||[Oct. 17th, 2006|10:50 am]
Speech By DAP Secretary-General Lim Guan Eng During The DAP Economic Forum "NEP vs VISION 2020: WHERE HAS ALL THE MONEY GONE?" In The Selangor Chinese Assembly Hall On 26.9.2006|
Let me first address the question that perhaps persuaded some of you to come here tonight, 'WHERE HAS ALL OUR MONEY GONE?"
Remember the phrase, "gaya mesti ada, mati tidak apa"
The Malaysian government is proud that there will be a Malaysian astronaut next year in conjunction with our country's 50th Merdeka celebrations. For this trip Malaysian taxpayers are paying RM 95 million. Pretty expensive to have the 'gaya' to try some teh tarik or roti canai in space. I am sure some of you are saying let's have teh tarik here and use the RM 95 million to solve our perennial flood problems.
Do Malaysians get any technological transfer or benefits except for PR and publicity and feel good factor for BN? Even PR is limited as going to space is not that unique anymore and does not attract that much international attention as there are even millionaires who can become space tourists.
But the real cost may be higher as this was supposed to be sweetener to get Malaysia to purchase 18 Russian-made Sukhoi SU-30 MKM fighter jets in May 2003 for US$900 million (RM3.42 billion then). Is US$50 million for an untested fighter jet too high? That is why Malaysian Air Force is unique in that pilots must understand English and Russian with two types of planes in service - American and Russian. The logistics and incompatibility has only added on to our maintenance costs.
So throw in the astronaut for RM 95 million which works out a total cost of RM 3.5 billion - that's where our money has gone. For wasteful white elephants projects and corruption that makes many of us worse off and some people very rich - the money it's all gone.
We still have some left because we have been blessed with oil. But even that would not last long as oil resources will be depleted in 19 years. But the oil crunch will come earlier in 2011 when Malaysia becomes a net importer and not a net exporter of oil. Will wiping out corruption and waste the solution. That is only part of the solution. The real problem is getting rid of New Economic Policy (NEP), the father of all waste, corruption, inefficiencies and mediocrity.
Malaysia's (NEP) was first announced in 1970 as the principal policy response to the post-election race riots of May 1969, which also saw Malaysia's first Prime Minister Tunku Abdul Rahman being forced to step down to make way for Tun Abdul Razak. The NEP had two prongs, namely "poverty eradication regardless of race" and "restructuring society to eliminate the identification of race with economic function".
The NEP was supposed to create the conditions for national unity by reducing inter-ethnic resentment due to socio-economic disparities between ethnic groups. However, we all know that in essence and in reality, UMNO has made the NEP policies pro-bumiputera, or more specifically, UMNO-putra. Over time, the NEP became less about poverty eradication and more about "restructuring society", especially the achievement of the 30% corporate equity target.
With a life-span of 20 years, the NEP was the most ambitious social engineering plan to overhaul the corporate equity ownership of 2.4% bumi, Chinese 27.2, Indian 1.1, foreigners 63.4% and nominees 6% in 1970 to 30% bumi, 30% foreigners and 40% for other Malaysians by 1990.
So what exactly has the NEP achieved?
UMNO Youth Deputy Chief and re-born Malay ultra, Khairy Jamaluddin recently accused the Penang Government of marginalizing Penang Malays.
We'd like to remind him once again, with charts and tables, with numbers and facts that Penang has one of the most successful track record in eliminating poverty, from 52.7% in 1970 to 0.3% in 2004. In fact, despite having a higher poverty ratio in 1970 compared to Selangor, Johor, Melaka, Negri Sembilan and even Perak, today, Penang poverty is lower than these states with 1.0%, 2.0%, 1.8%, 1.4% and 4.9% respectively. For that matter, there are more instances of hardcore poverty in the states of Sabah (6.5%), Terengganu (4.4%), Kedah (1.3%), Perlis (1.7%), Perak (1.1%) and Pahang (1.0%) than there are poverty in Penang.
Hence it clearly goes to prove that despite being a minority in a non-bumiputera led Penang government, the livelihood of the bumiputeras have improved tremendously over the past 34 years. And despite being led by UMNO with the NEP implemented to the letter, states like Sabah, Terengganu, Kedah, Perlis, Perak and Pahang continues to have high incidence of poverty - 23, 15.4, 7.0, 6.3, 4.9 and 4.0% respectively. Does this not clearly demonstrate that NEP has failed to achieve the objectives of alleviating poverty, particularly in the Malay dominated states ruled by UMNO?
