New Mara council a liability for gov't?

There is currently an uproar among the bumiputera community over the new Mara council's attempt to limit the role of Mara primarily to education, putting its entrenched role in bumiputera socio-economic development to a minor position. Explicitly declared by the chairperson of the Mara council and implicitly expressed by a budget allocation of RM3 billion to education and a mere RM16 million to entrepreneurial development, it is a big departure from the Mara Act of 1966 and the aspiration of the bumiputera economic congress that gave life to that act.

It is rare for Mara to put the government in a position of considerable political risk. Mara as a body has an emotional connection to almost all bumiputera and an even stronger one with the rural community. While one can argue that such a move would fit the DAP agenda, it is unlikely that the DAP aspires to be a one-term federal government. Without bumiputera support for its other partners in the government, such a prospect is a likely outcome.

The strange move by the council to end Mara’s involvement in the commercial sector and the attempt to strangle Mara Corporation from its role may appear to have negligible political risk, blindsided perhaps by its lucrative value to a potential beneficiary. After all, it has been done before when the entire Mara Holdings (the predecessor to Mara Corporation) was sold off to an individual. Predictably most of these companies are no longer active and it is doubtful if they can be considered part of the then 30 percent bumiputra economic target. So, is all this uproar just a diversion for someone to make a business killing?

However, even this angle can be questioned. Most of the Mara-owned companies are not really profitable to make an attractive acquisition. Notwithstanding, recently, during an Astro Awani interview, I had the privilege of meeting with Arshad Ayub, pro-chancellor of UiTM and Naguib Mohd Nor, president of the Malaysian Aerospace Industry Association who shared the view that there are some diamonds in the rough amongst the Mara group of companies in the aviation industry.

The first one is Strand Aerospace Malaysia that is a leading Airbus and Boeing approved engineering design and analysis provider in the region. Strand has been designing major wing and fuselage components for manufacture in Europe and Malaysia since 2006. Strand today is working for Dornier in Germany to revive the design of the Seastar, an amphibious transport aircraft.

Asia Aerotechnic (AAT) which is the reincarnation of the world-renowned MAS Aerospace Engineering (MAE) is another potential. Together with UNI KL MIAT (Malaysian Institute of Aerospace Technology) operated by former MAE top guns, they form Malaysia's potential thrust into the global aviation industry.

Some argue that they may threaten existing bumiputera enterprises in this field but this is to ignore how wide and varied the aviation maintainance industry is in both military and civil aircraft types that no single enterprise could possibly handle their potential alone.

These companies demonstrate how economic development, industry development, entrepreneur development and education are being done by Mara and Mara Corp in concert. A developmental formula enshrined in the Mara Act 1966.

The removal of the Mara formula in the manner that the council has announced may have actually decreased the value of its investment and threatens its underlying activities including the award-winning consulting, MRO (maintenance repair operations) and world-class TVET that delivers a ready supply of certified aircraft technicians. In short, the companies by themselves would have little value without the Mara support formula except, of course, to the non-bumis who have access to other sources.

In the absence of the third national car project, the aviation industry could in the long term be the new path for Malaysia and the bumiputera to jump into the technological field but instead, this is now under threat by the council.

Yes, profitability matters in doing business but Mara companies were not created to merely make profit as their main goal. Their actual primary objective is to drive socio-economic development and build industries including promoting downstream and upstream commercial opportunities for budding bumiputera entrepreneurs. It is extremely unlikely that the new owners would continue this role.

As such, the new council's move would only result in a negative contribution to the bumiputera economic agenda. Whatever it is, what appears clear is those who started this faulty new policy do not share the bumiputera agenda and probably are “bumi-liberals” who as defined by an ex-ITM grad as "those bumis in the high-income bracket who have forgotten the benefit they got from the bumi agenda and those who do not support the continuation of the policy".

It seems that these “kacang lupakan kulit” people have been placed in important decision-making or advisory positions in today's government and are putting their views into effect. The question is what is the real commitment of the new government and the new Mara council to increase the bumiputera share of the economy under the "Shared Prosperity Vision" and what can be gained by killing Mara Corporation.

The capitalist among them argue that the government should not be in business altogether, profit-making is a Darwinian game and social considerations should be cast aside. Most American business schools champion this concept. But the overwhelming economic success of China has proven otherwise, so has the German and Nordic business models.

The late Abdul Razak adopted many socialist models in developing Malaysia right from economic planning to creating public enterprises. The bumiputera community would not be where they are today if not for his bold moves. Of course, we made mistakes but we learn from them. Dr Mahathir Mohamad's effort at privatising government companies to individual bumiputera has been a dismal failure so we can only depend on institutions like PNB and Mara Corp to carry the effort through.

Ultimately the current government will have to decide whether the bumi-liberals should prevail or a correction is needed. Many bumiputera voters faced a terrible dilemma in the last general election. Should they continue with a kleptocratic government or a coalition of DAP and bumi-liberals? It was Mahathir's inclusion in the coalition that solved that dilemma, they believing that Mahathir after leading them for more than 20 years would not let them down. The next few months will show whether they have made a big mistake. - Mkini