Thursday, October 30, 2008

30% Bumiputera Rule Misguided

PAS Youth's recent outburst against the abolition of 30% bumiputera requirement for public listed companies is misguided despite being well-intentioned.
PAS Youth chief Salahuddin Ayub said that the 30-percent equity must be retained and defended "even if the target has been reached". According to him, "before 1969, the equity of the Malays was almost nil and after 40 years, it is only at 19 percent. If this continues, we need about 20 more years to achieve the 30 percent target."
Firstly, as stated, bumiputeras have failed to achieve the target fo 30% equity despite nearly 40 years of NEP only proves that achieving equity through regulation will not achieve the objective increasing the wealth of bumiputeras in the shortest possible time. In fact, the 19% wealth ownership target, if accurate, has remained stagnant since the 1990s.

Secondly, for bumiputeras to achieve not only 30% of the nation's wealth, but also a meaningful 30%, it is critical for the capital markets to be liberalised to attract global capital and its corresponding talent and economic effects.

Our goals of becoming the regional financial centre since the 1980s lie in tatters as we lose out to many other financial centres in the region. The Kuala Lumpur Stock Exchange as late as 1993 was the 2nd largest stock exchange in Asia-Oceania region ex-Japan, but today we have fallen out of the top 10, losing to financial markets in Singapore, India, China, Taiwan, South Korea, Australia and New Zealand.

As a result, not only are foreign companies not interested in the Malaysian stock exchange, Malaysian companies are similarly heading offshore to more attractive financial markets. Ultimately, the losers are Malaysians themselves.

Hence, taking progressive and deliberate steps towards liberalising the financial markets will allow for a more dynamic economy accompanied by greater wealth creation. It will ultimately benefit the bumiputeras as they form the majority of the population. A more liberal market will also catalyse a more productive workforce who will in turn be able to compete on an equal footing in a globalised economy.

Similarly, PAS is misguided in its response to the appointment of Low Siew Moi as the acting General Manager of Selangor State Development Corporation (PKNS) as the Selangor Menteri Besar has stated clearly that she is the most qualified person to fulfil the role at this point of time. By that, it means that she will be able to manage PKNS is the most effective and efficient possible manner, which will ultimate benefit the coffers of the state.

Given the people-centric nature of the policies of Pakatan Rakyat government, the poorest in the state, most of whom are bumiputeras will benefit most from such gains.

The race of the general manager should not be in question at all. It is disappointing that objections have come purely from a racial, and not from a qualitative perspective. PAS in these instances, should not miss the woods for the trees.
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