So who benefited? Has the NEP benefited the bumiputeras?
Deputy UMNO Youth President Khairy Jamaluddin talks of the failure of the New Economic Policy (NEP) to fulfill its objective of 30% bumi equity compared with the 18.9% in 2004 and that the Ninth Malaysian Plan (9MP) is the final chance to achieve it. This is untrue because the 18.9% bumi equity is based on par value of share capital of limited companies. The 9MP claims that in 2004, the Chinese owns 39%, Indians 1=2E2%, nominee companies 8%, others 0.4% and foreigners 32.5%.
Par value of share capital is a false reflection of the real or true worth of the company. A more accurate assessment, though not the most comprehensive and objective test, would be to take the market value of bumi equity of all listed companies in Bursa Malaysia (BM). As a millionaire from his previous RM9.2 million shareholdings in ECM-Libra, which he has since sold, Khairy should know that his worth is not based on par value but market value.
How can the wealth of bumiputeras in the corporate sector be measured by par value? Would the Government like exchange its RM1 par value share in Tenaga Nasional with a market value of RM10 for a RM1 par value share in Hwa Tai with a market value of 66 sen?
In February 2006, Professor Dr Lim Teck Ghee of the Centre for Public Policy Studies (CPPS), submitted a report that showed as at 30 September 2005, bumi ownership of shares in Bursa Malaysia amounted to 45% or RM325.08 billion out of the market capitalization of RM 715 billion. And he has further indicated that if the bumiputeras had not sold off their shares, their equity stake would have easily been higher than the 45%.
An estimated 40% of the preferential shares given to bumiputeras were sold for immediate profit.
But is the magical "30%" figure even relevant? When we talk about ownership of shares in Bursa Malaysia, we are effectively discussing only the interest of a very, very small elite. For example, the Amanah Saham Nasional (ASN) and Amanah Saham Bumiputera (ASB) are the government's exclusive bumiputera schemes to promote share ownership in Bursa Malaysia. They were extremely successful in attracting over two million bumiputeras participating by 1990. However, the vast majority invested less than RM500. Only 1.3% of all eligible bumiputeras owned 75% of all ASN shares!
It should also be noted that Bumiputera shareholdings via Trust Agencies such as state government declined dramatically from 11.7% in 1983 to 1.7% in 1999 in favour of individual holdings from 7.6% to 17.4%. Clearly, wealth accumulation by the state on behalf of the entire bumiputera community has been abandoned in favour of private accumulation by individual bumiputeras, which is heavily reliant on government dispensation. Hence, capital accumulation by bumiputeras has increasingly been determined by "know who", rather than "know how".
What this means is that the well-intended NEP affirmative action has morphed into clear cut cronyism. The government transferred wealth to a small pool of politically well-connected businessmen. To quote Datuk Shahrir Samad, former BN's backbencher's chairman: "=2E.. it was a deliberate creation of an oligarchy. There was this idea that the economic success of the country depended on entrepreneurial giants. The entrepreneurs were supposed to handle the creation of Malay wealth [when] in fact, it's been a subversion of Malay wealth."
All Malaysians Face Marginalization
The United Nations Human Development Report consistently list Malaysians as suffering the worst income inequality between the rich and poor in South-East Asia. This is conceded by the 9MP which showed the share of income of the bottom 40% of the population declined from 14.5% in 1990 to 13.5% in 2004 whilst the share of the top 20% of the population increased from 50% in 1990 to 51.2% in 2004.
The income inequality within the Chinese community worsened in the period 1999 to 2004 from 0.434 to 0.446 whilst for Indians from 0.413 to 0.425. The income inequality amongst bumis was even worse from 0.433 in 1999 to 0.452 in 2004. Marginalization of Malaysians generally can be seen with the Ninth Malaysian Plan (9MP) showing the Gini Coefficient nationally worsening from 0.452 in 1999 to 0.462 in 2004.
How come UMNO does not talk of reducing the widening income disparity between rich Malay millionaires like him and poor Malays but continue to hit out at Chinese as if there are no poor Chinese and all Chinese are millionaires like him? If UMNO is sincere about helping poor Malays and Malaysians who are marginalized he should be asking the government to abolish the 5% bumi housing discounts given to million ringgit homes (as if Malay millionaires need a discount) and distribute Petronas RM70 billion ringgit profits to the people.
