Forget Bumiputera equity, focus on productivity, economist tells govt

Universiti Tun Abdul Razak’s Barjoyai Bardai says Bumiputera equity should not be based on the number of shares held by them. (File pic)

PETALING JAYA: An economist has urged the government to set aside its focus on Bumiputera equity, saying the number of shares held by the community was not its biggest problems.

Universiti Tun Abdul Razak’s Barjoyai Bardai said equity is typically measured by the number of shares issued by companies and registered with the Companies Commission of Malaysia (SSM).

“If we measure Bumiputera equity based on the number of shares held, then it’s meaningless because different shares are priced differently.

“In one company, a single share can be worth RM150 but in another, a single share could only be 26 sen. Both represent a single share but their value is worlds apart,” he told FMT.

He was commenting on Prime Minister Dr Mahathir Mohamad’s revelation yesterday that Bumiputera equity dropped from to 16.2% in 2015 from 23.4% in 2011, far from the 30% target in the New Economic Policy.

Barjoyai said the decline in equity holdings can be traced to the increase in the number of companies being incorporated, including foreign investors who set up companies here.

“So the number of companies and number of shares owned by non-Malays has grown more rapidly than Bumiputera holdings.

Barjoyai Bardai of Universiti Tun Abdul Razak.

“But this is not important. What matters is a company’s ability to generate income from the ownership of these shares, and Bumiputera companies, by and large, have failed to do this.”

Malaysian companies, he said, on average do not pay more than 10% of their profits and dividends and so, for many equities, this is not a key to increasing their income.

The focus, therefore, should be on the value Bumiputera companies have on their employees, he said.

“In the bigger picture, the focus should be on ensuring Bumiputeras can earn higher wages. That is the real problem faced by the community.”

Barjoyai said some 80% of the people were employees, and the Bumiputeras – many of whom were in the working class – were facing problems because their salaries had not grown in tandem with inflation.

He said wages could not increase as productivity was low.

So, the government needed to focus on enhancing productivity and reskilling the Bumiputeras to enable them to earn more as well as encourage them to be entrepreneurs.

“A key part of developing entrepreneurs is changing mindsets and exposure. The people don’t have to always rely on the government. They have to be prepared to take risks.”

Meanwhile, Academy of Sciences Malaysia fellow Madeline Berma said she was concerned over the low equity given that the Bumiputera community accounted for 68% of the population.

She said equity ownership indicated Bumiputera wealth ownership, and the low equity reflected the failure of previous administrations to narrow the inter-ethnic wealth gap.

“I am concerned that Bumiputera wealth is concentrated only in the hands of a few, particularly those with strong affiliation to the ruling political parties then,” the economist said.

Madeline said the government should review the method of estimating equity distribution, noting that official data excluded shares held by the government.

“Also, the measurement of Bumiputera participation in the economy must include both financial and non-financial assets,” she said.

Yesterday, PAS deputy president Tuan Ibrahim Tuan Man called on the government to publish a detailed report on the latest equity holdings of the Malay and Bumiputera community, saying the party was shocked with Mahathir’s revelation on the equity holdings.