The Malaysian Insight

ETHNIC-BASED affirmative action must continue in the Shared Prosperity Vision 2030 (SPV) despite calls for Pakatan Harapan to move to a needs-based approach, said one of the policy’s authors.

This is because the income gap between the Bumiputera, Chinese and Indian households has widened since 1989, said Institute Masa CEO M. Nizam Mashar.

Despite the billions poured into nurturing a competent Bumiputera business and industrial class, their contribution to economic growth remains lower than that of their non-Bumi counterparts, said Nizam.

But Nizam believes the current government will break with the Barisan Nasional practice of patronage and deprivation.

Instead of giving out opportunities to the politically connected, PH will focus on those who are capable and demonstrate an appetite for business.  

Instead of giving out licences and permits, SPV programmes are focused on building skills and capability of Bumiputera SMEs to grow and compete against others, said Nizam.

“This is affirmative action without deprivation. We are not taking away business from non-Bumiputeras and giving it to Bumiputeras,” Nizam told The Malaysian Insight.  

“At the same time, Ali Baba businesses won’t be tolerated,” NIzam said referring to how Bumiputeras under past the BN administration would get contracts and permits that would then be sold for a quick profit to non-Bumiputeras.  

“We want to build the capacity and capability of Bumiputeras so that they won’t feel threatened and can compete against others.”    

Since the SPV2030 was first proposed, experts have questioned the need to maintain ethnic-based policies for Bumiputera entrepreneurs given past failures.

It was proposed that PH move to a needs-based approach, giving out assistance and aid that would help everyone regardless of ethnicity.

Nizam said ethnic-based targeting for government programmes needed to continue because household income, wages and financial asset measurements showed persistent disparities across ethnic groups.  

“The numbers are real, the gap is there between income classes, ethnicities and regions. The numbers show there is a growing divide in society.

“So, we need to build the capacity of Bumiputera SMEs so that they can join the supply chain and collaborate with non-Bumiputeras in a genuine manner.”

Only for the capable

SPV2030’s documents said that in the past 23 years, the income disparity between Bumiputeras and non-Bumiputeras has widened.

In 1989, the difference in median income between a Chinese household and a Bumiputera one was RM497 per month. In 2016, the gap was RM1,736 per month.

For Indian households, the median income gap with a Chinese family was RM1,154 per month as of 2016.

Despite comprising more than 60% of the country’s population, Bumiputeras still lag in most private sector professions, except dentists and quantity surveyors.

SPV documents said 50% of about RM1.1 trillion in government contracts given out in the past 20 years were awarded to Bumiputera SMEs.

But Bumiputera SME contribution to the economy was below 9% as of 2015, indicating that they were either wasted or given to others.  

Prime Minister Dr Mahathir Mohamad had also pointed this out when he said that opportunities given under the Vision 2020 economic agenda had been wasted.

Nizam said the low success rate of previous programmes was primarily due to leakages and abuse of power.

“Opportunities were not provided to the right people. People who were capable did not get them because they did not have the right political connections.

“Even non-Bumiputera players have acknowledged that in the past, they had worked with Bumiputera players who were not genuine.”

Nizam said the Malaysian Anti-Corruption Commission (MACC) and the Governance, Integrity and Anti-Corruption Centre are working on measures to prevent such practices from recurring.

Beyond just contracts and licences, SPV2030 is focusing on technical and vocational training and upskilling Bumiputera entrepreneurs to help them compete in an open market.

But these opportunities will be targeted to those who have an appetite for business.

“We are not just looking at how many Bumiputeras enter our programmes and how much we give. We are looking at how many succeed because we cannot help everyone but only those who are interested to be helped and who have the potential to grow.

“So, if you give the opportunities to the right people, disparities among groups can be addressed, and we can have equitable outcomes.” – October 22, 2019.