Distribute Petronas Oil Earnings To All
What the poor and marginalized Malaysians need now is increase in disposable income to deal with rising inflation and living costs, whether in the form of pay rise or government grants, which the 2007 Budget has miserably failed to provide. Since Petronas was formed in 1974, its earnings have exceeded RM 500 billion as compared to Singapore which does not have a drop of oil. If a non-oil exporter like Singapore can give S$2.6 billion (RM 6 billion) cash under the 2006 Budget to all Singaporeans, especially the poor, why can't the Malaysian government do so when Petronas has earned nearly RM500 billion. Oil importer Singapore has given $10.675 billion (RM24billion) directly to its people since 2000 as compared to Petronas which has not given a single cent.
This year its pre-tax profits hitting RM70.2 billion jumped 21 per cent compared to RM58 billion in the previous financial year ending 31 March 2006. Net profit rose to RM43.6 billion from RM35.6 billion. To get an idea of Petronas' size, the net profit of Malaysia's largest listed company, Malayan Banking, was just RM2.5 billion. This year alone, the oil company has paid the government a total of RM41.7 billion - equivalent to what it would take to build 23 Kuala Lumpur City Centre (KLCC) complexes, including the Petronas Twin Towers.
Instead of taxing Petronas, DAP suggests that the pre-tax profits be distributed to every Malaysian to a maximum of RM 2,000 each with the remainder given to Petronas for capital investment purposes. If an oil importer Singapore can give tens of billions to its citizens why can't an oil exporter like Malaysia do so.
Is UMNO Afraid Of Answering The Question Who Amongst The Malays Own 45% Or RM325 Billion Of The RM 715 Billion Market Capitalization of Bursa Malaysia?
Are UMNO and Khairy afraid of answering the question who amongst the Malays own the 45% or RM325 billion out of the total RM715 billion market capitalization of Bursa Malaysia? Malaysians, especially Malays who do not possess millions of shares or imported vehicles APs, should focus on the important question who the rich Malays are who have benefited. And not be distracted by false lies of such rich or millionaire UMNO leaders who do not wish to answer this question and try to distract attention with lies that the 30% bumi equity of the NEP has not been achieved.
How many poor Malays or Malaysians can afford to buy RM 9.2 million worth of shares like Khairy Jamaluddin? Or so powerful until Mukhriz Mahathir, former Prime Minister Tun Mahathir Mohamad’s son, had to beg him to reinstate a RM214.3 million contract for Opcom Sdn Bhd to supply fiber optics to Telecom Malaysia in 2003. Only after Mukhriz begged Khairy was the contract reinstated although the value was slashed by 15%.
Or can be like MCA Youth Deputy President Ling Hee Liong who can borrow RM1.2 billion to control 3 publicly listed companies.
How many can spend RM3.5 million on a wedding by Datuk Roslan Hashim? Malacca-born businessman Roslan said his wedding gifts to his bride included RM444,444.44 in cash and a further RM22,222.22 in dowry. Other gifts include a BMW 320i worth RM250,000, a RM150,000 jewellery set, a diamond ring worth RM20,000, a RM25,000 Rolex watch and other designer items.
Or other rich Malays who have benefited from the NEP such as Minister in the Prime Minister's Department Datuk Seri Effendi Norwawi. In court documents on the divorce settlement with his former wife Zariah Hashim @ Farida Effendi revealed that he had generously given her assets worth more than RM20 million, exclusive use of two houses in Kuala Lumpur and Kuching worth RM10 million and RM2.5 million, respectively. Since the divorce, Effendi claimed that he provided monetary assistance amounting to almost RM1 million, costs of maintaining the house, maids, drivers, security and cash.
Tajudin Ramli and Malaysia Airlines
Tajudin, an accountant and the son of a farmer, was entrusted with the management of Malaysia Airlines in 1994. Mahathir had spoken glowingly of how a man from such humble beginnings could rise to become the chairman of an important regional airline, and how Malays should be proud of his "achievements".
However, this protege of the country's then finance minister, Tun Daim Zainuddin, had no previous experience running an airline came very close to bankrupting the airline, and that was when fuel prices were still at record lows. MAS faced 5 consecutive years of losses and was plunged deep into debt before Tajudin was kicked out. But how was he "kicked out"? The government paid an exorbitant RM1.79 billion to buy out Tajudin's shares at RM8 each when the market price was less than half that at RM3.68!
MAS today is clearly still suffering from the after effects of major abuse and mismanagement today.
