Bumiputera (Malaysia) - Policy

Policy

Certain but not all pro-bumiputra policies exist as affirmative action for bumiputras, for NEP is racial-based and not deprivation-based. For instance, all Bumiputra, regardless of their financial standing, are entitled 7 percent discount on houses or property, including luxurious units; whilst a low-income non-Bumiputra receives no such financial assistance. Other preferential policies include quotas for the following: admission to government educational institutions, qualification for public scholarships, positions in government, and ownership of businesses. Most of the policies were established in the Malaysian New Economic Policy (NEP) period. Many policies focus on trying to achieve a bumiputra share of corporate equity, comprising at least 30% of the total. Ismail Abdul Rahman proposed this target after the government was unable to agree on a suitable policy goal.

Examples of such policies include:

• Companies listed on the Kuala Lumpur Stock Exchange (Bursa Saham Kuala Lumpur) must have 30% bumiputra ownership of equity to satisfy listing requirements. Foreign companies that operate in Malaysia also must adhere to this requirement.

• For a limited period, a certain percentage of new housing in any development has to be sold to bumiputra owners. Housing developers are required to provide a minimum 7% discount to bumiputra buyers of these lots. This is required regardless of the income level of the potential buyer. Remaining unsold houses after a given time period are allowed to be sold to non-bumi if the developer proves attempts have been made to fulfill the requirement. There is no bumiputra discount on existing housing.

• A basket of government-run (and profit-guaranteed) mutual funds are available for purchase by bumiputra buyers only. The Amanah Saham Nasional (ASN) has return rates approximately 3 to 5 times that of local commercial banks.

• Many government-tendered projects require that companies submitting tenders be bumiputra owned. This requirement has led to non-bumiputras teaming up with bumiputra companies to obtain projects, in a practice known as "Ali Baba". Ali, the bumiputra, is included solely to satisfy this requirement, and Baba (the non-bumiputra) pays Ali a certain sum in exchange.

• Projects were earmarked for bumiputra contractors to enable them to gain expertise in various fields.

• Approved Permits (APs) for automobiles preferentially allow bumiputra to import vehicles. Automotive companies wishing to bring in cars need to have an AP to do so. APs were originally created to allow bumiputra participation in the automotive industry, since they were issued to companies with at least 70% bumiputra ownership. In 2004, The Edge (a business newspaper) estimated that APs were worth approximately RM 35,000 each. They also estimated that the late Nasimuddin Amin, the former chairman of the Naza group, received 6,387 in 2003, making him the largest single recipient of APs. More than 12,200 APs were issued in 2003. In addition to APs, foreign car marquees are required to pay between 140% to 300% import duty.

As a result of these policies, many bumiputera with good connections quickly became millionaires. According to Tan Sri Rafidah Aziz, former Minister of Trade and Industry, the policy was to create "Towering Malays". In 2005 she gave a speech that stated: "If there are young Malay entrepreneurs whose companies are successful, then we appreciate their success, we want Towering Malays of glokal (global and local) standard". She also said that the policy of Approved Permits (APs) had produced many bumiputera entrepreneurs in the automotive industry.

Since 2000, the Government has discussed phasing out certain affirmative action programs and reinstating "meritocracy". In 2003 it began the system of "Malaysian model meritocracy" for university admission. Admission to public universities was not based upon a common examination such as the SAT or A-Levels, but rather upon a two parallel systems of either an one-year matriculation course or a two-year STPM (Malaysian Higher School Certificate) programme. Bumiputras compose an overwhelming majority of entrants to the matriculation programme. It is indisputable that the public university entry requirements are easier for matriculation students and disporportionately difficult for STPM students.

Quotas also exist for Public Services Department (JPA) scholarships, full scholarships offered to students to study in leading universities worldwide. These scholarships are given on the basis of SPM (Malaysian Education Certificate, the equivalent of O-Levels) results, ethnic group, and certain quotas. The JPA scholars are sent to selected pre-university programmes offered by the government — from there, they apply to universities.