Yesterday, the country's largest Malay daily newspaper gave front-page coverage to a proposal by the Malaysian Chinese Association (MCA) to scrap the 30 per cent bumiputra ownership requirement for companies listed on the local stock exchange.
The apparent highlighting of the proposal by Utusan Malaysia - which is controlled by Umno - comes
after Deputy Prime Minister Najib Razak said on TV last week that the NEP will gradually be liberalised in the "not too distant future".
As it is one of the government's main media conduits, Utusan's views are perceived by readers as reflecting its owner's position.
So given Umno's consistent defence of the NEP - a position at odds with its fellow National Front coalition member MCA, which prefers a needs-based approach - the front-page report raised eyebrows.
MCA vice-president Liow Tiong Lai has asked that equity requirements be liberalised so companies can better compete, especially in the tougher economic climate, and so "real" partnerships be formed between Malay,
Chinese and Indian businessmen. The 30 per cent equity requirement is an obstacle to this, he said.
Started in the early 1970s after race riots, the affirmative-action NEP aimed to do away with poverty irrespective of race and to restructure society so race would not be identified with a specific economic
function.
Bumiputras, mainly ethnic Malays, have been given preference and discounts in many areas - public employment, scholarships, house ownership and new public share offerings - so they would eventually own 30 per cent of corporate wealth.
Originally set to expire in 1990, the NEP has been continued indefinitely under various names because the government maintains the targets have not been met.
Over the years, the local bourse has become less and less attractive to major shareholders, who prefer listing overseas to avoid being tied down by what they see as unnecessary rules - which on Bursa Malaysia includes
restoring the bumiputra portion during major corporate exercises to 30 per cent if it has been diluted or sold down.
Bursa officials recently proposed a rule change so that a listed entity which has met its 30 per cent bumiputra equity requirement should no further be made to top-up.
In the late 1990s during the Asian financial crisis, the rule was relaxed in the manufacturing sector for export-oriented companies, so as to encourage foreign investments.
RAM Holdings chief economist Yeah Kim Leng believes the equity conditions to be outmoded and because of the meltdown in the global financial systems, suggested "it is more favourable now for the restrictive
conditions to be removed".
Najib is expected to replace Prime Minister Abdullah Badawi in March under a planned succession. In touching on the sensitive policy, he did not give details or a timeline, but his caveat of doing so "when the
Malays are ready" predictably drew scores of sceptical comments, especially on the Internet.
Making things less restrictive for listed firms would be a start, an anonymous commentator posted, noting: "Professionally run firms get better multiples overseas, faster listing and are closer to more sophisticated capital markets. In the global economy, you don't care where the company is listed, only whether it is wanted and appreciated."
- Business Times Singapore