Halim Saad and Renong
If the Tajudin's bail-out was considered incredible, then you have not met Halim Saad. In the midst of the Asian financial Crisis, cash rich United Engineers Malaysia (UEM) was forced to purchase his 32.6% worth of shares in Renong without triggering a mandatory general offer. Halim committed to a put option to buy back his shares from UEM for RM3.2 billion within 3 years. And guess what? UEM never saw the return of their money and Halim today is relieved of all his financial obligations.
The entire episode saw the share prices of UEM and Renong plunge within 3 months from RM8.75 and RM3.16 to RM1.60 and RM0.66 respectively wiping off hundreds of millions off the wealth of thousands of minority shareholders, many of whom were bumiputeras as well as bumiputera funds.
And RM3.2 billion will work out to almost RM40,000 for every household living below the poverty line, many of whom are the bumiputeras the Government and UMNO claim they were seeking to help. And yet every single sen of that money went to a single individual, probably representing the interest of the rich and powerful in the country.
Vision 2020 Of A Developed Nation Has Failed.
Prime Minister's Datuk Seri Abdullah Ahmad Badawi's announcement of the 3rd Industrial Masterplan (IMP3) target of 6.3 % average economic growth in the next 15 years is an admission of failure of achieving Vision 2020 of turning Malaysia into a developed nation. Clearly Malaysia would not be a developed state by 2020 with only 6.3% average economic growth when the target for the next 15 years to achieve developed nation status is 8.8%.
When former Prime Minister Tun Dr. Mahathir Mohamad presented Vision 2020 on 28th February 1991, he required an average annual growth of 7% during the three decades to 2020 so that our GDP in 2020 can be RM920 billion in real (1990 Ringgit) terms. Malaysia is capable of reaching its gross domestic product (GDP) growth target of RM920 billion in 2020 only if it achieves an average growth of 8.8 percent in the next 15 years from 2006-2005.
Malay Research & Strategy Foundation fellow consultant Datuk Dr Mohd Dahan Abd Latiff said the projection was based along the calculation of the GDP of RM262 billion in 2005. He said with the 6% GDP growth already set for 9MP, or RM351 billion target in 2010, growth for the remaining 10 years -- 2011 to 2020 has to be at about 10.2 percent. The target of 10.2% for 2011-2020 is clearly impossible as the National Mission had set a growth rate of only 6.5% for this period. Even this 6=2E5% growth rate is doubtful as Malaysia is expected to be an oil importer from 2011-2020.
What we want
Just as the 2007 Budget has not benefited lower-income groups, we should adopt the correct macroeconomic policy and discard nationally divisive and outdated policies of quotas and subsidies. Such racial policies like the NEP must be replaced by those which forge national unity and encourage competition, value creation and meritocracy.
Malaysian must abandon the racial premise of the NEP and its false pursuit of 30% bumi equity to pursue the real UMNO Malay owners who possess the 45% market capitalization of Bursa Malaysia.
Malaysia must learn from developing countries that have successfully made the transition to developed country status how they strengthened competitiveness. Experience from these countries such as South Korea, Singapore, Hong Kong and Taiwan have shown that quotas and discriminatory type policies were rejected. Emphasis was always on developing human resources to ensure the best and brightest are chosen. For this reason even though these countries lacked natural resources, they progressed more rapidly than countries blessed with abundant natural resources.
From a situation where Malaysia was almost thrice more prosperous than Korea in 1966, Korea is now more than 3 times more prosperous than Malaysia.
In 1966 annual per capita Gross Domestic Product (GDP) was less than US$130 as compared to Malaysia's US$350. By 1980, barely 10 years after the NEP, South Korea had caught up with a per capita GNP of US$1900 as compared to Malaysia's US$1,830. By 2005 according to the International Monetary Fund., GDP per capita in Korea had far exceeded Malaysia at US$16,421 as compared to Malaysia's US$5,040. From a position where Malaysia was almost 3 times better than South Korea, NEP has made us three times worse.
The New Economic Policy (NEP) and the 30% bumi equity requirement are the principal reasons why Malaysia performed worse than South Korea. Instead of promoting transparency, we promote corruption. Instead of merit, we have quotas. Instead of technical "know-how" we have political "know-who". Lack of competitiveness, inefficiency and poor productivity is the price we pay for the government's continued reliance on the NEP.
Malaysia hopes to attract some RM2,894 billion in investment – both private and public - during the 15-year period to 2020. But do these investments benefit the country when we do not even have sufficient workers until we have to import them from foreign countries?
