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The aim is to distribute wealth more widely. For a long time, it was the politically connected Malay businessmen who became rich on the quotas, causing resentment among the Malay masses and the minorities. By Carolyn Hong, The Straits Times
Malaysia’s pro-Malay economic policies were never meant to be only about Malay corporate ownership, but the focus inevitably narrowed to just this one aspect. It was seen as a litmus test for any leader who wanted to signal reforms in a highly politicised economy. Thus, when Prime Minister Najib Razak removed the longstanding quota on Malay ownership of public-listed companies yesterday, along with a wide swathe of liberalisation measures, it was an extremely bold move - and a huge political risk. Companies will no longer have to sell at least 30 per cent of their shares to Malays. Instead, they will have to maintain at least 25 per cent of their shares for sale to the general public, of which half must be sold to Malays. The aim is to distribute wealth more widely. For a long time, it was the politically connected Malay businessmen who became rich on the quotas, causing resentment among the Malay masses and the minorities. Datuk Seri Najib’s move has been described as a seismic shift in Malaysia’s economic policy. ‘Indeed, the measures represent the beginning of a mindset change that is bound to excite investors, stimulate the economy and inspire the people to be even more competitive,’ Malaysian Chinese Association president Ong Tee Keat wrote in his blog. The economists have largely hailed it, although most say the effects would not be immediate. Mr Lee Heng Guie, the chief of economic research at CIMB, said the dismantling of policies that had hampered investments will put Malaysia on a better footing for sustained growth in the medium and long term. Mr Najib had earlier also announced the liberalisation of 27 sub-sectors of the services sector, and financial sector. There is bound to be some disquiet on the Malay ground, although most Umno politicians are sticking to the party line for now. Umno Youth chief Khairy Jamaluddin told The Straits Times that there has been a bit of rumbling among the Malays because the grassroots members do not understand the big picture yet. ‘It can be easily manipulated to say that the Malays are losing out. We will give an explanation to our members,’ he said. To him, the change may be seismic in terms of the psychology of it, but the Prime Minister was merely getting rid of old tools that did not work. The Malays, Mr Khairy said, should understand that the overarching Malay agenda was still in place, but a new method was being fashioned to achieve it. He pointed out that participation through quotas did not develop capacity or skills. Leakages were serious, making millionaires of the few who were allotted shares. Mr Najib said that of the RM54 billion (S$22 billion) in shares allocated between 1984 and 2005, only RM2 billion worth of shares were left in the hands of bumiputeras. Umno MPs like Datuk Mukhriz Mahathir, Datuk Tajuddin Abdul Rahman and Datuk Jamaluddin Jarjis were quoted by the online media as saying that the new model could break the stagnation of Malay economic participation. Another Umno MP, Datuk Nur Jazlan Mohamed, too said the initial reaction on the ground was not good, but he said people needed to understand the pressures of global competition.
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