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Tuesday, October 17, 2006

Never the Twain Shall Meet

If we study carefully the basis of the dispute between the government and ASLI’s methods of calculating, just a simple understanding will show how the target of 30% will be hard to achieve in the next 100 years.

I am not a researcher but would like to make the following observations based on the basis of what is reasonable and fair:

The NEP had a definite shelf life but that was extended by a government that steamrolled its policies instead of looking at the various weakness in the policies.

The number of companies in the government’s study is not really a fair measure and in fact can put a serious curb on people who want to do business – the so called private investors. These people take a lot of risk and create many jobs for all Malaysians. I think this method of calculating the 30% equity is unfair and in fact most businesses lose money and have to wind up.

So we simply take the par value of shares that is the hard earned capital obtained from blood sweat and tears and want to extract a 30% share it is a form of unfair taxation as even our ex-PM mentioned that the Chinese pay more than 80% of taxes.

Those companies that do extremely well and want to expand further usually undertake a public issue of shares that require the mandatory 30% “pass over” and we know that even Ministers have got involved in such “get rich quick” schemes by using proxies.

Some public listed companies even used their good offices to enrich third parties by playing “pass the property” gambit. This is such a simple way to enrich anyone in the loop as finally bodies like the EPF can be used to finance marked-up deals.

By not taking the market value, we are ignoring the growth and power of the giants in business. It also ignores the run down in value of companies that may have required much paid up capital but now almost worthless as the small company usually does not survive two generations.

Of course some people of all races have really benefited from NEP policies but these are far and few in between and usually have political connections.

As far as GLCs are concerned, if they are owned by the government then we should expect a fairer distribution of the directors’ posts to better reflect the nation’s composition. Taxpayers should be able to require a better performance from such companies since they usually control important sectors of the economy.

My basic belief is that government should only form the climate for business to flourish and not get so directly involved. Just see how a simple document like the AP can be so easily abused.

Let us bury the NEP as it has outlived its purpose and agreed expiry date.
So the question all Malaysians should ask is “Why did the NEP fail even after 35 years?”

graphics: malaysiakini


PabloPabla said...

Actually, and this is a digression, I was speaking to a friend who moved into Ara Damansara not too long ago. She bought her house on sub-sale. She bought it from a Malay chap. Apparently, this Malay chap has 6 units for sale, which he "supposedly" won by bidding for them from the developer. Each unit was sold at RM80,000.00 higher than the developer's price on the average. Of course, I am sure some chinese also get lucky by winning a couple of bids and then sell them off. Property investment, people say. But really, this system makes me sick to the core! I really wonder if this is just confined to the property market or to all kinds of tenders where "really lucky" people win bids...

H J Angus said...

Since we will soon see how the government justifies its calculations we should also ask why the 5 to 10% discount for the wealthy Bumis has not been stopped.

It is a form of taxation that takes from the poor and gives to the rich.

Supposedly won can also mean working in cahoots with the developer and giving the accomplice part of the loot!