The government should be encouraging capital intensive and high-value investments centred on knowledge and ICT, not on labour intensive investment. Such dependence on foreign workers is unhealthy and as of December last year, there were 1.8 million foreign workers of which 32 percent were in the manufacturing sector and 8.8 percent in the
Malaysia should learn from South Korea and Taiwan whose commitment towards excellence and cost competitiveness has created world-class companies like ACER, Hyundai and Samsung. Hyundai and Posco Steel Corp of South Korea has succeeded where Proton and the corrupt-ridden Perwaja has failed.
We do not have much time to lose if we want to stay in touch with globalisation. As Thomas Friedman famously said in his book "The World Is Flat", 'When I was growing up, my parents used to say to me, ''Tom, finish your dinner -- people in China are starving.'' Now we should be telling our kids, 'finish your homework -- people in China and India are starving for your jobs.' Where is Malaysia?
First Class Mentality That Is Colour-Blind Vital
One cringes when the government talks of low bumi representation in the private sector without explaining the dominance by one ethnic group in the public sector or in government procurement.
How can Malaysians attain first class mentality if the government is still gripped by racial considerations? Canada appointed a first ethnic Chinese, Adrienne Louise Clarkson who is a Hakka born in Hong Kong (Chinese: =8C=DE=99u=8E}), as the 26th Governor General from October 7, 1999 to September 27, 2005 even though Chinese formed 3.2% of the population. Judge Anand Satyanand of Indian and Fiji-Indian background will be the first New Zealand Governor-General of Asian ethnicity in August this year. A Chinese and Indian can be appointed as head of state for Canada and New Zealand despite the fact that they do not comprise one third of the population like in Malaysia.
As of June 2005, there were 899,250 public servants, of whom 77.04 per cent or 692,736 were Malays. The rest were: 84,295 Chinese (9.37 per cent), 46,054 Indians (5.12 per cent), 69,828 other Bumiputeras (7.77 per cent) and 6,337 of other races (0.70 per cent). Before the launch of the New Economic Policy in 1971, the racial breakdown of the Malaysian civil service comprised 60.8 per cent Malay, 20.2 per cent Chinese, 17.4 per cent Indian and 1.6 per cent others.
Some 35 years after the NEP, the already under-represented Chinese percentage in the Malaysian civil service had fallen further from 20.2 per cent to 9.37 per cent, while Indians who were somewhat over-represented with 17.4 per cent before the NEP are now under-represented with 5.12 per cent. The government must be serious in finding out why the Chinese and Indians have become so under-represented in the civil service 35 years after the New Economic Policy, with the Chinese falling by 10.8 percentage points and the Indian by 12.3 percentage points from 1971 to 2006.
Giving Disadvantaged Communities The Net And The Fishes To Be Self-Sufficient.
But we empathise with disadvantaged communities. Unlike UMNO, we fully understand the concept of being marginalised and therefore it is our policy stand that no specific community, whether Malay, Dayaks, Kadazans, Indians or Chinese for that matter will be "left behind". We will call for the NEP or its modern incarnates, National Development Policy (NDP) or National Vision Policy (NVP), be abolished in favour of significantly strengthened policies to alleviate the living standards the rural and urban poor in Malaysia. And if the bumiputeras form the largest community in this group, then our policies will benefit them the most - the bumiputeras in need, not the Halim Saads or the Tajudin Ramlis.
Opium was used by the British colonialists during the 1800s to subjugate the Chinese to impose its imperialism and control over the Chinese subjects in China. It resulted in China losing 2 humiliating Opium Wars over a period of 20 years. The NEP is like opium which is synonymous with corruption. It is an addiction exploited by the Malay political elite in UMNO to subjugate and control the bumiputera masses for the purposes of consolidating and perpetuating political and economic control over the country. It is a corrupt tool used the UMNO elite to harness power and wealth at the expense of all Malaysians, the bumiputeras, the Kadazandusuns, the Ibans, the Dayaks, the Indians and the Chinese.
The Prime Minister, Abdullah Ahmad Badawi, must go beyond mere rhetoric in claiming that the Government does not "marginalize anyone in the implementation of [its] programmes". He must go beyond just preaching the principles of Islam Hadhari which calls for "a just and trustworthy government", "free and liberated people", "protection of the rights of minority groups and women" as well as "cultural and moral integrity". He must be seen to act for the man in the street and abolish the NEP and be a real "Prime Minister for All Malaysians".
Instead, ethnically-biased policies should be replaced with those focusing on alleviating the plight of the poor and the needy. Successful implementation of this policy will automatically naturally ensure that the inter-ethnic disparities are eliminated over time.
With this, I thank you.
- Lim Guan Eng