Reshaping the bumiputra economy | The Star

PETALING JAYA: Prime Minister Datuk Seri Anwar Ibrahim is out to reform the decades-long bumiputra agenda to weed out undeserving beneficiaries, and while this is a noble intention, it will be a tough nut to crack, analysts say.

With almost seven out of 10 Malaysians being bumiputras, reforms to the affirmative action policies must be carefully laid out to avoid the Anwar Ibrahim administration losing the majority bumiputra support.

With this in mind, economists have welcomed Anwar’s proposal to identify new growth areas for bumiputras, although they cautioned that the effectiveness of such efforts will hinge on the execution.

Shankar Nambiar, head of research at the Malaysian Institute of Economic Research (MIER), applauded the Prime Minister for his proposal but said more clarity is needed to understand how it will be implemented.

“We do find some shortcomings (in the current bumiputra agenda).

“For instance, although the electrical and electronics sector is a major contributor to the economy, the bumiputra participation in this area is limited,” according to Nambiar.

Based on the Statistics Department’s data for 2023, the number of bumiputra lawyers was disproportionate to their population at only 39%. Similarly, for accountants registered with the Malaysian Institute of Accountants, the share was only 32%.

It is, however, noteworthy that bumiputras represent the majority group in some other registered professions.

For example, almost 53% of registered dentists in 2023 are bumiputras, and the rate is higher at 62% among quantity surveyors.

On Feb 14, following the first Bumiputra Economic Council meeting for 2024, Anwar said new bumiputra growth areas need to be identified so that the benefits can be enjoyed by everyone and not just certain groups.

“We should avoid the narrow point of view that this agenda is only for the benefit of the bumiputra, therefore the new bumiputra growth areas need to be identified as well as having a systematic collection of data,” he said in a post on X (formerly Twitter).

The statement was made ahead of the Bumiputra Economic Congress 2024, scheduled for Feb 29 to March 2.

In pushing bumiputras’ involvement in new business sectors, Bank Muamalat Malaysia Bhd chief economist Mohd Afzanizam Abdul Rashid said the focus must also be on how the government’s resources can be mobilised to the emerging entrepreneurs.

“Coordinating the various government agencies so that it can promote entrepreneurial activities among the bumiputras would be a good start.

“From my own engagement, I can see Institut Keusahawanan Negara has done an effective job to inculcate the spirit of entrepreneurship by formulating a structured training for the aspiring entrepreneurs by leveraging experienced business coaches who happen to operate their own business,” he said.

Centre of Market Education chief executive officer Carmelo Ferlito, however, opined that the government’s main task should be to put in place the right set of rules for entrepreneurship to flourish, rather than choosing where it should flourish.

“The economy is a spontaneous order and any attempt to direct it with top down plans ends up in a disaster.”

Ferlito further added that economic policy should be designed for the general growth of the country, creating opportunities for entrepreneurship to flourish, independently from any particular background.

“I think it would be misleading to say, for example, that bumiputras should focus on manufacturing and Chinese on real estate.

“This does not take into account the originality belonging to each human being,” he added.

Critics have said that rebooting the bumiputra agenda in line with the demands of today’s world has become more necessary, in ensuring that the bumiputras can enjoy a larger share of the economic pie.

A public policy analyst urged the Anwar Ibrahim administration to identify weaknesses in the implementation of the 1980-90s’ Bumiputra Commercial and Industrial Community (BCIC).

“We can create BCIC 2.0 but without the previous weaknesses,” said the analyst.

To further push Anwar’s proposal for new bumiputra growth areas, Bank Muamalat’s Mohd Afzanizam suggested sectors like renewable energy (RE) and electric vehicle (EV).

He said the focus should be on creating bumiputra entrepreneurs serving the entire RE and EV ecosystem.

“I believe each and every step of the supply chain in RE and EV can open up opportunities for bumiputra entrepreneurs such as the installation, producing the original equipment manufacturer products and maintenance.

“Surely these bumiputras would need to undergo a capacity building programme.”

Meanwhile, MIER’s Nambiar recommended areas like technology, particularly in artificial intelligence, application development and data analytics.

Other areas are digitalisation and alternative energy.

“These seem to be the new growth areas and it would do well for bumiputra business to get into them.

“However, it will be moot if this will be done by encouraging select bumiputra businessmen or through the government-linked companies,” he said.

Aside from identifying the high-potential areas, Nambiar said the government should also develop strategies to ensure that the right pre-conditions are in place, such as credit conditions, access to technology and human capital, and appropriate risk taking behaviour.

“There have been institutions that were developed in the past to address these issues (such as Mara). But they will have to be modified to take into account present realities.

“At the same time, the government will have to be mindful of the disadvantages of government intervention in business.

“We have seen how this has failed in the past.

“The country’s automotive sector is a stark example of how building winners can fail,” Nambiar said.