Readings: ‘Umnoputras and their statistical charade’

Sunday Readings 1, while I pack up the house …

UMNOPUTRAS AND THEIR STATISTICAL CHARADE
By Dr Kua Kia Soong, Director of SUARAM, 14 October 2006

The latest controversy over the ASLI equity report is but another episode in a charade that began when the New Economic Policy was manufactured after May 13, 1969. Supposedly introduced to eradicate poverty regardless of ethnicity and to correct the “racial imbalance” relating to wealth holding in the country, all the statistics relating to ethnic proportions ever since have been consistently obfuscating.

For a start, it is impossible to verify the government’s statistics relating to share of equity and poverty incidence by ethnicity because the raw data used to calculate these are not made available. In 1986, it evoked this observation from the Far Eastern Economic Review:

“Suspicions that somehow these figures are doctored to suit political ends are heightened by the fact that all compilation is undertaken by the EPU, which is staffed at the senior level almost exclusively by Malays.”

Until the Eighties, the government used to measure wealth on a narrow cash-income basis without taking into account such factors as land ownership, scholarships, services and subsidies. This therefore threw up large disparities between the incidence of poverty among Malays being more rural-based, and the more urban-based Chinese.

Statistics on household income must also take into account the proportion of household members participating in economic activity. If the statistics show that there are more economically active members in the Chinese household, then this will invariably inflate their household incomes in comparison to other communities. It is clear that average income figures will always hide the true picture of poverty within each ethnic community.

The other controversial statistics relate to the proportion of equity capital held by the different ethnic communities. Even during the Eighties, it was pointed out that by lumping holdings of bumiputra and government agencies in nominee and locally-controlled companies under “Other Malaysian residents”, it was not surprising that the “bumiputra” stake would be understated (17.8 per cent in the mid-Eighties). It was estimated then that the bumiputra stake under “Other Malaysian residents” accounted for at least another 12 percentage points. Hence, there would have been no further justification to prolong the New Economic Policy beyond 1990.

The solution to the latest controversy over how GLCs should be looked at seems elementary to the economics student. I am surprised the Government does not have the simple vision of getting the EPU technocrats to come clean instead of issuing threats to academics. Would I be a genius if I said that Petronas, to name but one example, is certainly not a Non-bumiputra corporate entity? Is there any wonder our ranking in the universities league is dropping?

This whole notion of equity share by race is nonsensical when bumiputras can sell their shares for cash as soon as they have been allocated and restore the status quo ante ad nauseum! Future writers of Malaysian fairy tales will deride the New Economic Policy very much like we lampoon the emperor’s new clothes.

Never Ending New Economic Policy
Without such a racially discriminatory policy, the Umnoputras would not only lose their unfair privilege, they would also lose their “Malay-centric” ideology to win Malay votes and enjoy the fruits of political power! Therefore, the NEP had to be prolonged under a different guise – the “National Development Policy”.

But while earlier Malaysia Plans used to provide statistics with ethnic breakdown (how else can we correct the “racial imbalance”?), the later Plans did not provide these. The authorities justified this practice by saying that they were “likely to promote feelings of ill-will or hostility between the different communities” (Standing Orders 23(2) of the Malaysian Parliament).

When I was in Parliament, my questions relating to proportion of scholarships and loans that were given to the bumiputra poor; the numbers and proportion of Malay, Chinese and Indian waged labour and their respective earnings and others were similarly disqualified under Standing Orders 23(2).

The need for a Freedom of Information Act has never been more urgent after this latest controversy.

A National Economic Policy
Any policy based on “race” is seriously flawed and questionable since every ethnic community has its rich elite and its poorer majority. Every scholar worth his or her salt knew then in the Seventies what the outcome of the NEP would be – the “corrective” measures have mainly benefited the well-placed Umnoputras. The separation of control of funds by NEP “trustees” from nominal ownership by bumiputras led to the flouting of public accountability. Without effective checks and balance, we witnessed the scandals of yesteryears – Bank Rakyat, BMF and others.

More insidious is the effect this widespread racial discrimination has had on ethnic relations in this country. Unity can only be promoted through an affirmative action policy based on NEED, never on RACE.

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