Screenshots

ASLI has backed down under severe intimidation from parties which disputed its findings on Bumiputra's equity share of the country's wealth.

According to Bernama, its president, Mirzan Mahathir, said that on re-examining the methodology and conclusions of the report, "ASLI has concluded that there are shortcomings in assumption and calculation that led to conclusions that cannot be vigorously justified."

Meanwhile, theSun quoted sources as saying that consultants and researchers at the Centre for Public Policy Studies (CPPS) involved in putting it together are standing by their work. However, they accept that the political reality left the institute no choice but to back down in order to stop the attacks on ASLI.

In February, ASLI-CPPS submitted to the Government five research papers that integrally made up a comprehensive proposal entitled "Proposals for the Ninth Malaysia Plan". One of the five research papers, tiled Corporate Equity Distribution: Past Trends and Future Policy, had used statistics from the Bursa Malaysia Corporate Equity’s 2005,and estimated the amount of bumiputra equity ownership to have reached 45%, or RM325.08 billion, of the RM715.4bil worth of stocks on the stock exchange.

Initially, nobody gave the ASLI findings a meaningful mention until it was politicised in the mainstream Malay press.

October 5, theSun ran an editorial urging the Government to review how the bumiputra equity is measured -- a mathematical equation that Screenshots said all Malaysian prime ministers had failed to resolve since the implementation of the NEP in 1971. Excerpts:

Without a doubt there are many weaknesses in the way the authorities measure bumiputra participation in the corporate sector. These weaknesses are so serious that one wonders whether a purpose is served at all by attempting to measure bumiputra equity participation in the corporate sector.

It is terribly unfortunate that the 30% target for bumiputra participation in the corporate sector, measured so inaccurately, has become politically charged so as to almost decide whether economic policy-making is successful or not.

The most basic of weaknesses is that ownership is based on the par value of companies in Malaysia which effective represents the original capital put into a company. It takes no account of future losses or future retained profits. A much better measure will be shareholders' funds, which represents the net book value of assets attributable to shareholders or in the case of listed companies, the market value of these companies.

But for reasons known to only itself - probably related to political expediency - the government prefers to stick to the par value of companies.

The other thing is that the stakes of government-owned companies are not included under bumiputra on the reasoning that the government represents everyone in the country. This can be overcome by de-segregating government ownership in proportion to the racial composition of the country.

Again, one wonders why such simple measures have not been taken since the introduction of the New Economic Policy in the seventies, and whose tenets continue to have a huge impact on economic policy-making.

What perhaps grates the most is that as a result of economic policies that seek to right this perceived redress - which is so inaccurately measured - companies are regularly required to satisfy 30% bumiputra equity participation each time they have to get government approval on restructuring or expansion plans.

And what galls even more is that if bumiputra investors have already been brought in before at a concessional rate to satisfy that 30% bumiputra equity requirement and if they have now sold out, the whole process has to be repeated again - and again.

That is surely a terribly unfair arrangement which the government should have rectified long ago.

Incidentally, October 8, Parti Gerakan president Dr Lim Keng Yaik told the press in his Bruas constituency that, to fully convince the people, ASLI and the Government should clarify their respective methodologies used to determine their equity share in the nation's wealth, and this must be done transparently.

SOURCE: Oriental Daily News (October 9, 2006Page A4)

"The people's eyes are razor-sharp, so ASLI and the Government must reveal their methodologies and benchmarks, and let the people decide for themselves," Dr Lim said in Oriental Daily. "It's a waste time to keep arguing on whether it's 18% or 45%."

"Arguments like this is an attrition and it does not benefit the country's development," he added. "On the contrary, we should spend more effort in enhancing our competitive power in the global arena. Once we stopprogressing, we will be eliminated."

Dr Lim was alos quoted in The Star as saying that, in the controversy, the rich were merely squabbling amongst themselves as to who had more shares.

“The rich are arguing over what they have. What about those who don’t have anything?

“In my 30 years of political experience, the issue of racial equity usually crops up only when the country approaches a recession.”

Recession or no recession, thus far, the MCA leaders have played safe and none of them have offered any clue how they face the issue.

TO BE CONTINUED.