The need for government intervention to facilitate bigger participation of the bumiputera community in Malaysia’s industrial and commercial sectors was recognised way back in 1965 in the country’s first five-year plan.

Prime minister Tunku Abdul Rahman, in unveiling the First Malaysia Plan in 1965, set aside RM70 million for Majlis Amanah Raya (Mara) to undertake various training programmes, co-invest in ventures, lease out offices at subsidised rates, and buy up equity that was to be eventually sold to bumiputera entities. The sum of RM70 million was a lot of money then and Mara was supposed to make a meaningful impact on the bumiputera social agenda.

But the Tunku also warned that the final outcome of Mara’s efforts would ultimately depend on how the bumiputera community capitalises on the privileges.

“In the final analysis, however, such an achievement will depend not so much on the number and amount of loans which Mara provides, the magnitude and range of technical assistance it gives, the number of people it trains or the number of industrial projects it initiates, but very much more on the response of the bumiputera in availing themselves of these facilities and services and in putting them to good and proper use,” the Tunku had said.

Following the racial riots of 1969, the New Economic Policy (NEP) was launched in 1970 under Prime Minister Tun Abdul Razak, with the setting up of a 30% bumiputera corporate equity ownership target that was to be achieved in 20 years.

Today, after 50 years, billions spent by the government, and at least seven more agencies joining Mara to increase the community’s participation and ownership in corporate Malaysia, the percentage of bumiputera equity ownership stands at a paltry 16.9%.

The highest level it rose to was 22% in 2008. Every time the country unveils the five-year Malaysia Plan, the failure to meet the 30% bumiputera corporate equity ownership is conspicuously felt.

When Abdul Razak set the 30% target, economic imbalances were grossly against the bumiputera community. They only held 1.5% of corporate equity ownership, a notch higher than the Indian community’s 0.9%.

Foreigners or foreign-controlled entities owned 62.1% of the equity while the Chinese had 22.8%.

The Malays and other indigenous people were even lagging behind in ownership of plantation assets. According to the Second Malaysia Plan, there were hardly any rubber estate of more than 100 acres that was owned by Malays then, although the community controlled 37% of paddy farms.

There are several reasons why the 30% bumiputera equity ownership has not been met after 50 years.

Among them is the relaxation of bumiputera equity ownership rules for the manufacturing sector and a change in the strategy of some institutions given the mandate to pursue the agenda.

But the biggest drawbacks are the leakages in the delivery mechanism and inadequate monitoring by the agencies responsible for the intended outcomes.

So, it should not surprise anyone if multinational companies (MNCs) and the private sector are less supportive of the bumiputera equity ownership agenda.

It is evident from the recent uproar after the government ruled that integrated logistics companies had to comply with 51% bumiputera ownership regulations by the end of the year or they would not be able to deal with the Customs Department.

Although the requirement has been pushed to the end of next year, there are leakages in the system that could eventually see only certain bumiputera individuals getting rich if the rule was implemented.

For instance, owners of logistics companies with “51% Bumiputera equity” can instead easily lease their licences in return for a fixed monthly income. And operators of logistics companies would prefer to opt for this kind of arrangement and pay a lease instead of “selling” 51% equity.

This sort of arrangement has happened before, notably in the approved permits (APs) fiasco in the car industry, which only benefitted certain individuals among the bumiputera second-hand car import dealerships.

The AP car idea was mooted so that the dealers could eventually graduate and become manufacturers in the automotive industry. But it did not happen. Instead, the AP holders sold the permits to automotive companies, including non-bumiputera dealers, and made millions.

The one company that successfully graduated to control an automotive assembly plant sold its stake to a foreign company.

Which brings to question: Why this fixation on bumiputera equity ownership? If it cannot be achieved after 50 years and billions spent, there is no reason to believe the goals can be achieved in the next 50 years.

Instead of being fixated on bumiputera equity ownership that has proven to benefit only a few individuals, a better solution is to push for a more equitable bumiputera household income agenda.

The community makes up the largest percentage of households in the country at 65.1%.

But 71.4% are in the B40 income group, which has a household income of less than RM5,000. In fact, a 2019 study revealed that the mean monthly income of the B40 group is RM3,152.

The Chinese community forms 25.9% of households in the country, with the rest made up of others, including Indian households. Among Chinese households, 19.5% are in the B40 category.

In terms of absolute poverty, the bumiputera community forms the highest percentage at 7.2%, followed by the Indian community with 4.8%, while absolute poverty among Chinese households is 1.4%.

As at the end of last year, there were more than 711,000 unemployed persons, and more than half were bumiputeras between the ages of 15 and 30.

The median bumiputera monthly household income was RM5,420, compared with RM7,391 for the Chinese and RM5,981 for the Indians. According to the 12th Malaysia Plan, the median income gap between the Chinese and bumiputeras was four times higher compared with 1989.

Going forward, the gap is only going to get wider if the average household income of bumiputeras does not rise. In the last six years, although the level of income has been rising, the gap between the rich and poor is widening.

In the course of the 11th Malaysia Plan between 2016 and 2020, the median monthly income of the B40 group increased from RM3,000 in 2016 to RM3,152 in 2019. But the Gini Coefficient, a measure of the wealth disparity between the rich and poor, worsened to 0.407 from 0.399, reflecting wider income inequality.

The bumiputera equity ownership policy is outdated. It does not work because of leakages in the delivery and monitoring system. It is best for the government to let bumiputera-controlled funds such as Permodalan Nasional Bhd, Lembaga Tabung Haji and Mara meet the equity ownership objective.

Today, a more meaningful narrative for the community would be higher, and more equitable, household income, and certainly less fixation on corporate equity.

M Shanmugam is contributing editor at The Edge