High GLC, GLIC involvement deters Bumis from entrepreneurship, says economist

 

Bursa Malaysia chairman Abdul Wahid Omar recently announced that only one out of 97 listed companies in the last three years has been Bumiputera-owned.

PETALING JAYA: Competent Bumiputeras do not pursue their own businesses due to the high involvement of government-linked companies (GLCs) and government-linked investment companies (GLICs), according to an economist.

Niaz Asadullah, a professor at Monash University, said GLCs and GLICs had played a key role in providing preferential job opportunities through the New Economic Policy, steering elite Bumiputeras towards careers in the public or pseudo-public sectors.

“When you have a shadow sector (of GLCs and GLICs) that gives you (less competitive) C-level jobs based on ethnicity, why do it the hard way and get into market competition?” he said to FMT.

Niaz, the Southeast Asia lead of the Global Labor Organization, said attributing Malaysia’s economic flaws to the divide between Bumiputeras and non-Bumiputeras oversimplified the “imbalance problem”, which had seen financial power concentrated in Bursa Malaysia-listed companies.

“Not acknowledging and scrutinising the ‘GLC factor’ muddles the ongoing discussion on the Bumiputera empowerment agenda and the role of public sector policies,” he said.

Niaz said Bumiputera businesses were numerically under-represented in the corporate sector due to a general lack of risk-taking among non-elite Bumiputeras, adding that as a result, they did not scale.

Niaz Asadullah.

He urged the government to invest more in quality education and curricular reforms to shift Bumiputera mindsets towards pursuing more scalable businesses, outside the safety net of careers in the public or GLC sectors.

“Corporate success in an outward-oriented and foreign direct investment-led economy like Malaysia is not just a matter of access to finance.

“It requires openness to competition, collaboration with different cultures, and a risk-taking mindset,” he said.

Bursa chairman Abdul Wahid Omar had announced during the seventh Bumiputera economic congress that only one out of 97 listed companies in the last three years had been Bumiputera-owned.

The former economic planning minister said this was a reflection of the Bumiputeras’ participation in the business sector, and called for an Equitable Opportunity Act to ensure that all citizens are given a fair shot at jobs and business opportunities.

Economist Geoffrey Williams of the Malaysia University of Science and Technology said a reliance on government policy and Bumiputera companies’ avoidance of stock markets for financing growth had also contributed to the low representation of Bumiputera-owned companies listed on Bursa.

He agreed that an Equitable Opportunity Act would be a good move if it ensured fair access to opportunities for all ethnic groups, but said similar policies had failed for the past 50 years.

“It’s better to deregulate and open up markets, letting Bumiputera-owned companies stand on their own two feet. They are more than capable of this,” he said. - FMT