THE MALAY ECONOMIC DILEMMA AND THE RISE OF THE MALAY FINANCIAL MAFIA.
Because of that intellectual development, many business tools were discovered which could be used to measure efficiency of businesses enterprises. We are not opposed to these ideas and business tools because they are good. There is nothing wrong or ashamed in adapting our own management styles with that of successful business entities. Some of the more famous tools were a set of indicators known as Key Performance Indicators and Speed-to-market (STM) responses.
When the new economic policy was launched in 1971, the principle engine for Malay economic advancement was the state owned enterprises(SOEs). The government set a target for the Malays to achieve a 30% share of corporate wealth by 1990. By that date, Malay share in the nation’s corporate wealth was about 19%. Malay corporate wealth grew at an average rate of 0.85% over 20 years. Dismayed at the speed of growth, the government switched from reliance on state owned enterprises to Malay private corporate vehicles to speed up Malay economic advancement. From 1991 to the present, we have seen extensive privatisation of state owned assets.
In 1971, the government launched the New Economic Policy( NEP). This was an economic blueprint to unite the Malaysian races by eradicating poverty and dissociating particular race with particular economic activity. The NEP was a blueprint which came into being after the racial clashes in 1969. That dark episode in Malaysia history exposed the wide disparities of income between Malays and other races, especially the Chinese.
The principal reason for this disparity appear to be the entrapment of the Malays in the traditional rural economy. The Chinese on the other hand dominated the modern capitalist economy. The Chinese dominated the secondary and tertiary sectors of the economy, where the returns were higher. As a result of this association, Malays lagged behind in economic prosperity.
To rectify this situation, the strategy chosen was to create a number of state owned enterprises to carry out wealth creating activities. The strategy was essentially a sound one. Individual Malays lacked the necessary skills, experience and knowledge to do well in business. Malay companies were hardly existent. Therefore the government stepped in to form their own business companies. Their aim was to engage in business emprises where Malay individual and business participation were under represented.
Unfortunately, the GLCs have not been able to act as catalyst for Malay economic advancement. Indeed many folded and had to be bailed out on a continuous basis by state governments. Why is the performance of these state owned companies ever so dismal? Why have they accumulated huge losses? What has their management done about these performances? Why is the quality of their management so mediocre? We can only conclude that it is such because of the poor returns. Why should we then continue their existence?
But perhaps, my biggest question that was never asked was: is the performance of state owned businesses dismal because the management is largely Malay? These are questions that I seek answers to.