PM Ismail's policy on bumiputera equity under flak in Malaysia

A new policy announced by Prime Minister Ismail Sabri Yaakob on bumiputera equity has come under fire with critics charging that it would do little to foster social mobility.

Mr Ismail on Monday said bumiputera shares can be disposed of only to other bumiputera stakeholders, justifying the move as an effort to protect bumiputera equity in the country.

The National Economic Policy (NEP), which was introduced in 1971, set a target of increasing bumiputera equity to 30 per cent of national wealth by 1991. On Monday, Mr Ismail said bumiputera shareholding stood at 17.2 per cent as of 2019, with 25 per cent in the hands of non-bumiputeras and 45.5 per cent held by foreigners.

Opposition leaders have called for a new approach to empower bumiputera interests in Malaysia - after four decades of affirmative policies failed to to meet initial targets.

The debate over equity policy had begun even before Mr Ismail's announcement, after the Finance Ministry in January asked local freight forwarding companies to comply with a long-delayed rule of having 51 per cent bumiputera equity to obtain a Customs licence by December. The matter came to light last week when the freight forwarders federation sought clarity from the government on the rule, with months left to the deadline.

The owners of the companies then expressed concerns about finding bumiputera investors to cede control of their companies at such short notice. The owners also warned that the rule might lead to some freight forwarders moving their base of operations to another country.

On Tuesday in Parliament, Finance Minister Tengku Zafrul Aziz acknowledged that enforcement of the rule - first mooted in 2015 - would be delayed by another year to end-2022 while Teraju, the government's bumiputera agenda unit, studied the matter.

Mr Ismail, in tabling the 12th Malaysia Plan - a five-year development plan which is also Malaysia's biggest to date - said that the median income gap between the bumiputeras and Malaysian Chinese widened by four times over the last 30 years.

He also announced that every ministry would set up a separate division to fulfil the agenda of raising the bumiputera share of the country's wealth.

Malaysia's youngest bumiputera lawmaker Syed Saddiq Syed Abdul Rahman on Tuesday questioned if such rules would benefit low-income bumiputeras, such as fishermen and farmers.

He also said the new rules were unfair as they would be tantamount to taking equity from non-bumiputeras and giving them to bumiputeras.

Opposition leader Anwar Ibrahim was similarly critical, saying such rules would only benefit select elites. He pointed out that such policies had been pursued since 1971, and while the social mobility of bumiputeras increased, equity only benefited "crony companies".

"Don't simply follow old methods," said Datuk Seri Anwar.

Economist Jomo Kwame Sundaram - a former key economic adviser to the Pakatan Harapan administration from 2018 to 2020 - said Mr Ismail's new rule could lower share values and worsen ethnic segregation in Malaysia.

Composed of Malay Muslims and aboriginal communities, bumiputeras make up 70 per cent of Malaysia's population. Malay-Muslims account for 54 per cent of the group. Many bumiputeras are poor, and the Department of Statistics says they make up 73.6 per cent of the so-called B-40 group or those in the lowest income group.