The dismantling of the 30% rule

After PM Dato Sri Najib spoke about dismantling the 30% quota, the reception was mixed. Generally speaking, it is said that the Malays feel naked. There are no longer protection and special privileges that come along with being a Bumiputera. Hence, some feel that Dato Najib by doing so is only attempting to ingratiate himself with non Malays. Perhaps, PM Najib recognised the validity of Lee Kuan Yew's observation, that Malaysia can be better if she treats her non Malay citizens better. Maybe.

The 30% quota was the backbone to the economic policies under the NEP and its successors. It has allowed for the enrichment of selected BUMIPUTERAS namely the well connected and privileged minority. The general improvement for the Malays was secured not through the operation of this 30% rule, but by specific policy initiatives targeted at education, in land distribution or land consolidation (FELDA), through improvements in agriculture which is the main economic preoccupation of the majority of Malays, job mobility and so forth.

There seemed to be two different set of policy initiatives. One which worked through the 30% quota enabled gratuitous transfer or inexpensively financed equity stakes in on-going business firms. The Malay input is required by law to enable the company secure licence, contracts or go for listing. They got the benefits of being who they are NOT because of what they can do.

The other approach was meant for the majority unknowable masses. The policy initiatives outlined above were targeted at capability enhancing. These took the form of raising educational standards, expanding technical knowledge, widening job prospects or transferring productive assets into the hands of those who qualify being given by actually working the land.

The NEP created 2 groups of Malays. The 30% faction turned out to be largely rent seekers. The second group, which took the slower route of progress, were actually the people who actually worked to gain benefits.

The NEP then created two dichotomous groups. One secured benefits by being who and what they are. The other group secured benefits by offering what they can achieve.

The numerically larger capability enhanced group has been outside the 30% game thus far. They lose nothing that which they have not gained. Thus dismantling the 30% quota does not cast a doomed shadow over them. In fact, they stand to benefit from the opening up of the economy since they have been capability enhanced. The ones suffering will be those who have benefited by taking a joy and free ride enjoying the status of Bumiputera.

My own personal view is, the NEP (especially the 30% equity rule) is essentially a giant, legalised PONZI scheme. Consider this. Since the NEP was carried out, in the name of the NEP, in the name of Melayu tak akan hilang di dunia, RM54 billion worth of equity ownership has been given to BUMIPUTERAS. Who were these BUMIPUTERAS? The refined term used presently- the first tier BUMIPUTERAS.

It has created a super rich section of the Malay community. I salute the PM for dismantling this 30% myth of Malay ownership of Malaysia's wealth. If it has not worked, cut our political losses and abandon them. Clearly, the policies have not been functioning well.

Inter ethnic wealth differences are widening. Intra ethnic income differences are worse among the Malays. We can infer many things from the outcome of various economic policies. By and large, the Malay administrative elite have not helped out the majority Malays. The political elite have been feathering their own nests. Just look at the GINI coefficients. The facts speak for themselves. Res ipsa loquitur.

What has happened to the 54B? Our PM has been forthcoming in this- out of that figure only 2B remained. Those BUMIPUTERAS once holding the RM52 billion have left the building. They sold or the softer term- cashed out. This behaviour, as some contend, is perfectly rational. The NEP was designed to help Bumis acquire 30% equity- but the policy, these people claimed, never demanded they retain it. They had it and cashed out. The problems start when the very same people want the opportunities again- for themselves, for their successors.

The NEP failed to produce the two elements essential for sustained wealth creation. These are actual ownership of the businesses and a willingness to defer present gratification. You don't have ownership, when you don't have title to something and the responsibility, your attachment is ephemeral. It's like bloggers who chose to remain anonymous while delivering their vitriolic and personal attacks. They refuse to confer ownership on their writings and therefore attach no conscientious responsibility over them. So they babi here and babi there.

95% of those who received government largesse wanted to exercise immediate gratification- more cars, houses and more wives. They want to drive in Ferraris, Jags, Mercs and Aston Martins.

Who are these selected few? Various euphemistic terms have been given to them- first tier, top tier, perhaps later, maal hijrah
business stars. We know them simply as rent seekers and rent collectors. It was easy for them to jettison their shares because they got it gratis. Easy come, easy go. That is also perfectly rational behaviour.

We have another plain term for them. The bumiputera means just that- putera di depan, bumi dibelakang. These puteras in front- PUTERA BANGSAWAN, PUTERA PIMPINAN UMNO, the genetic elite, the inducted elites and so forth. The rest which forms the majority are left belakang- behind. Just like the oppressed natives spoken about by Franz Fanon, the majority BUMIPUTERAS shout- cracy—cracy—while the elite say it loud and proud- democracy. The elite know what democracy means- the chance to enrich themselves at the expense of the majority herd. Indeed, what the majority were shouting and mimicking were words sounding more like kasi-kasi-kasi (not give) but neuter, neuter. They, the majority have been neutered.

What are the positive effects of the NEP on the Malays? It has been successful in so far as it has created the real basis for wealth creation. These include better education, better job opportunities, improvements in agriculture, better standard of living for Malays. The all round improvements cannot however be attributed to the NEP alone especially the 30% equity rule. Maybe it is the outcome of the exercise in normal government responsibilities. It is the nature of government to provide the framework within which, economic actors act on them. They gained by being active and never passive.

The majority Malays are not going to lose sleep over the abolition of the 30% quota rule.