Now everyone prospers: new equity pathways

Many Malaysians harbour concerns about the economy, the endemic nature of corruption, and the future of the country in an increasingly turbulent world. Despite this there remains a need to leverage positivity in the process of seeking change – the road to reform will be bumpy but a very real possibility.

This need for reform is clearest in the face of the legacy of institutional racism embedded within the implementation of the National Economic Policy (NEP). While the policy initially aimed to address economic disparities and uplift the economically disadvantaged bumiputera majority, its poor implementation and abuse has created numerous market and social distortions which have demonstrably hampered long-term progress.

There is a growing realisation in the government that the NEP is not a sustainable policy for building the Malaysia of tomorrow.

The recent call by the Bursa Malaysia chairman to scrap property discounts for bumiputeras for high-value bungalows is a welcome step in the right direction. The practice of offering discounts based on race to the already privileged contradicts both economic principles and the intended purpose of affirmative action.

The move signifies a recognition that a needs-based approach to affirmative action – rather than a blanket race-based approach – is a fairer and more effective way of prioritising those who are truly socioeconomically disadvantaged.

Misdirected affirmative action is disadvantageous to the economic health of the country, damages social cohesion, and lends itself to multiple forms of corruption.

Building on this positive momentum, the government should explore revising certain other key pillars of the current bumiputera affirmative action system. These reforms should ensure that the system continues to serve its intended purpose while upholding fairness and fostering a meritocratic society. Here are five key areas to start with.

Property quotas and discounts

Property ownership policies, particularly quotas and discounts for bumiputeras, warrant examination. The NEP mandates developers to reserve at least 30% of all properties for bumiputera buyers. Additionally, bumiputeras receive discounts of up to 15% (subject to state laws) when purchasing designated bumiputera lots.

The desired benefits are not reaching the most deserving who often do not have the capital or knowledge on how to invest in property or land. Instead wealthy bumiputeras leverage this policy.

Developers know this and thus are not interested in catering to lower-income groups. The government could change this by mandating that 20-25% of properties should be reserved for lower-income bumiputeras and at least 10-15% for lower-income non-bumiputeras – the message being that all races in that economic class should enjoy the same discounts. This would better align with the NEP’s true spirit of promoting equitable bumiputera participation in the economy and not discriminating against other races.

Equitable equity

One of the main goals of the NEP was to propel bumiputera equity ownership to 30%. A key instrument in this grand design was the Amanah Saham Berhad (ASB). Yet, decades after its inception, it remains woefully off target. “Why?” The answer is simple: poorly thought-through schemes captured by the wealthy.

The ASB 2022 annual report highlights a disparity in holdings, with a small group of bumiputera unit holders (9.8%) controlling a significant portion (82.5%) of the total value. Wealthy bumiputeras have essentially captured this privilege and crowded out others, especially poorer Malays. Equity in this case is not about race but class.

Therefore, it is essential to consider whether needs-based criteria, alongside other relevant factors, could be integrated into the allocation process. Such an approach would aim to ensure that resources are distributed in a more equitable and impactful manner, fostering broader participation and wealth creation.

Appointment of senior government and GLC leaders

The current approach to selecting and appointing individuals to senior positions in government and GLCs is a mystery to all except the elite. A cursory look at the demographics of the GLCs, shows that it reeks of racial discrimination and class privilege.

Concerns exist that the current selection process disadvantages qualified candidates from diverse backgrounds, unfortunately contributing to the widely held view of an elite class within the bumiputera community feeding off the fruits of the NEP.

Thus it should be no surprise that when there is a crony system operating in leading institutions, the elites serve their agendas by creating policies that favour themselves (housing discounts even for the rich) under the pretext of helping disenfranchised bumiputeras.

If Malaysia is to realise its economic potential, it is crucial to ensure that merit and qualifications are the key factors in judging a candidate’s worth.

Transparent and objective selection procedures would strengthen public trust and confidence in the selection process, while also promoting better corporate governance within GLCs.

Government scholarship distribution

The current allocation of government scholarships has been a point of contention for decades. Questions abound about ensuring fair and equitable access to educational opportunities for all Malaysians whilst fully supporting the need for affirmative action. But this does not need to discriminate based on race nor lower standards in our education system.

In all of this, the ministry of education has for decades been incapable or unwilling to bring about the desperately needed reforms. While the existing system is supposed to support bumiputera students and much was achieved in the early years, we are now in a different era: granting scholarships by race is proving to be inefficient, out of date, and regressive.

Implementing thresholds based on income level could be one approach to ensuring that these scholarships are directed toward students from underprivileged backgrounds, regardless of ethnicity. This aligns with the intended purpose of these scholarships, which is to uplift individuals and contribute to the nation’s development.

The scholarship selection process should also be made fairer. For example, it may seem counterintuitive, but replacing the racial selection criteria with a needs-based criteria may benefit disadvantaged bumiputeras more, because they constitute the largest segment of impoverished households in the country.

Government procurement and affirmative action

A final area to tackle that will help the economy is the practice of awarding government contracts based solely on racial criteria. The government frequently implements bumiputera participation thresholds for large tenders, usually at 30%. Such practices have led to inefficiencies and widespread abuses through “Ali Baba” style subcontracting, exemplified by cases like the Jana Wibawa scandal.

As is common knowledge, politicians see this as an entitlement and are often involved in securing these lucrative contracts for their families, cronies and political agendas. Far too many elites are complicit and thus unwilling to change the rules and put in place tough measures to punish offenders.

As such, the government should enforce without fear or favour an open and competitive bidding process based on merit and qualifications, ensuring fairness and transparency in awarding contracts. There are tried and tested administrative measures that can be enacted easily, so that no one in power is capable of running roughshod over the rules. What is missing is the political will.

If there is a need for affirmative action within the procurement process, it is crucial to ensure that it is clearly defined and effectively implemented, focusing on supporting bumiputera SMEs in a tangible and verifiable manner.

Ultimately, race-based policies have reached their expiration date. The time has come to embrace a needs-based approach, a reality that is dawning upon many. This isn’t about diminishing bumiputera rights, but about acknowledging the past failures of these policies. A level playing field will empower deserving bumiputeras to thrive, not hinder them.

It is time to plug the leaks that have enriched the privileged few at the expense of the very people these policies were supposed to help. In doing so we can build a Malaysia where opportunity transcends ethnicity, where hard work and merit pave the way for a brighter future for all. - FMT

The views expressed are those of the writer and do not necessarily reflect those of MMKtT.