The bumiputra 30% equity objective will now be a macro target as the Government seeks to turn Malaysia into a more competitive economy, said Datuk Seri Najib Tun Razak.
The Prime Minister explained that the policy changes had to be made because of the drastic changes in the global economic scenario since the inception of the New Economic Policy (NEP) and the failure of the Foreign Investment Committee (FIC) to produce the desired results of increasing the bumiputra equity.
“This is part of the overall new economic model. This has been necessitated by two major factors,
“One, the economic environment regionally and globally has changed drastically since the inception of the NEP.
“Secondly, the FIC as an instrument has not produced the desired results over the last 19 years. Bumiputra participation has remained stagnant over the last 19 years.
“We need to have a new instrument but it has to be more market friendly. In the process, we are embarking on a new philosophy which will help the best and good bumiputras in business, not just any bumiputra, who are willing to help themselves,” he said yesterday.
On the doing away with the 30% quota for companies seeking listing, he said investors were dissatisfied with such a condition.
Najib pointed out that even the allotment of shares by the FIC to bumiputras in the past did not work as most of them would “straight away sell-down an enormous amount”.
“We have done our research. Very little shares are still left. The old model is not sustainable. Of the RM54bil in shares allocated, only RM2bil worth of shares are left in the hands of bumiputras. That’s a D-minus performance.
“In short, the FIC will no longer exist. We will replace it with an investment instrument called Ekuiti Nasional Bhd (Ekuinas), which is a private venture capital focusing on helping bumiputra entrepreneurs who have the potential and capability to develop into huge players domestically, regionally and globally,” he told a press conference after delivering his keynote address at Invest Malaysia Conference here.
He said Ekuinas would have an initial capital of RM500mil and which would be enlarged to RM10bil depending on the needs of identified entrepreneurs.
He said the remaining processes that still required government approvals would be made through a unit under the Economic Planning Unit.
Asked if he would expect a political backlash following his announcement on the new policy reforms, Najib said: “I believe it is fair. These new policy guidelines are designed to create a win-win situation. In other words, it will make global investors happy and address the need for a more effective instrument for bumiputra equity participation.
“The overall macro target of the 30% bumiputra equity remains. We will move along the line of achieving a balanced society. We have to be fair to all communities. It will be based on two important premises – that no one is marginalised or disincentivised. It’s a tricky balancing act but it’s do-able.”
On whether the policy change should be termed as one of his achievements in his first 100 days in office, Najib, who had been in office for 89 days yesterday, said: “I came in with a clear promise to bring about change and reform. I try to live up to my promise as a politician. I hope you will have more faith in politicians in future.”
On whether Ekuinas would be established to achieve the 30% bumiputra quota target, he said: “It is not the only way. There are other ways as well to achieve the 30% bumiputra equity. It is important to see that the 1Malaysia concept is translated in the economic sense.”
To a question whether he was confident the Ali Baba practice (where bumiputra participation is in name only while non-bumiputras run the whole show) would be eliminated with the policy reform, he said: “I don’t think you can eliminate sleeping partners overnight but you will reduce it substantially. We are helping those who want to help themselves.”
Asked if the policy reforms were the much talked about new economic model, he said it was part of the overall new economic model.
“The new policy will make our economy more vibrant and dynamic and Malaysia will be high up in the radar screen of investors.”