Wednesday, April 22, 2009

Najib & the Bumi Equity paradox

Datuk Seri Najib Razak today freed the country's services sector by ending the 30 percent Bumiputera equity rule.

The Prime Minister, who is also the finance minister, promised further liberalisation, saying that he would announce details of the liberalisation of the financial sector next week.

I hope Najib knows what he is doing. The consequence of this decision will impair on the "Dream NEP" and cause the 30% equity acquisition policy to falter.

Someday, the Umnos and the cronic NGOs are going to blame eveyone else on this policy and cry-jihad with pendatangs who become rich for whatsoever reasons, related and unrelated to the policy change.

Mr. Najib, maybe, it is far better to keep the old policy and let the kleptocrats thrive.


moo_t said...

One stone two bird from the no.1
First, let the NEP cronies put blame on other race to create havoc.
second, let him implement much worst cronies system at the back of the scene.
Expect the rubbish junks papers like utusan make noise.

Dhahran Sea said...

Heard over Al-Jazeera that Najib has economics degree lah... but I wonder why he came up with this brilliant "policy statement" at a time when the "real" economy needs a jump start... will this policy change has the immediate effect to jump start the economy? Definitely NOT... rather, it would invite unnecessary political debate at a time when Malaya could hardly afford it lah... I wonder what the new PM is trying to do...first with 1Malaysia vision which confuses everyone, then "new" cabinet line-up with well know deadwoods in it, followed by a statement that Penanti by-election is a waste of time & money (of course la due to politik wang, no more money in the coffer?),and now "liberalization" of the financial/servic sector... haiya... manyak susah lor ini macam... manyak pining kapla...

Purple Haze said...

Well, this is certianly a tangible change by the new PM.

Jefus said...

Arm twisted? The way I read in the Sun it looks more like being compliant to AEC and WTO.

Malaysian government is learning that if you dont want to tango, you can sit out and watch the excitement pass you by. Its your choice.

Comply or be out of the picture.

artchan said...

Wait a fews days and you will see the likes of Ibrahim Ali jumping up and down like a monkey and the "defenders" of "bumiputraism and malay rights" staging protests and finally I want to see the how RIOT SQUAD will treat these idiots. Will they just stand by and watch or will they use tear gas etc like they did against Hindraf.

sun said...

good job najib

Anonymous said...

good policy, sokong all the way...

hope it become a reality, so some of us pendatangs could make more so we could migrate.

zewt said...

dont be so happy... the detail guidelines are not out yet. based on experience... the govt can proposed and annouce a lot of things, but when you look at the actualy details and mechanism of the guidelines... it can be completely un-do-able.

Anonymous said...

zewt, fully agree.

artchan said...

Mahathir has not spoken it is not cast in stone...who know when it gets hot our newly minted premier might say.."Oh itu hanya cadangan"

Anonymous said...

Source :

Unedited version which includes full text of AWSJ and Najib's letters :

Najib couldn't answer foreign editorial
Vijay Kumar Murugavell | Apr 23, 09 4:03pm
In it recent editorial, the Asian Wall Street Journal Asia highlighted doubts as to the efficacy of the first stimulus package announced by the Malaysian government. Prime Minister and Finance Minister Najib Abdul Razak responded to this article and articulated his views on how it will work.

He does not mention that of the initial RM7 billion stimulus package, RM5 billion is set aside for F Class contractors linked to Umno which he recently took over as president. He then goes on to say that it is designed to enhance domestic growth and improve market confidence while ensuring that a larger segment of the population will realise the benefits.

Incredibly he goes on to say that there is no additional expenditure in implementing these measures as it will be entirely funded by savings on subsidies as a result of falling global oil prices.

This does not explain what we are going to do about falling oil revenue that was used to fund these subsidies in the first place. Its akin to an individual saying that he will fund his expenditure on reduced taxes but hides the fact that the lower taxes are because of income reduction.

Najib then goes on to say that ValueCap will enhance existing assets and multiply the benefit that the Employees Provident Fund (EPF) already provides Malaysian workers but he does not provide hard figures as to its (ValueCap's) track record since its inception in 2003.

The operations of ValueCap are shrouded in mystery and many who tried to probe for more details came up against a brick wall. ValueCap was supposed to make good on a RM5.1 billion bond repayment to its original shareholders by February.

Ironically it was incorporated in 2003 with a seed capital of the same amount. The government acknowledged in October last year that ValueCap would receive a RM5 billion ‘loan' from EPF.

There was a loquacious debate about this in Parliament November last year where it was insinuated that the loan was most likely to consolidate ValueCaps debts. The second Finance Minister vehemently denied this while not providing pertinent details.

It is also misleading to say that ValueCap will enhance EPF contributor's returns when the amount is insignificant against EPF's total assets of RM330 billion. Furthermore when EPF relies heavily on Malaysian Government Securities (MGS).

These debt papers maturing in three and five years are currently yielding less than 4% at today's prices making it unlikely for EPF to pay out dividends higher than 5% in the coming years which is way below projected inflation figures.

The good old 1980's when MGS yielded above 12% are long over and EPF does not seem to have a cohesive plan to protect contributors against inflation.

Najib's statement that: ‘Malaysia is no stranger to this sort of scrutiny. During the last crisis, our ‘unorthodox' stimulus initiatives were loudly criticised and largely condemned' comes across as patronising as the 1997 financial crisis was a different creature altogether; currency controls are not going to help us this time.

No doubt our financial sector is in a better position than a decade ago but to say that Malaysia is well-positioned for the coming economic challenge is stretching it a bit too far.

As to the question of liberalising affirmative-action programmes, the finance minister said: ‘To boost local and foreign investor interest in the stock market, I announce the liberalisation of the 30% bumiputera (indigenous Malaysian) shareholding requirements for companies seeking listing on the stock exchange'.

Incredibly in the same month, the government defended the need for this quota.

As for our willingness to face challenges head on, open discussion, working together to develop solutions, we are no where near to what Najib stated when the ruling government uses draconian laws to silence legitimate political dissent, makes many subjects that affect the nation taboo for discussion, and sabotages (economic or otherwise) the opposition-ruled states.

I am truly embarrassed as a Malaysian citizen that the highest office-bearer in my country could not even answer a simple critique by the AsianWall Street Journal Asia in a cogent manner.

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