51% equity rule – the making of more Malay fat cats?

 You must have been following the ongoing excitement about the government ruling that requires non-Bumiputera freight forwarding companies to sell 51% of their equity to Bumiputeras.

My own reaction was “Oh wow, haven’t heard of such things for a while”. I guess unremitting disasters (viruses, incompetent governments, economic stress) have been occupying my mind a lot lately.

But this is Malaysia, and Covid or no Covid, nothing much has changed. Seems like our regular Malaysia Boleh service is resuming as things are beginning to look up a bit.

I have a question though – how will this help the Malays? Seriously, do you think anybody in KL cares about our Bumiputera brothers and sisters across the South China Sea?

 If the companies are nationalised instead and the shareholdings turned into unit trusts and distributed to all Bumiputeras (here give a bit of face lah to the East Malaysians and the odd Eurasians), then it may be of some help.

Everybody gains here, or rather, none will lose too badly.

Or sell the shares to government-linked companies. But our GLCs have their own issues trying to navigate the treacherous business environment caused by the pandemic, and also figuring out who their next chairman will be, given the horse-trading among their political masters.

Anyway, how likely would such GLCs outperform the current non-GLC businesses? Good question isn’t it?

Breathtaking wealth grab

The shares could also be sold to the more successful Bumiputera freight forwarding companies, which then get to control their competitors. But if they haven’t been able to win on their own, how would things change now?

Merely by the stroke of a pen, a totally artificial economic scenario has appeared, a breathtaking wealth grab that is nothing short of modern day economic colonisation, if not outright piracy.

And then came the 12th Malaysia Plan, where Bumiputera equity can only be bought and sold by other Bumiputeras. So, is the grand plan then to forcibly take control of non-Bumiputera companies, deem them as Bumiputera entities and limit their share trading only among Bumiputeras?

Did anybody think about how such illiquidity of Bumiputera shares would cause the value of the companies to drop, regardless of how successful they are? Has anybody ever compared the prices of Bumi-lot property versus non-Bumi lots? Any lessons there?

The plan doesn’t seem to be one devised by people who understand how the economic marketplace works, or even care about what’s good for the nation and the Bumiputeras themselves.

Fat cats and Lamborghinis

In the case of freight forwarding companies, there’ll be a fire sale that’ll punish those who’ve built the businesses, while benefitting those who started the fire in the first place.

Is this the unfortunate by-product of the decision, or its actual raison d’etre?

Most likely the end result will be some kind of Ali-Baba arrangement involving proxy companies.

A few fat cats will be installed on top of such companies, get rich without doing anything, and their children will buy Lamborghinis and crash them.

How would making a few Malay fat cats even fatter help the needy and desperately poor Malays in the kampungs and low-cost flats? How many of them would bother to work hard when they see you can easily get rich through politics?

Their children, already disadvantaged by a poor education system that trains them only to be Grab riders, would just have it cemented in their minds that only playing racial politics will get them ahead.

Opportunists in the food chain

I’m yet to hear the logic behind such moves, and I doubt there’s one. I guess saying the 30% Bumiputera equity goal hasn’t been met is a good enough cover. The usual political opportunists took this idea up the food chain to the politicians and implemented it through senior civil servants, who’d later get appointed as chairmen of the companies.

What will happen for sure is the companies will deteriorate because of the additional costs and bureaucracy from those who in their entire life have been part of the costs and bureaucracies themselves. It’ll certainly dampen foreign investment when they see Malaysia is ruled by the law of the jungle.

The powers that be don’t dare to do this to international companies (yet, or at least until the time that everything else has been looted). The smaller non-Bumi SMEs of any industry now, except maybe those selling pork, are all vulnerable to this kind of neo-economic colonisation.

And so it goes.

While this will help a small number of privileged Malays, it’ll hurt the vast majority of Malays. Even though we now vastly outnumber every other race and control every lever of power, we’re even more afraid of a future without political dominance.

No dignity in crutches

Fifty years after the New Economic Policy, shouldn’t the Malay political parties be proudly fighting to end affirmative actions, quotas and special privileges and to restore our maruah – our dignity – as a strong, capable, proud and honest people?

Shouldn’t we be saying: “Thank you for 50 years of crutches, we are OK now. We can take care of ourselves, and are happy to also take care of the weaker ones.” Shouldn’t we, as the majority, stop awarding ourselves the privileges of an endangered minority?

The crutches can go to the many poor Indians and East Malaysians who’re also being exploited by their own elites. The Chinese, while they seem to survive anything thrown at them, aren’t all millionaires and there are many needy ones out there too. And of course, there are still many Malays who need help.

Forever exploited by ‘our kind’

The counterargument is that the fight isn’t over yet, or that things have actually become worse — which raises the question that either our “fighters” have failed (even if they’ve made themselves very rich whilst at it) or it’s convenient for them to continue to keep the Malay masses weak, poor and frightened.

This “fight” has been designed to never be over.

The 30% Bumiputera equity target hasn’t been met in 50 years (though, there may be good reasons to challenge this) regardless of the billions spent to help us achieve it. And it’ll never be met because it’s inconvenient to do so.

We can clearly see those who get discriminated against – the non-Malays whose valuable assets are being taken away by the stroke of a pen.

We also need to see the other victims – the poor Malay masses whose only valuable asset is their sheer number and unquestioning loyalty driven by fear and insecurity. They’re the ones being exploited, even if they have been conditioned to see this as a victory for “our kind”.

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