June 26, 2018
GLC’s: Pagar makan Padi
by Dr. Lim Teck Ghee
“ Yes, they enjoyed their position admittedly through patronage, but it would have been a competitive climb for them nevertheless. Is the mood for revenge against the previous regime making us senseless to the long-term damage to Malay progress in commerce?”–Former UMNO MP Tawfik Ismail
As the heads and top officials in Government-linked corporations (GLCs) continue to be lopped off and voices are raised on how to reform these enterprises, the wisdom of the new Pakatan government in taking off the kid gloves in dealing with GLCs has been questioned.
The plain truth, however, is that the shortcomings and failings of these enterprises have been known for a long time – long before Dr Mahathir described them as becoming “monsters”.
Crowding out private enterprise, given privileged access to contracts, benefiting from favourable government regulations and capitalizing in less discernible but nonetheless effective ways familiar or accessible only to insiders, the negative impact of these ubiquitous and often monopolistic bodies has been accentuated by their lead role in the poor governance and corrupt practices that have blighted the nation’s economy and society.
Self Censured Analysts
Most analyses of GLCs in the past and continuing today – even if critical -have either ignored or tended to avoid forthright and frank discussion of the main reason for the establishment and dominance of GLCs – the mission focus on the Malay agenda.
The key questions to be asked are:
what is this Malay agenda; whose interests does it serve; and should a race-based agenda be the driver or leitmotif of GLCs which rightfully belongs to all stakeholders in the country.
These questions need to be put out and answered in the public sphere regardless of whether the GLCs can be reformed and reconfigured in accord with truly national aspirations.
Perkasa Inaugural Congress, 2010 and GLCs
I had posed and tried to answer this question in response to Ibrahim Ali of Perkasa who, in the inaugural Malay rights group congress held on 27 March 2010, had said that “We are not only looking at their (GLC) performance but also the role they play in helping Malay entrepreneurs.”
I had replied then that:
“The Malay and Malaysian public should look forward to hearing the outcome of Perkasa monitoring the GLCs and learning the truth about how these bodies are standing in the way of, or seriously implementing, their mission of fulfilling the Malay agenda.” See http://www.cpiasia.net/v3/index.php/141-cpi-writings/lim-teck-ghees-contribution/1888-perkasa-glcs-and-the-new-economic-model
At that time, in 2010 eight years before the present debate, I noted too the considerable success of GLCs in furthering the Malay agenda from the following indicators:
- GLCs are major shareholders of corporate equity. They comprise 36 per cent and 54 per cent of the market capitalization of Bursa Malaysia and the benchmark Kuala Lumpur Composite Index.
- Seven out of the top 10 listed companies are under majority ownership of the government.
- Senior GLC positions are largely determined along ethnic lines. GLC directors, management and staff are largely Bumiputeras.
- Non-Malay owners of listed and unlisted companies often have no choice but to work with influential Bumiputera and GLCs to help protect their interests through obtaining sub-contracts or becoming suppliers of goods and services.
- Non-Malays may own 40 per cent of corporate equity Based on the government’s flawed calculations but GLCs are the major players and have control over the economy.
Malay Agenda Accomplishments Since NEP
I had also noted that much of the new wealth in the country is in Malay hands. These sources of wealth include the plantation sector which is dominated by Felda and PNB companies; the smallholding agricultural sector where the Malays are the major group amongst the 112,635 Felda settlers; the hi-tech aerospace industry; the defense industry; the petroleum and gas industry where apart from Petronas and MMC, the Malays have substantial holdings in key MNCs such as Shell, Exxon, BP; the finance and banking sector where eight out of 10 banks are Bumiputera- owned and controlled; the automotive sector where Malay interests are dominant in Proton, Perodua, DRB Hicom, UMW and Naza, and where the system of APs ensures a steady stream of income for select Bumiputeras; the energy and utilities sector where TNB and Malakoff are key players; the more recently contentious MARA’s digital malls and so on.
Perhaps most successful of all in accomplishing the Malay agenda was that the NEP objective of building a strong Malay professional and technical elite class had been reached well before the time of Perkasa’s inaugural congress.
From a very small base of professional and technical workers in 1970 (Bumiputera comprised 4.9 per cent of registered professionals at that time) the Malay component of the country’s professional and technical workers in 2010 was the biggest amongst the various racial groups. According to the Malaysian government’s Third Outline Perspective Plan (2001-2010), the Bumiputera community comprised 63.5 per cent of the ‘Professional and Technical’ category of employment in 2000.
This growth of a strong Malay professional class within a short period of 30 years – with some finding employment and high positions in GLCs as noted by Tawfik Ismail- is possibly the fastest recorded by any marginalized community anywhere in the world.
That this information is not widely known is not due to modesty. It is part of political spin aimed at playing up to Malay insecurity, under-reporting Malay achievement and emphasizing the non-Malay, that is, Chinese dominance of the economy.
This new privileged class (and its leadership institutions such as the GLCs) could also be the main reason accounting for the phenomenon of “pagar makan padi”.
Tackling Malay poverty
I had also argued that in the economic sphere there is still work to be done to uplift the lot of the poor Malays (see article on the country’s underclass –https://dinmerican.wordpress.com/2018/06/11/new-malaysias-underclass-what-to-do/). I noted that the task is less formidable than what official statistics may make it out to be. This is because Malay poverty – as distinct from Bumiputera poverty – is over-estimated by the statistical practice whereby the Malay figures are lumped with the figures of recent migrants from Indonesia who have obtained Bumiputera status as well as the other Bumiputera from East Malaysia.
The great majority of the former group — Javanese, Sumatrans, etc — who have assimilated into the country’s population especially after the 1970s came with little in assets or income. Inclusion of these poor “pendatang”, despite their upward mobility after migration here in the official statistics, has impacted in distorting the racial distribution of household income.
Without them (and Bumiputra communities in Sabah and Sarawak), the ‘native’ or ‘indigenous’ or ‘local’ Malay achievement, as distinct from Bumiputera achievement, will be higher in all the social and economic indicators – especially the key one of land ownership – used by the Department of Statistics to measure inter-ethnic differences.
The Malay Agenda and the country’s future
In the weeks and months to come, the ruling PH government will unveil more of its economic policies and programmes to replace the BN’s ineffective, unproductive or discredited ones.
Looking beyond 1981– 2020: Will the Malay Dilemma be resolved under Mahathir 2.O Administration? NO until we empower and challenge the Malays and stop spoon feeding them like UMNO did to remain in power for 60 years.
We need to stop manjaing (pampering) them and should make them self-reliant and resourceful. I understand what Dr. Lim Teck Ghee and Tawfik Tun Dr. Ismail are trying to hint at. Let us challenge Malaysia’s Status Quo.–Din Merican
It is extremely unlikely given the BN’s prioritization of the Malay agenda that the Malay position in various sectors of the economy has stagnated or fallen back since 2010 and that it deserves attention and propping up through a larger allocation of the nation’s financial resources to support. This issue needs strong and independent empirical evidence to verify.
It could also be that GLCs should continue to play a key role in enabling achievement of whatever is authoritatively established as an uncompleted or lagging Malay agenda as well as the priorities in the larger national agenda. This also needs similar rigorous analysis to establish.
But the hard questions – driven not by “revenge politics” but by sensibility and prudence – still need to be asked of the Malay agenda in this new era of accountability, transparency and good governance:
What is this new Malay agenda today; which part of the old Malay agenda has yet to be achieved or realized; which targets have not been attained; and how will reconfigured or reformed GLCs help the Malays and the nation arrive at final accomplishment of the Malay agenda?