel guilty, by their kin who accuse them of ungratefully denying to the next generation what they received, and by minority voices who pile on their grievances.

A property discount is best rejected before the purchase. Young adult Bumiputeras – self-aware of the ways the system has benefited them, which enable them to afford homes without the discount – should step up and declare that they will waive the discount.

Policies that promote ethnic mix in new housing areas may need to be revised; designating Bumiputera lots that can only be sold to Bumiputeras can depress prices in the secondary market. But it is a poor excuse to keep the discount because resale value might be lower. Seniors who have bought high-end property at a discount could be coaxed or compelled to contribute to an affordable housing fund. That would be quite an impactful and meaningful giveback.

I hear thundering cries of “impossible!”. It seems, though, that we have given up trying.

Lee Hwok Aun is senior fellow at the Iseas-Yusof Ishak Institute.

The views expressed in this article are those of the author(s) and do not necessarily reflect the position of MalaysiaNow.